Islamic banking – mark-up, interest or saving?

Prof. Rahmat Karim Baig

There is a constant demand from the Islamic circles to make our finance system a purely Islamic one, based on the teachings of the Divine Faith. But this has not been possible even after 75 years of the creation of the Islamic Republic of Pakistan though some measures have been taken to Islamize the rules of banking as closely as possible. Some Muslim economists have taken measures towards this goal but that is a private effort and the state has not taken the issue seriously.

Muslim scholars and economists have to discuss the matter and propose measures in consultation with the government and explore the possibility to introduce this system in earnest. In fact the State has run her finances on the pattern of the global economic system and has not seriously taken steps to put it on pure Islamic rules and regulations. Private finance system may work but to a certain extent and the whole economic system of the State needs some serious changes in consideration with the global finance system based on interest i.e. mark up.

For this purpose preliminary proposals have to be made public for getting views of the economists as well as the citizens of the country as what is going to be introduced so the suggestion could be analyzed and flaws if any, be pointed out in the light of the world economic system and also the economic experts of the Muslim countries should be sought to handle the changing aspect of the issue. How will it be possible to run an interest free economic system? The depositor should put his money in a bank for the cause of saving but not for mark up.

So to get the objective there should be a mass awareness campaign and motivate the public to deposit their savings not for mark up but for free as a token of measure towards Islamization. How many of us are ready to initiate it?

The mark-up free accounts are open in the banks but the whole economic system is not based on it. All changes come from the lower level when the public’s trend is directed towards it. All the Muslims should be made bound to deposit their saving on markupless basis and the non-Muslims be given other options too. If we are crying for sood say pak economic system, we have to make sacrifices and it should begin from our own side. 

The banks should issue the number of such accounts on monthly basis to motivate those who lag behind. A banker or an economist should tell us all the aspects of this issue and give the two aspects in detail to clarify the future position of such a measure. This is a complex issue and has to be considered and reconsidered by high level economists before taking any step.