Pakistan's Islamic finance sector poised for major transformationBreaking

May 03, 2024

Pakistan's Islamic finance sector is poised for a significant transformation as it embarks on an extensive workforce training strategy to align with the Shariah-compliant practices. To transition towards an interest-free economic system following the Federal Shariat Court's landmark ruling in April 2022, the sector is undertaking comprehensive measures to equip its workforce with the necessary skills and knowledge. The ruling, which prohibits Riba (interest) in all banking transactions, has set in motion a concerted effort by the government and the State Bank of Pakistan (SBP) to steer the financial system towards the Shariah-compliant principles. To facilitate this transition, a highly influential steering committee, led by the SBP governor, has been constituted to oversee the process and ensure adherence to the Shariah guidelines, reports WealthPK. “Recognizing the critical role of human capital in this transition, the Islamic finance sector is implementing an extensive workforce training strategy. This strategy aims to retrain the existing banking professionals, provide specialized training to the recruits, incorporate Islamic finance principles into educational curricula, and promote continuous learning and skills enhancement among the industry professionals,” said Asim Mustafa, Regional Head at Faysal Bank.

“One of the key components of the strategy is comprehensive retraining of the existing banking professionals. This involves unlearning conventional banking concepts and acquiring the knowledge of Shariah-compliant financial practices. Specialized training programs and workshops covering ethical considerations, regulatory frameworks, and Shariah-compliant products are being developed to support this initiative,” he said. “In addition to retraining the existing staff, the sector is focused on training fresh recruits to ensure a pipeline of skilled professionals. Orientation programs are being designed to cover the basics of Islamic finance, Shariah compliance, and regulatory requirements. Practical training methods, such as case studies and simulations, are being employed to enhance learning outcomes and prepare recruits for the demands of the industry.” Talking to WealthPK, Nosheen Ahmed, Operations Manager at the MCB Bank said, “Efforts are underway to incorporate Islamic finance principles into the educational curriculum at all levels, from primary education to post-secondary institutions. This includes the development of specialized courses and advanced tracks in Islamic finance, banking, and accounting within business schools and academic institutions.

By integrating Islamic finance education into the curriculum, the sector aims to cultivate a new generation of professionals with expertise in Sharia-compliant practices.” “The transition of Pakistan's Islamic finance sector towards Shariah-compliant practices holds the potential for a multitude of benefits. Firstly, it fosters financial inclusion by aligning the banking practices with Islamic principles, thereby catering to a wider segment of the population that prefers Shariah-compliant banking services,” according to Nosheen. “Secondly, it promotes stability and resilience in the financial system by mitigating the risks associated with interest-based transactions and speculative activities. Additionally, the transition can attract foreign investment and strengthen Pakistan's position as a hub of Islamic finance, leading to economic growth and job creation.” Moreover, by fostering ethical and socially responsible financial practices, the transition contributes to sustainable development and social cohesion within the society, Nosheen added.

Credit: Independent News Pakistan