Space For Rent

Space For Rent
Wednesday, August 20, 2014, Bhadra 5, 1421, Shawal 23, 1435 Hijr


Greedy banking to be phased out soon, says IBBL chief
Publish Date : 2014-08-20,  Publish Time : 00:00,  View Count : 126
Faruk Ahmed
Bangladesh is going to the biggest hub for Islamic financial products as need-based Islamic banking is taking over greed-based one where interest is being used as a deadly weapon against the people and  the economy as well.  
Md. Abdul Mannan, Managing Director of Islamic Bank Bangladesh Limited (IBBL) said this during his exclusive talks with The Daily Observer last week.
"In the growing competition environment, Islamic banking will outflank its competitors of conventional banking" ,  he said.
"Greed and need are two separate things- twos move always in opposite ways. In banking race, conventional banking are doing greedy business using interest as a vital tool which exploits people while Islamic banking has come with a different way making them almost business partners", Mr. Mannan said.
Islamic banking is banking that is consistent with the principles of Sharia which prohibits acceptance of specific interest or fees for loans of money. Abdul Mannan has claimed that his bank IBBL is the pioneer in financial inclusion in Bangladesh since its inception in 1983.
With its impressive 20 per cent global growth, Islamic banking has already found a niche market in the country's banking industry since the IBBL started its operation in 1983 as the first Islamic Bank of South Asia.
Islami Bank Bangladesh Limited has been rated the best bank in Bangladesh by the UK based magazine- The Bankers in 2012 and took a position in the global list of 2000 banks.  The bank engaged in commercial banking business based on Islamic Shari'ah with 63.09 per cent foreign shareholding with 286 branches all over the country.
"We have already earned people's confidence providing interest free finance and investment and playing our pioneer role in financial inclusion since the last decade", IBBL chief told the daily.
During an hour long talks with the Economic Editor of the daily, Abdul Mannan presented an in-depth insight of banking trends with particular focus on Islamic banking which has already put its foots in Western world.
He also expressed his thoughts, ideas and vision on the role of banks and the upcoming challenges in their operations.
"Globally Islamic banking has emerged as a response to both religious and economic exigencies", he said.
"Despite the outstanding contribution of the conventional banking system (interest-based), several ancient and modern economists are critical about its efficiency level. Some economists consider the role of interest in the conventional banking mechanism as a major negative factor that contributes to cyclical fluctuations in the economy", IBBL Managing Director said.
Specifically, the ineffectiveness of interest rate as a stabilization tool during the period of the Great Depression is a case to note. This eventually called for Keynesian prescription of government intervention, he noted.
IBBL Managing Director said the global banking system is powered on greed and passing through a transition of global financial market, which crumpled some big banks in the recent past.
 "Regardless the risks and challenges, in the long term, there will be a survival of the fittest scenario where only the best stores will stay afloat. Our economy will grow much faster and bigger living in the truth", he said.
A major principle in Islamic finance is to have a direct link between the real and financial economy. It has long faced the criticism that it's just mimicking the broader market. The economic reason derived from a verse of the Quran providing inspiration to devise an interest-free financial system has been substantiated in the way that interest, instead of increasing wealth, reduces it.
"Interest of money is harmful to mankind, destablise economy, makes poor poorer",In this regard", Mr. Mannan said quoting the related verses from the holy Quran where Reba  or interest has been strictly prohibited.
"The primary reason of why the Quran has taken such a hard approach towards interest is that Islam stands for establishing a just economic system free from all kinds of exploitation. Further, Muslim economists consider depression and stagflation very often found in the capitalist world as an outcome of the financial system based on interest", he said.
He said financial inclusion has become a crucial issue in the global financial market and has emerged as an imperative indicator of the survival issue of banks and financial institutions. In this context, the IBBL is leading the queue with its pioneering role and excellent growth in financial inclusion", he said.
In Bangladesh, IBBL at first started financial inclusion programmes, when others remained busy with conventional banking operations with profit motive. "Today, we are in the top position in the most key performance areas of financial inclusion", IBBL chief claimed.
 "Conventional banking, in fact, is nothing but a greedy banking system, which brings troubles to the people. That is why, interest free Islamic banking is gaining popularity day by day even in the western markets", IBBL chief said.
"In fact, the concept and idea of Islamic banking is nothing but financial inclusion. Nobody had to instruct us to finance in rural areas, poor marginal farmers or women entrepreneurs when we started operations in ------. We did it as a rule because it is the core objectives of Islami banking", he said.
In contrast, he said, conventional banks are now financing more to increase financial inclusive growth due to regulatory bindings. The central bank is promoting this growth strategy to make Bangladesh as a middle income country by 2012.
"If the authority withdraws its pressure on banks, then most conventional banks will reduce their financing under financial inclusion. Because it was not their agenda", he said.
" The reason is that the Islamic banking is a welfare-oriented banking system that fulfills people's need, while others are engaged in greed based banking to grab people's money using interest as a tool", Abdul Mannan, who is known as an Islamic banking expert in international arena told the daily.
Replaying to a question, Mannan said financial inclusion has become a crucial issue in the global financial market and emerged as an imperative indicator of the survival issue of banks and financial institutions. In this context, Islami Bank is leading the queue with its pioneering role and excellent growth in financial inclusion", he said.
"They say money is a commodity but we see it as a medium of exchange of goods. So we can not buy or sell money. Because,  
In Bangladesh, we at first started financial inclusion programmes when others remained busy with conventional banking operations with profit motive. Today, we are in the top positions in the most key performance areas of financial inclusion, he said.
He said the bank introduced micro-credit financing meant for economic emancipation of the poor people, especially women.
"We have diverted the micro-credit of Grameen Bank founder Prof Dr Muhammad Yunus into formula of Islamic economy to bring about changes in life standard of destitute people." Asked about the amount of investment, he said Islami Bank has invested around Tk 10 billion in micro-credit programme.
He said life standard of 40,000 people has been promoted due to such programme run by the bank while 600,000 families are beneficiary of Islami Bank programme.
The world has now been expe?riencing operation of as many as 250 Islamic banks and financial institu?tions in more than 50 countries, Muslim and non-Muslim.







Editor : Iqbal Sobhan Chowdhury
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