To begin, Meezan Bank is the first Islamic Bank in Pakistan. Can you share your experience of developing the concept and bringing it to fruition? What were the challenges of establishing an Islamic bank in Pakistan?
Meezan Bank started as an investment bank. (Al Meezan Investment Bank) The major challenges faced at the time were the lack of understanding and information in the general public about Islamic banking and the insufficient availability of human resources with the requisite training and experience in Islamic banking. We worked hard in educating the public and our customers about Islamic banking by conducting seminars and training workshops, both in-house and outside the Bank.. Alhamdulillah, the level of understanding and acceptance of Islamic banking in the public along with the growth of the Bank over the years is proof of the success of our efforts.
At that time, the Bank had a very limited product suite coupled with limited outreach. Alhamdulillah, with the passage of time, we have been able to address all these issues through building a large branch network and developing strong Shari’a research and product development capacity.
The share of the Islamic finance industry as a proportion of the total financial industry in Pakistan increased – from 1% in 2002 to about 9% in 2013.
In your opinion, what are the major factors behind this growth and how much further do you think Islamic banking can grow in the country?
Muslims comprise over 97% of Pakistan’s population. Most of the population understood that interest (riba) was prohibited; however, due to the non-availability of Islamic alternatives to conventional banking, they were impelled to fulfill their banking needs through conventional banks. But, Alhamdulillah, Meezan Bank and other Islamic banks have provided a viable and Shari’a-compliant alternative for society, generating the growth in Islamic banking that we are witnessing today. If we work with sincerity towards our vision, which is to establish Islamic banking as banking of first choice, this industry can reach great heights.
What are the primary factors that have led to Meezan Bank’s success?
We are grateful to Almighty Allah whose blessings paved our way to success. From the very first day, we have been sincere and committed to our vision. In the beginning, several opportunities that were not Shari’a compliant were presented to the Bank. We could have made a decent profit but we refused to be part of such transactions. This resulted in positive publicity and increased interest in the Bank and its offerings. We are also fortunate to have the first-mover advantage placing us in an admirable position with those customers who are interested in Islamic banking. Finally, we have a dedicated team of Islamic banking and Shari’a professionals who are continuously in the process of researching and developing innovative Shari’a-compliant products for the needs of our diverse customers.
Building awareness of Islamic banking in the country has been a challenge. How is Meezan Bank, which has the largest outreach in the country, tackling this?
We consider building awareness of Islamic banking as both a part of our mission as well as a business need. We hold seminars and workshops on Islamic banking for both the general public and our customers across the country to create awareness and dispel misunderstandings about Islamic banking.
We also actively use the outreach offered through social media channels to disseminate information about Islamic banking within and outside the Bank. Our staff members regularly teach Islamic banking courses at several universities, contributing towards the enhancement of awareness about this field among the youth.
The State Bank of Pakistan (SBP) has recently announced a marketing plan to improve awareness in the country. How is Meezan Bank contributing to that?
Meezan Bank is very actively participating in the campaign initiated by SBP. I have been nominated as the Chairman of the Steering Committee. We are working in close conjunction with SBP to ensure that this awareness program goes well.
How has Meezan Bank supported SMEs and the agricultural sector? Do you think there is more Meezan Bank can do?
Meezan Bank emphasizes the importance and value of SMEs and agriculture as it has great synergy with Islamic finance. We have a separate SME and Agriculture Finance Unit with specialized and experienced staff members. SME is an undocumented but high-yield sector. Due to the wide range of Islamic products, competitive rates and an increasing branch network, Meezan Bank is catering to almost all banking needs of SMEs. Our large SME customer base has helped us to diversify into various business sectors. Apart from financing, the Bank is also acting in an advisory role to promote Islamic banking, for example, with relation to the Prime Minister’s Youth Loan Scheme. For agriculture, we are adopting a prudential approach and gradually penetrating into this sector. We are both booking small tickets in agriculture as well as going for corporate deals.
How has the overall distressed condition of the country affected Meezan Bank?
Although the banking sector has seen some tough times with net spreads in a tight squeeze, Alhamdulillah, Meezan Bank continued breaking all previous records in terms of both growth and profitability. We are now the 8th largest bank in Pakistan in terms of the size of branch network. We remain very optimistic about the future growth and success of the Bank.
Recently, the Finance Minister has set up an Islamic Finance Committee; can you please share its aims and objectives of it with us?
We appreciate the efforts taken by the government in setting up this committee which will, InshaAllah, suggest practical steps for implementing a Shari’a-compliant financial system. It will develop and recommend practical measures to resolve the challenges present today for the widespread implementation of a Shari’a-compliant system including solutions for an Islamic secondary market and money market for liquidity management.
The Committee will also chalk out a roadmap and propose a timeline highlighting progress. It will study the international implications of converting conventional banking into Shari’a-compliant banking and conduct an analysis of the possible legal obstacles in doing so, and the changes required to remove these obstacles.
Meezan Bank recently won Best Research and Development at the Global Islamic Finance Awards (GIFA) 2013 held in Dubai on 26th November, 2013. How would you define this achievement?
Our core strength lies in research and development in Islamic finance. Today Meezan Bank has one of the most comprehensive product suites in the global Islamic finance industry. We have more than 30 professionals from diverse backgrounds including Shari’a scholars, chartered accountants, business graduates and lawyers, who are dedicated to continuous research and developing new products to address the business needs of our customers in a Shari’a-compliant way.
Meezan Bank has contributed immensely to building human resources for the industry in Pakistan and internationally. What has been your strategy and how do you hope to continue it in the future?
The Bank has built an excellent human resource base of Islamic bankers for both local and international markets by providing nurtured and consummate professionals with hands-on exposure to state-of-the-art products with strong adherence to the rules of Shari’a. We consider this as an element towards achieving our vision of establishing “Islamic banking as banking of first choice.”
Our strategy has remained focused on attracting fresh talent from 1st and 2nd tier business schools at entry level and training them in our products, systems and culture. For senior positions, we elevate the successor on merit, either searching inside the organization or hiring talent from outside. The elevation strategy has provided good career growth opportunities to existing employees, hence contributing towards morale.
Our in-house and public learning programs are designed to enhance the Islamic banking knowledge and skill set of our staff, our customers and the general public, thus creating awareness and removing misunderstandings prevailing in the public about Islamic banking.
Can you please share your professional experience and education history before Meezan?
I am a Chartered Accountant from England and Wales. I started my career with Abu Dhabi Investment Authority in Abu Dhabi as a Senior Accountant from 1980-1981, Then I moved to Exxon Chemical (Pakistan) Ltd, taking the position as a Senior Business Analyst from 1981-1982, Following this, I joined Abu Dhabi Investment Company as Manager Finance & Operation (1982-1987) before moving to Kuwait Investment Authority as Advisor (KIA) (1987-1989).
In 1989, KIA deputed me as General Manager at Pakistan Kuwait Investment Company (Pvt) Limited (Pak-Kuwait). Pak-Kuwait is a joint venture between the Government of Pakistan and the Government of Kuwait.
My wife’s perseverance in warning me about working with riba eventually led me to think about building an Islamic banking institution in Pakistan. I gathered sponsors for the proposed Al Meezan Investment Bank Limited (AMIBL). By the grace of Almighty Allah, the Bank came into existence and transformed into Meezan Bank Limited within a very short period of time.
