St. Barbarossa’s Memoirs is a regular feature of ISFIRE. We present here the memoirs of Professor Humayon Dar in a light and occasionally humorous way to highlight some issues of importance to the global Islamic financial services industry.
This is not intended to offend any individual or institution but rather present a perspective on the practice of Islamic banking and finance.
Meezan Bank is the largest Islamic bank in Pakistan. I have visited its headquarters in Karachi on numerous occasions, and I was impressed by the Islamic culture the bank has nurtured amongst its key employees and the central management. Visiting Meezan Bank’s headquarters is a pleasant experience. I have visited numerous conventional banks in Pakistan and in other countries, and I must say that Meezan Bank stands tall in terms of upholding an Islamic culture within the organisation. The bank is led by Irfan Siddiqui who has provided an exemplary leadership.
In terms of Shari’a authenticity, Pakistan provides the best example of compliance with Shari’a. Meezan Bank has led the process of Shari’a assurance from the front.
The bank’s leadership is close to what most advocates of Islamic banking and finance (IBF) would like to see in terms of their competency and adherence to Shari’a on a personal level. The likes of Ahmed Ali Siddiqui (Head of Product Development & Shari’a Compliance), Farhan Usmani (Head of Shari’a Audit & Advisory) and other members of the executive management of the bank lead the bank by example. A number of members of the top management of the bank has some kind of formal qualification in Shari’a from the seminaries like Darul Uloom Karachi or informal instruction from Shari’a scholars. No wonder why Meezan Bank has achieved a lot of accolades, apart from being a profitable bank in the country.
The bank benefits from direct guidance by Sheikh Taqi Usmani, arguably the most influential jurist of the present times. His son, Dr. Muhammad Imran Usmani, serves as the full-time resident Shari’a advisor at the bank.
All the above praise for Meezan Bank is not without a purpose. I wanted to share with our readers the experience of culinary delights I had when I visited the bank. Irfan Siddiqui, President & CEO of the bank, invited me for lunch during one of my visits to its headquarters. The eatery is an impressive place at the bank, where all the employees can enjoy delicious food for very cheap prices.
It reminded me of my early morning visits to Bloomberg offices in London. Bloomberg offers free breakfast to its employees, and I was told that it has contributed to productivity of its employees.
To avoid the possible perception by our readers that I might have been paid to write this note of appreciation for Meezan Bank, I must also mention of some other Islamic banks in Pakistan, which are being led by some very able people. Bank Islami Pakistan is one such example. Its President and CEO, Hasan Bilgrami, is another visionary leader who has built the bank from scratch. I remember visiting him in his office in an unfinished tower in Karachi (before the full- fledged launch of the bank), overlooking the Arabian Sea. I presented to him a product that we had developed at that time for the use of Islamic banks around the world. He rejected the product on the grounds that it wasn’t sufficiently a profit loss sharing (PLS) product. He wanted to offer “genuinely” PLS-oriented products through his bank. A few years later, we met again, and he said, “The PLS doesn’t work. When I want to offer PLS to successful businesses they are not willing to share their profits with us. Only low quality financing opportunities are brought to us for PLS.” I just thought at that time that economists were not entirely useless people. They had for long identified moral hazard and adverse selection issues with share contracts.
At this juncture, I must mention of my meeting with Nat Rothschild in New York in 2008 or 2009. I presented a very innovative Islamic financial product for use by one of the entities the Rothschild family owns. He didn’t like the product on the grounds that it was not sufficiently Islamic. His argument was interesting. He was of the view that his family would like to offer the most conservative Islamic products, if it decided to do so, to avoid any possible reputational risks. Given the not-very-ideal perception of the Jewish community amongst most of the Muslims (and of the Rothschild family), he didn’t want to expose his business to any controversies and the consequent reputational risks. I liked the guy, and I also wondered if we should ask Jews to take a lead role in developing IBF. I must say that in most cases, we the Muslims are making mockery of IBF by developing products that have limited appeal amongst the Muslim masses.
On the issue of product development in IBF, I must say that there is a dangerous trend emerging in even the most conservative markets. I have shown my appreciation for the Shari’a authenticity of IBF in Pakistan but even in this market some hawkish Shari’a scholars of the second generation have started developing soft corners for otherwise Shari’a-light products. Salam currency is one such issue and we have included an analysis of such products in a previous issue of ISFIRE. There is one group on social media, called Islamic Economic Forum, on the WhatsApp, where some young Shari’a scholars have aggressively defended some questionable Islamic financial products. I have shown my discomfort with such a trend. While jurisprudence is central to product development, consideration of other socio-economic factors is also important for product development and wider development of IBF.
If such trends are not analysed in an objective way, this will lead to acceptance of interest in Islam, albeit in a camouflaged way. Conservatism is the best policy in this respect. In this context, I have huge respect for the likes of Dr. Muhammad Anas Zarqa, a prominent Islamic economics and son of the famous jurist Dr. Mustafa Zarqa, who has shown huge restraint in opining on Islamic financial products.
