Islamic finance almost complete change of form.

Byline: KHALIL AHMED

Interview with Mr Rehan Waheed - Islamic Finance Expert

Profile: Mr Rehan Waheed started his career with Meezan Bank in 2006 through its first batch trainee program and received comprehensive training at the Institute of Bankers Pakistan before his placement in the Bank. After serving at multiple positions in branch banking, he is currently leading the Bank's Shariah Advisory Unit - a position he is currently serving at in the Investment Banking and Shariah Advisory department of Meezan Bank. At Meezan Bank, he has been actively engaged in developing unique and complex Sukuk structures including Sukuk at discount to face value, etc. As part of an organization that is heavily invested in Islamic banking awareness and educational initiatives, he also plays his role by serving as a visiting faculty member at one of the leading business schools of the country.

PAKISTAN and GULF ECONOMIST had an exclusive conversation with Mr Rehan Waheed vis-a-vis ISLAMIC FINANCE. Following are the excerpts of the conversation:

The evolution of Islamic finance is divided into three periods i.e., experimental, amorphous and metamorphosis periods. During the experimental period from 1940 to mid-1970s, the initial idea of Islamic finance was attributed to the Indian Muslims and specially to Abul A'la Mawdudi (1903-1979) who wrote a book "Sood" i.e. Interest, published in 1960.

Later, we see two experimentations for interest-free banking in 1960s; one in the form of a savings bank/investment house based on profit-sharing model in Mit Ghamr in Egypt and the other as Tabung Haji (Pilgrim's Savings Fund) in Malaysia. The amorphous period started from mid-1970s to 1990.

Islamic Development Bank was established in 1974 followed by Dubai Islamic Bank, Jordan Islamic Bank, Kuwait Financial House and Islamic Bank Malaysia, etc. During this period, we witness banks seeking fatawa (religious opinion) from Shariah scholars on various banking issues and transactions and we may call this period as infancy stage of Islamic finance.

I believe we are now in the metamorphosis period since 1991. Countries like Malaysia and Bahrain have played a pivotal role to bring 'modernization' in Islamic finance. An autonomous corporate body AAOIFI was established and vested with the objectives to develop various standards including accounting, auditing, governance and Shariah standards for Islamic financial institutions to compete with their conventional counterparts...