The glimpse of the possibility: Establishment of Waqf by Islamic Financial Institutions.

Byline: Muhammad Zeeshan Farrukh

Need of the Institution of Waqf

The institution of Waqf may bring a robust socio-economic development in the society as it is based upon human affection and the act of kindness to think to meet the need of others.

The main objective of Islamic banking is to implement ideal socio-economic system in the society based on the injunctions of Islam. Collectively, the Islamic banks may do very much with the establishment of the institution of Waqf.

The Islamic banks may establish significant Waqf fund for meeting the financial needs of the public. Through Waqf, Islamic banks may get experience many modes which is being thought as difficult in normal banking circumstances i.e. Qard e Hasana and Partnership modes.

Establishment of Waqf

All Islamic banks may establish Waqf fund under the regulation, permission and compulsion by State Bank of Pakistan (SBP) and Securities and Exchange Commission of Pakistan (SECP).

Objective of the Waqf

The objective of Waqf is not only the meeting of immediate financial needs of the people on temporarily basis but to stand people upon their own feet as they may play their role in the socio-economic development of the society.

Ways of Contribution in Waqf

As far as ways of contribution in Waqf fund, Islamic banks may contribute in the following, but not limited to, ways:

Firstly, Islamic banks may contribute though charity as it has been observed that almost every year, the Islamic banks disburse charity to different charitable institutions. This charity comes from the customers in case of late payments and the amount of profit that must be surrendered by the bank into charity due to non Shariah compliant transactions.

Secondly, Islamic banks may contribute through its own equity.

Thirdly, there may be an option to open Waqf account in Islamic banks under the Shariah and regulatory guidance of SBP. Pakistan is one of the largest charity provider nations in the world. The Islamic banks may play dominating role in this respect. Through opening of Waqf account, the Islamic banks may offer the public to contribute in Waqf account for further utilizing the certain amount for different socio-economic objectives. Islamic banks may become the most reliable charity collection and utilization institutes of the country.

Earning Activities of Waqf

The Waqf should be an earning body by investing in various profitable avenues. The profit would be utilized for remuneration of the management and staff...