Abstract
Current accounts and Ijarah has been foremost and important tools operated by the Islamic Financial Institutions. This study attempts to explore a few misgivings in the handling of current accounts by the Islamic banks in Pakistan. Financial management of Islamic banks is not under consideration which leads to the violation of Shariah’s fundamentals. Also in case of Ijarah, a bank’s client suffers from financial losses which must be borne in Islamic Banking system. Islamic Banks transfer the burden of some charges emerging form ownership of leased asset on their clientele which does not have any justification according to Shariah. This research has been carried out by taking unstructured interviews from some of the concerned staff of Islamic Banks. The results depict that current accounts and Ijarah is in operation and need to be revised and refined and must comply with Shariah.
Highlights
The history of Islamic Banking industry in Pakistan is almost 25 years old
Pakistan economy is experiencing full fledge 5 Islamic Banks, approximately 461 branches and sub branches of Islamic Banking of conventional banking are functioning as of June 30-2014 in Pakistan according to the Banking Policy & Regulations Department, State Bank of Pakistan
Current Accounts in Islamic Framework: The current accounts refer to carrying no returns but sometimes it offers some benefits in the form of overdraft facilities, the current accounts and other deposits carrying no returns can be considered as Qarḍ or interest free loans from the depositors to the Islamic commercial banks (IIIE, 1997)[14]
Summary
The history of Islamic Banking industry in Pakistan is almost 25 years old. This industry is contributing lustrously in various segments of Pakistan’s economy. The main objective of the research is to review prevalent current accounts (some time termed as demand deposits and Ijārah) under the Shari'ah framework and to trace out the gaps and contradiction in practice of current account management and Ijārah in line with Shari'ah compatibility. This is a qualitative research in nature and it necessitates to gather already published theoretical and empirical literature and data. To cover the practical implication of these two modes, some banking officials have been approached to gather information through unstructured interviews
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