Shari’a compliant solutions in banking


In an exclusive interview with Profit, Junaid Ahmed, President & CEO Dubai Islamic Bank Pakistan Limited discussed the prospects of finding shari’a compliant solutions in the banking industry.

DIBPL’s five years in Pakistan

While giving a brief introduction he said Dubai Islamic Bank Pakistan Limited (DIBPL) commenced its operations in Pakistan in 2006. The Bank currently enjoys a short-term credit rating of A-1 and long-term credit rating of Single A. ‘We are proud to be one of the fastest-growing banking networks of Pakistan currently standing at 70 branches in 27 cities. We have plans for further expansion of our network to 75 by the end of year 2011,’ he said.
He further added that their diversified product portfolio includes Current & Savings Accounts, Term Deposits, Foreign Currency Accounts, Auto and Home Finance, Takaful Savings Plan and Priority Banking. In addition, DIBPL has been a pioneer in offering the most comprehensive portfolio of state-of-the-art Alternate Delivery Channels (ADCs) giving 24/7 banking access to customers comprising of Internet Banking, SMS Banking, ATMs and Cash Deposit Machines, he added.

DIBPL to provide ‘World Class Banking-The Islamic Way’

To a question he said, DIBPL has always sought its strength in its slogan and being the first Islamic Bank of the world and having a global presence in the UAE, Jordan, Turkey, Sudan and Bosnia, the bank is in a position to offer the best mix of banking services to their customers. ‘Having access to the banking practices of innovative modern markets, we have a pool of knowledge to enable our customers to benefit from. Our Shari’a advisors play a crucial role in providing Shari’a-compliant solutions and alternatives for all those products that serve genuine requirements of the financial sector,’ Junaid explained.

Achievements of DIBPL

Talking about the achievements of the DIBPL, he said they can proudly claim to have achieved a lot in a short span of time, as currently, they are one of the fastest-growing banking networks of Pakistan with 70 branches in 27 cities. ‘Along with nation-wide network, we have one of the widest arrays of banking products and services under one roof. The Bank has made an attractive profit of Rs168 Million before tax in the first half of 2011,’ he added.
In the area of Consumer Banking, DIBPL has remained actively cognizant of the industry dynamics and customer needs by offering a number of world class products and services, he said, adding that DIBPL’s Auto Finance registered a volume of Rs2.9 billion within 9 months of its launch. In a market where cut throat competition persists, this reflects a great success for the Bank, he added.
Similarly, DIBPL’s Home Finance facility reached the fastest billion mark in the entire banking industry within the first three months of launch only, while within the first year of its launch, DIBPL Home Finance registered a volume of Rs2.6 billion, which is the fastest growth rate in the entire industry, he said.
Moreover, he added, DIBPL has also played a pivotal role in various Sukuk transactions, from its structuring capability to distribution and coverage strength, DIBPL has added immense value to the Sukuk issued in Pakistan so far. DIBPL has been engaged in major Sukuk transactions such as Karachi Shipyard and Engineering Works Limited (KSEW), Power Development Authority (WAPDA), Engro Chemicals Pakistan Limited (ECPL), Sui Southern Gas Company Ltd. (SSGC) and Sitara Chemical Industries Ltd. (SCIL), he informed.

Misconceptions about
Islamic Banking

Asked about some major misconceptions people may have in Pakistan, he said one of the biggest is that Islamic banking and conventional banking is the same given that usually the end commercial results may also be the same. He said that Islamic banks may have a “look and feel” similar to conventional banks, but this is primarily because the Islamic Banks strives to offer Halal products at competitive prices, while there are substantial structural differences between Islamic banking products and their conventional counterparts.
‘The basic requirement of Shari’a is that you need to undertake asset-based transactions under the set Islamic Modes of Finance. In addition, all standard operating procedure of the Islamic Bank need to be 100 per cent Shari’a compliant. It’s the same as Halal and Haram meat. A McDonalds Burger in Karachi and New York may look alike, taste alike and feel alike. The processing however at the backend backed up by a recognized FATWA (Shari’a pronouncement) which is certainly different makes one Halal and the other non-Halal,’ he added.
Junaid said that Islamic Banks measure their profit rates using the KIBOR or Discount Rate as declared by SBP, and this measurement is purely used as a benchmark and does not in any way render the Bank’s transactions un-Islamic. The KIBOR and Dicount Rate benchmarks in the absence of an Islamic Inter Bank rate is only set to enable wide acceptance and recognition by our customers, he added. In addition, the financial statement may indicate a loss in terms of a particular Islamic Bank’s overall profitability as the expenses of the Bank may outpace its income/profit from the Mudaraba, just like an individual whose home expenditure may be more than his income from his salary or business, said Junaid. However, based on the strong Shari’a approved profit allocation model under Mudaraba, the investments of the deposit holders are appropriately diversified in case of losses which may result in lower profits to the deposit holders in such cases, he added.

Tough competition in Islamic Banking industry

He said competition has been tough in the Islamic Banking Industry in terms of capturing market share from the existing conventional banking industry and from the new growing bankable population particularly in the rural and un-served areas of Pakistan. However, DIBPL has endeavoured to remain at par with the competition by using a focused approach whereby we have made niche market products for a segmented group of customers, for example, our Platinum Banking, one of its kind in the Banking industry has successfully drawn deposits from the elite class of DIBPL, he added.
Junaid further said that ‘We are proud to continuously invest in infrastructure and technology which has enabled us to produce state-of-the art products that can easily stand strong against even conventional banks. Like we rightfully claim that our portfolio of Alternative Delivery Channels (ADCs), targeted towards the tech-savvy range of customers is amongst the best in the industry.’

DIBPL’s future plans

Talking about the future plans of the bank he said while eyeing the future in a very competitive Islamic Baking industry of Pakistan we wish to provide not just Islamic products but offer our customers a distinctively unique range of Islamic Banking financial solutions. ‘Our plans for next year include taking our branch network to 100 along with developing further new niche-market products, and we intend to use the best mix of innovation, talent and technology to achieve the dual goal of spreading the wings of Islamic Banking far and wide,’ he said. In this effort, we will undertake more marketing campaigns to reflect upon the virtues of Sharia-compliant banking and the launch of Shari’a compliant products and solutions for banking products that serve genuine needs of the economy and finance, he said.


  1. Being a customer of DIBPL, i have found it excellent in terms of banking services and specially its internet banking is awesome.

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