Javed Mehmood talks to Afaq Khan, Head of Islamic Banking Standard Chartered Bank of Pakistan, discussing various aspects of Islamic banking and the role of Standard Chartered Bank in promoting it.
Q: What products and services does Standard Chartered Saadiq offer in Pakistan for its consumer banking and SME customers?
A: Standard Chartered Saadiq offers current and savings accounts, term deposits, Shariah compliant credit card, takaful, home financing and SME trade and finance facilities. The enhanced Saadiq suite includes new products such as the Saadiq platinum and PIA co- branded platinum debit cards; Saadiq platinum and PIA co-branded platinum credit cards; and Saadiq saver plus monthly savings account. We also offer comprehensive employee banking products. SCBPL is the first and only bank in Pakistan that has launched Shariah-compliant credit card, Saadiq with the aim to promote Islamic Banking in the country.
Q: What is the customers’ response to Saadiq credit card in Pakistan?
A: Saadiq credit card is the only Shariah compliant card in the market. This unique offering is in line with our vision to promote Islamic Banking in the country through continuously offering a diverse suite of products to meet customer needs in a Shariah compliant way. Response has been very positive and we have recently expanded our credit card suite to offer platinum and co-branded platinum cards as well.
Q: What is the branch network for Islamic Banking?
A: Customers can avail Islamic banking products and services from 143 Standard Chartered Bank branches with over 500 relationship managers spread across 32 cities.
Q: Does Standard Chartered offer priority banking for its Islamic Banking customers?
A: Absolutely. We are proud to offer the perfect blend of exceptional service, unique benefits and expert solutions tailored to help Islamic Banking customers achieve their priorities. Priority banking also offers a dedicated call centre exclusively for priority banking customers. The proposition includes dedicated relationship managers and exclusive priority banking experience in dedicated state of the art priority centers. No matter what the customers’ priorities are, they can count on us to recognise their priority status and provide the banking services they deserve – not only in Pakistan, but also around the world.
Q: Standard Chartered Islamic Banking has made its mark in a very short period; do you think it has grown enough to be an alternative to conventional banking?
A: Growth of Islamic Banking has been due to an alternative being available whereby consumers can get the same services as conventional banking without having to compromise on their beliefs. Islamic banking is growing and with the passage of time, as more and more products and services are offered, it will be on par with conventional banking as an alternative available to consumers in line with their values and beliefs.
Q: What prompted SCBPL to initiate and expand Islamic Banking in Pakistan?
A: Pakistan offers immense potential for Islamic Banking and depicts an optimistic outlook for the growth prospects of the Islamic Banking industry. Our goal as a bank is to be able to offer consumers, Islamic banking services, which are comparable in terms of diversity and convenience, to suit the needs of customers in parallel with our conventional offering and then let them choose. Our key to success is our customers who have confidence in the Standard Chartered brand name. Islamic Banking is our way of recognising the needs of our customers and offering financial solutions in line with their values and beliefs. We strive to offer the same commercial convenience as conventional banking in terms of a diverse suite of products, ease of access to our network and availability of Islamic Banking products and services through all Standard Chartered Bank branches.
Q: What would be the strategy of SCBPL to maximise Islamic Banking in Pakistan?
A: A: Our strategy is very clear – we want to offer a diverse suite of products to meet customer needs and offer the same ease, convenience and accessibility to Islamic Banking products and services that are being offered in conventional banking.
Profile of Afaq Khan
Afaq Khan is the CEO of Standard Chartered Saadiq – the international Islamic banking business of Standard Chartered Bank. Afaq joined Standard Chartered Bank in 2003 with the mandate to launch the Islamic business division for the Bank. Since then, Afaq has been responsible for the strategic build up of the international Islamic banking business covering retail, corporate and investment banking, across geographies with a wide suite of product capabilities and award winning solutions. Afaq has been individually awarded the prestigious Euromoney award for “Outstanding Contribution to Islamic Finance” in 2010 and also named the “2010 Islamic Banker of the Year” in the London Sukuk Summit. Afaq holds an MBA from the University of Western Illinois and was born in 1962. Prior to joining Standard Chartered, he was the Global Head of Asset Finance and Advisory at HSBC Amanah, and before that with Citibank for 13 years in various functions.
“Prophet (صلى الله عليه و آله و سلم) will sometimes go to the shops and buy goods. But (sometimes) he would not have the money to pay. So the shop keeper would give him the goods and he (صلى الله عليه و آله و سلم) would promise to pay him later. This is called credit transaction.
So a credit transaction; to buy now and pay later is Halal. It is Sunnah.
However because the shop keeper had to wait for his money, he was not allowed to raise the price. If you can raise the price because you have to wait for the money; then money can grow because of time. That is Riba.
Money cannot grow because of time.
So a credit transaction is permissible; provided that the credit price and the cash price are the same. There can be no increase in credit price over cash price.
If the credit price is higher than the cash price; then the difference between the prices would be Riba.
What Islamic Banks around the world are doing: if you want buy a house and you do not have the money to pay cash, the cash price is five hundred thousand, the Islamic Banks say no problem. We will buy the house for five hundred thousand. (The cash price) but we will sell that house to you now on credit. We give you 20 years to pay.
But (because we have to wait for our money for 20 years) our credit price is now twice the cash price One Million.
The difference between the credit price and the cash price becomes Riba. But the Islamic Bank say, No, this is something called Murabaha.
Murabaha is a transaction in which something is sold at a profit and both the buyer and the seller know the amount of profit and accept it.
But this is not Murabaha, no. If it was a cash transaction, yes. But this is a credit transaction. And because it is a credit transaction the difference between the credit price and the cash price is Riba.
I call it Riba through the back door. And if you want to differ with me, no problem.
If people want to use Islamic Banks; sure they can do that. That’s your choice.
But if you say I am wrong and want to silence me, and you want to band me, and you want come after me with boxing gloves, remember I can challenge you, just remember that.”
Here's one question to Mr. Afaq (purely a business one, not of the Islamic rationalization breed):
Why does SCB run an Islamic banking window, in addition to having a majority stake in a Modaraba namely Standard Chartered Modaraba?
I was approached by sales representatives of both for a financing line. It was highly confusing.
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