Islamic Banking System Could Boost Country’s Economy

Officials have said that an Islamic banking system in the country would help small and medium-sized businesses especially in villages.

Thumbnail

Officials from the Afghan Banking Union on Tuesday said the Islamic banking system was one of the best strategies to leverage the economy and attract investment in the country. 

They said the Islamic banking system is a trusted system and it ensures safe banking .

According to the union, currently up to 11 percent of the population in Afghanistan keeps their money in banks, adding that if the Islamic banking system is expanded in Afghanistan, more money will start circulating and Afghanistan’s financial system will benefit.
Meanwhile, the Ministry of Commerce and Industries (MoCI) said Islamic banking can also help boost small and medium businesses in the country.

Despite a growth in the banking sector in the country over the past sixteen years, private and state-run banks in Afghanistan have managed to attract only 11 percent of the population’s money.

According to experts, the lack of up to date Islamic banking services in the country has been a key reason for Afghans not using banks.

Experts say that billions of AFs are held in cash by 89 percent of the population.

Currently only seven banks in the country provide Islamic banking services in the country.

“Seven banks are providing Islamic banking services, some banks plan to provide the complete banking system,” said Najibullah Amiri, CEO of the Banking Union.

“Banking services are very limited, people use it rarely, most people exchange money in unofficial ways, an Islamic banking system can be the initial step towards resolving the issue,” said Wahidullah Nawsher, the first deputy central bank governor.

According to Afghanistan Chamber of Commerce and Industries (ACCI), the business community in Afghanistan is currently facing major challenges in terms of banking transactions and said that bank charges are also high.

“We are facing major problems in the transaction sector; banks are asking for more documents and even ask us to show our purchase bills; this issue needs to be come to an end,” said ACCI deputy chief Khan Jan Alokozai.

“An Islamic banking system can play a constructive role in the expansion of medium and small businesses in the country particularly in villages,” said Kamila Sediqqi, the deputy minister of commerce and industries for trade.

Meanwhile a number of religious scholars have said that banks in the country should look to Sharia (Islamic law) to boost Islamic banking in the country and persuade the people to save their money in these banks.

“If we want to go towards the Islamic banking system, we should look to the Islamic law, because everything has been explained in the Islamic law,” said religious scholar Shamsurrahman Frotan.

Economists say that many people in Afghanistan are willing to invest in the country through an Islamic banking system.

Experts say that the Islamic banking system is expanding fast in developing nations and that these banks have played a significant role in the economic development of these countries.

[“Source-timesofindia”]