ISLAMABAD: A parliamentary panel on Friday constituted a special committee comprising bankers, parliamentarians, leading religious scholars and representatives from relevant ministries and the central bank to move quickly towards a complete Islamic financial system in the country.

The National Assembly’s standing committee on Finance & Revenue presided over by PTI’s Faiz Ullah also expressed dissatisfaction over the slow progress on eradication of riba and desired that at least the government should shift its deposits to the Islamic banking.

The committee ordered that the State Bank of Pakistan (SBP) and Ministries of Finance and Law to immediately arrange a meeting with the Maulana Akbar Chitrali, Dr Aisha Ghaus Pasha, Amjad Ali Khan, Abdul Wasay and Syed Javed Hasnain, MNAs for concrete solution and speedy way forward on complete riba-free banking system in the country. The committee should also engage Maulana Taqi Usmani and suggest laws required to be amended in this regard.

A complete transition plan should also be presented to the NA panel before its next meeting, Mr Faiz Ullah said. All members agreed that at least the government should shift all its deposits to shariah-compliant mode for which no legislation was required.

They agreed that continuation of an interest-based banking system was a collective failure of all including various institutions and members of the committee despite the fact that all believed it was ‘an open war’ against the Allah Almighty.

Seeks a complete transition plan before next meeting

While discussing the Eradication of Riba Bill, 2019, moved by Mr. Abdul Akbar Chitrali, MNA, the committee expressed its dissatisfaction on the presentation given by the SBP.

Dr Pasha said there was a lot of scope and appetite for Islamic banking from an economic point of view and the government should come up with a plan for incremental growth that would increase financial inclusion. She said the Islamic banks like Alfalah and Meezan were showing tremendous profits and the government, parliamentarians and regulators should put their act together and make a concerted push.

Additional Secretary Finance Dr Arshad Mahmood agreed that Islamic banking had become a reality now and demand was coming up from depositors as a lot of people now considered conventional banking as a curse.

The committee was told that the share of Islamic banking currently stood at 16.6 per cent. The members expressed dissatisfaction that 98pc of government business was still based on interest-based systems. The committee also expressed dissatisfaction over SBP’s strategic plan 2020-25 that envisaged 30pc share of deposits in Islamic banking, 35pc share of branch network, 8-10pc of agriculture and small and medium enterprise financing.

A representative of the law ministry said the apex court had ordered shifting 90pc of the banking to Islamic mode in 1990 but banking industry with the support of then government went into review appeal in 2004 saying the system would not afford an abrupt shift and gradual transition be allowed.

The court remanded the case to the Islamic Ideology Council and Federal Shariah Court (FSC). He said the FSC held only one hearing of the case over the last four years and unless the case was decided, no progress could be made.

The NA panel observed that there was no bar on the parliament to make laws and the special committee of parliamentarians and religious scholars constituted above should come up with a doable transition and suggest where legal amendments were required because a lot of developments had already taken place over the years. The next meeting of the NA panel would exclusively take up the matter.

NBP chief briefs on hiring, promotions

National Bank of Pakistan President Arif Usmani briefed the committee about the hiring status of employees at the NBP from 2019 to 2020. The committee expressed serious concerns over the violation of rules and standards in the hiring process for employees as Mr Usmani conceded that the central bank had also criticised some inductions and the bank was going for re-advertisement of 2,300 staff members who were hired on contract.

Mr Faiz Ullah also expressed his concerns over the mismanagement made in appraisement, rewards and appointments of branch managers in the NBP at lower level, especially in Faisalabad division. After detailed discussion, the committee directed the Ministry of Finance and the NBP to provide detailed criteria of the last three presidents appointed at the bank and the criteria followed for the current president.

It also recalled the record and number of employees recruited in New York, USA and details of the procedure adopted by the NBP along with their experience, qualifications and performance. The committee also ordered the Ministry of Finance to provide a comprehensive report on whether the required process for hiring of NBP senior officers including group heads were followed or not.

Mr Usmani said the quality of NBP’s senior resources across a variety of disciplines were identified as a serious gap as evidenced by large numbers of unaddressed audit comments indicating lack of will for resolving them and repeated breaches which resulted in reputational loss and lack of public trust.

On a question from PMLN’s Ahsan Iqbal, Mr Usmani confirmed that he was interviewed by Minister Asad Umar and Dr Ishrat Hussain for induction through a video link.

He further said the recruitment process was done by using existing board’s approved policies and process for external recruitment. He informed that all the senior positions were advertised internally (within the bank) accordingly, internal candidates were assessed and eligible candidates were short-listed in interview, however, none of them were found up to the mark and then hiring were made from outside to capitalise Pakistani talent abroad and other banks.

Published in Dawn, September 5th, 2020