Islamic Banking and Finance

Islam is not only a religion in the ordinary sense of the word, but a complete system of life. While other religious codes provide guidance only for the relation between man and his Creator, Islam guides man in his relationship with God and gives him the norms which govern his temporal existence, since Islam is concerned with the spiritual, political, social economic, moral and all other material aspects of the human being.

Islamic banking is banking or banking activity that is consistent with the principles of Islamic law (Shariah) and its practical application through the development of Islamic economics. Shariah prohibits the fixed or floating payment or acceptance of specific interest or fees (known as Riba or usury) for loans of money. Investing in businesses that provide goods or services considered contrary to Islamic principles is also Haraam (forbidden). While these principles were used as the basis for a flourishing economy in earlier times, in the late 20th century that a number of formal Islamic banks were formed to apply these principles to private or semi-private commercial institutions within the Muslim and Non-Muslim Communities.

Current Status and Future Potential of Islamic Finance

The growth of the Islamic finance industry was remarkable in the last decade and in certain parts of the world its growth is extraordinary. According to Ernst & Young’s inaugural World Islamic Banking Competitiveness Report 2011, Islamic banking assets with commercial banks globally will reach US$1.1 trillion in 2012, a significant jump of 33% from their 2010 level of US$826 billion. The Islamic banking assets in the Middle East and North Africa (MENA) region increased to US$416 billion in 2010, representing a five year Compound Annual Growth Rate (CAGR) of 20% compared to less than 9% for conventional banks and these Islamic banking assets are expected to reach to US$2.8 trillion by the year 2015. As new geographies open up to Islamic banking, the MENA Islamic banking industry is expected to more than double to US$990 billion by 2015.

Based on estimates of the International Monetary Fund (IMF) (2010), there are more than 390 Islamic banks and institutions spread across 75 countries. Based on the Islamic Development Bank records, the average annual growth rate of Islamic financial institutions assets during the period 1995-2010 was estimated to be within the range 10-15%. The main reason for the growth stem from a number of sources:
- Muslims worldwide are starting to use Shari’ah compliant products that were not previously available to them;
- Due to the increase in oil wealth of the Muslim nations in the Middle East and their decision to use Shari’ah compliant products, western governments and conventional financial institutions are considering using Islamic Finance
- Due to their escalating competitiveness and focus on ethics, Islamic products are attracting not only Muslims but non- Muslims as well.
- Islamic Finance has no way to leave in any time soon as Islam is the fastest growing religion in the world and is the second largest religious group in the UK, USA and France.


The GCC countries account for nearly 56 percent of the total Islamic banking assets. Based on Mckinsey projections, by 2015, more than half of financial services provided are expected to become Shari’ah complaint in the GCC countries.

Need of Islamic Banking and Finance Education & Trainings

Islamic banking faces an increasing problem of Human Resources with the start of the perspective to open Islamic banks, according to a careful estimate 50000 Islamic financial professional are needed in Islamic Financial industry. The need of human resources is growing indeed but the Human Resources are not growing in line with the opening of Islamic banks. It is a fact that a person cannot become an Islamic banker just by studying a few books or One week training, it needs many things in collective. To become an Islamic banker, one needs to spend life in this field and gain experience. We do not have enough trained professionals in the field of Islamic banking and finance but we also need to replace the conventional staff from Islamic Banks, so that Islamic Bank can be performed accordance to Islamic principles. We need suitable people and it will take time to the problem to be solved, the human capital can be trained in this field in accordance with the demand. Education will indeed raise standards in Islamic finance.

Current Status of Islamic Banking Education at University, College and Religious Schools

Currently, in accordance with a careful approximation, around 40 Universities all over the world are providing Post Graduate, PhD and Bachelor level programs on Islamic Banking and Finance, these universities are producing approximately 5000 professional every year while the demand of the Islamic Financial professional are 10 times high, it is an immediate need to fulfill the demand and supply gap from the Islamic Financial Industry. Some renowned international institutions who are providing Islamic financial education are , International Institute of Islamic Banking and Finance (IIIBF), La Trobe University, IIUM Institute of Islamic Banking and Finance (IIIBF), Durham University, Effat University, The Markfield Institute of Higher Education, Qatar Faculty of Islamic Studies, London School of Business and Finance, Salford University, University College of Bahrain, The University of Bedfordshire, Aston Business School, Islamic Research and Training Institute(IRTI), Bangor Business School at Bangor University, University of Reading, University Of Wales, The University of East London, Paris-Dauphine University, The International Centre for Education in Islamic Finance (INCEIF) Malaysia, Monash University Australia, University College of Bahrain, University Islam Sultan Sharif Ali (Unissa) – Brunie, College of Business UUM - Malaysia, University of Sharjah, MDIS Uzbekistan, University of Wales UK, Selangor International Islamic University College (KUIS) Malaysia.

With reference to Pakistan, almost 10 institutions are offering masters level program in Islamic Banking and Finance. Dadabhoy Institute of Higher Education, University of Management and Technology, KASBIT, Sheikh Zayed Islamic Center, International Islamic University Islamabad, Riphah International University and PAF Karachi Institute of Economics & Technology are some well-known name of institutions in Pakistan.

AlHuda Center of Islamic Banking and Economics (AlHuda CIBE) is also working on the same grounds. It is a well established name, working in the field of Islamic banking and Finance from the last seven years. AlHuda is dedicated to serve the community as a unique institution providing advisory, trainings, education, Awareness, product development and Publications in the field of Islamic Banking & Finance not only in Pakistan but all over the world. It has so far organized more than 500+ trainings, 52 successful campus programs and other educational & training program in different parts of the world.

Approaches to produce Quality Human Resource in Islamic Banking and Finance

Several approaches can be used in order to produce the quality Human Resource for Islamic Banking and Finance industry. The approaches and techniques can be:
- University Degree Programs
- Specialized Trainings and Workshops
- Distance Learning Programs
- Publications, Webinars & other Media

As stated earlier, different Universities and Colleges are providing the education facility in the field of Islamic Banking and Finance. There is a need of more institutes providing degrees in this field with an aim of enabling the candidate to deeply understand the Islamic Banking operating system and the concepts of Islamic Finance.

In addition to this, training is an effective tool for Human Resource Development (HRD) as well as for achieving the goals of an organization. Islamic banking is a Shari’ah-based interest-free banking system. It has to operate in a way that benefits society as a whole. Its features and functional procedures are quite distinctive than that of the traditional banking system. To satisfy the objectives of the Islamic banking and to face the challenge of the next century, the job of Islamic banking is becoming more complicated and more technical day by day. The personnel of Islamic banks require special Attitude, Skill and Knowledge, which can be developed through proper training. It is obvious that a large number of appropriately trained employees would result in increased output and reduced costs, further resulting in maximum utilization of human resources, which will ultimately benefit the entire nation.

Many institutions are providing Distance Learning Program on Islamic Banking and Finance. Through this mode, masses can be educated in a flexible and convenient manner. As Muslim are not only limited in Asia or Africa but they also reside in all over the world, so we can educate the Muslims and Finance professional globally through Distance learning programs. In addition to this, publications can also be used as a medium to educate masses about the latest news and updates on Islamic Banking and Finance.

We are sure that Islamic Banking system can be strengthened in better way by promoting Islamic Banking Education and Trainings.