Dr. Abidullah

Assistant Professor, Sakarya University

The momentum of Islamic banking in Pakistan has increased following the Islamic financial inclusion efforts led by the State Bank of Pakistan (SBP). The program uses various methods to educate the public about Islamic banking and how it differs from mainstream banking.

Awareness seminars are conducted by the SBP, Islamic banks, and in partnership with academic institutions. Furthermore, the SBP, in conjunction with the Higher Education Commission (HEC), has mandated universities to incorporate Islamic finance courses into their curricula and to establish distinct programs. These measures are well targeted, as evidenced by the substantial rise in the proportion of Islamic banks’ assets within the wider banking sector, which currently accounts for 21.1%, with a year-over-year growth rate of 24.6%. The proportions of deposits and financing are 24.4% and 30.5%, respectively.

The awareness sessions conducted by banks focus on the prohibition of Riba, justified by Qur’anic verses and Ahadith, and explain how Islamic banks avoid it in their operations. This fosters a sense of religious superiority among those who begin to assume that the inherent beauty of the faith renders Islamic banking nearly flawless.

Consequently, there is a growing belief that the employees of Islamic banks are more truthful, empathetic, and attentive to inquiries than those of mainstream banks. However, upon becoming customers of Islamic banks, they often observe that interactions with Islamic banking personnel at the front end are nearly identical to those with employees of conventional banks.

As a result of this experience, some dissatisfied consumers express their discontent via customer care portals and social media, emphasizing the deficiencies in customer management operations. Due to operational inadequacies at the front end, many of these clients misinterpret Shari’ah compliance.

Because of the enormous focus on Shari’ah compliance in the awareness programs, clients of Islamic banks begin to judge the bank’s every move by this standard. In fact, a problem exists within the internal training programs of Shari’ah departments as well, which seem to focus more on ensuring technical Shari’ah compliance and less on coaching employees to behave in a way that reflects Islamic principles.

A number of consumer concerns regarding various Islamic banks were brought to attention recently on LinkedIn and Facebook. The majority of these issues demonstrated how the relevant staff were ill-equipped to handle client inquiries and how Shari’ah compliance was misunderstood. For a financial transaction to be considered compliant with Shari’ah law, it must be free of interest, ambiguity, and gambling or speculation.

Investments should also be made in halal avenues, and asset backing and risk sharing should be part of the deal. Since Shari’ah compliance often focuses solely on the procedure and ignores everything outside of it, values like Amanah (trust) and Ihsan (excellence) in dealing with customers are frequently disregarded.

In a LinkedIn article, Mufti Faraz Adam eloquently explains how Islamic banking must adhere to Shari’ah law while also upholding Islamic principles and ethics. The points he raised are important to note, as they serve as a standard for Islamic bankers. He emphasized the importance of Amanah (trust) and Ihsan (doing good) in the workplace. The true goal of Islamic banking will remain unfulfilled, regardless of how Shari’ah-compliant an Islamic bank appears to be, if its personnel do not embody these fundamental values.

A fundamental principle of Islamic ethics is the importance of being trustworthy, reliable, honest, and accountable in every interaction. It is mentioned in the Qur’an:

“Indeed, Allah commands you to return trusts to their rightful owners; and when you judge between people, judge with fairness. What a noble commandment from Allah to you! Surely Allah is All-Hearing, All-Seeing.” (Al-Quran 4:58)

The principle of Amanah and the ultimate objective of Islamic banking are not achieved if the sole focus is meeting monthly targets for customer acquisition or product sales. This results in the same capitalist concept of profit maximisation disguised in the colour of ‘Shari’ah compliance’. The Amanah principle is violated when an employee of the bank interprets a customer’s lack of product knowledge as an opportunity to present a desired image, rather than sharing the actual facts.

Similarly, Ihsan entails being genuine and striving for excellence in everything one does, particularly in worship and in social interactions. The Qur’an states:

“Indeed, Allah orders justice and good conduct and giving to relatives and forbids immorality and bad conduct and oppression. He admonishes you that perhaps you will be reminded.” (Al-Qur’an 16:90)

The above verse offers a thorough framework for social interaction. It encourages three actions, Adl (justice), Ihsan (good conduct), and Ita’ al-Qurba (giving to relatives) while forbidding three others, Fahsha (immorality), Munkar (evil), and Bagh’y (oppression). Ihsan fosters compassion and warmth within the community, while Adl ensures the efficient and just functioning of society. The hallmark of a true Muslim is doing good to all. Regrettably, this quality is eroding in all segments of our society. Our professional lives are no exception, whether as academics, businessmen, or members of other professions. We are compromising on this fundamental trait of a true believer.

Islamic bankers are not exempt from this accountability. They must be recognized for their trustworthiness, humility, and integrity. A true Islamic banker should demonstrate the ability to empathize with the suffering of others as if it were their own, provide transparency in customer interactions beyond the minimum required by rules, and offer excellent customer service at the outset, during the contractual period, and at the conclusion of the contract. Unfortunately, these attributes are diminishing due to the excessive pressure on branches to meet targets associated with the expansion of Islamic banking.

This situation necessitates that Islamic banks move beyond merely incorporating Shari’ah into the organizational structure and focusing solely on compliance with financial transactions. Islamic banks must also reform customer service practices in line with Adl, Ihsan, and Amanah. Decision-makers must give equal importance to Shari’ah compliance and customer service provision, guided by these principles, both in internal departmental trainings and in broader efforts to transform Islamic banking according to Islamic values.