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PRACTICE AND LAW OF BANKING IN PAKISTAN PDF

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and to provide them a specialized knowledge in Banking laws and practice, MODULE III, ELECTIVE PAPER Banking Law and Practice ( Marks). Introduction to legal system of Pakistan. Introduction to Banking Laws. Module 2. Financial system and banking: it would cover the following topics/contents. PDF Drive is your search engine for PDF files. As of today we and to provide them a specialized knowledge in Banking laws and practice, a paper on. Indian.


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Practice And Law Of Banking In Pakistan book. Read 14 reviews from the world's largest community for readers. of existing case laws and banking practice. Main focus of the study shall be to equip knowledge of Banking Practice and Laws of Pakistan in light of. International. Practice and Law of Banking in Pakistan: 9th Revised & Enlarged Edition - [ Dr. Asrar H. Siddiqi] on musicmarkup.info *FREE* shipping on qualifying offers.

Still, this article will question whether non-secular Islamic banking could coexist with and benefit from the disruptiveness of FinTech. To this end, an argument will be put forward that Shariah-compliant finance can absorb some of the incarnations of FinTech without the latter contradicting Shariah principles. Furthermore, it will be suggested that some financial innovations such as peer-to-peer P2P lending may have profoundly beneficial effects on users in a way which is particularly relevant to Muslims. In terms of structure, this paper will be divided in the following parts. Part One will briefly introduce the reader to the basics of Shariah finance law.

It appears that in the course of an investment the time-value of money may be estimated not at the beginning but at the end, when the outcome of the transaction has become known. As will be seen further below, this may have been partially why FinTech-enabled P2P lending has been seen as acceptable in the Islamic finance environment. The above should have helped to clarify that lending of money, which is one of the main activities of conventional retail banks, operates in a fundamentally different way when done in a Shariah-compliant setting.

The Islamic alternative to this are trade or equity-based Shariah-compliant transactions. In this latter case, at the beginning the bank owns the majority of the shares in an asset but it sells them to you gradually, over the course of time. In comparison, in the murabaha example, the bank owns the asset outright and the customer receives ownership only upon paying in full. In the second example, the asset is owned by the partnership. It is evident that the above financial vehicles serve to provide an end result, which would be consistent with Shariah law, while remaining attached to the reality of the market.

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It is arguable, therefore, that Islamic Finance could take the same approach with respect to FinTech with a view of incorporating as many technical innovations in its framework as would be practically possible. Part Three What is FinTech and how does it relate to conventional banking? However, FinTech goes far beyond that—both generally and more particularly so in the banking context. This applies to both conventional and Shariah-compliant banks.

However, incorporating all of the benefits derived from FinTech may not be so easy for either. To begin with, when considering the conventional banking context, it should be clear that the speed at which FinTech develops far exceeds that of conventional banks. Nevertheless, some have counter-argued that this should not necessarily be the case and that, as a matter of principle, banks and FinTech should merge well as the simplicity of most of the products used in retail banking makes them well adapted to disruption.

In the particular case of retail banks, their focus should be on how best to utilise their relationship with customers so that they can maximise financial gains for the bank while staying within the frame of banking regulation. In a post-FinTech era this is easier said than done as banks experience fierce competition from FinTech-enabled third parties, attracting their former customers in large numbers.

As well as offering old products in a new guise, FinTechs develop completely new services, such as cross-border peer-to-peer P2P payments, micro-lending or robo-investment platforms where almost all processes are based on algorithms, and barely any human intervention is required.

This makes some established offerings obsolete, and diminishes the profit pools of banks. Banks can for now still rely on the business provided by their corporate clients. However, in terms of retail bank customers, the danger presented by FinTechs to banks is a very serious one. This is due to FinTechs having their focus predominantly on consumer satisfaction and innovation, while keeping their overheads to a minimum.

This combination leads not only to FinTechs being able to provide their consumers with arguably better and cutting-edge banking services but an ability to do so at a significantly reduced price which consequently reduces the fees paid by consumers.

A good example of the above is a UK P2P money transfer service provider, the fees of which are substantially lower than those that would normally be paid if the same service were provided by a bank. Overview This paper has so far argued that Islamic finance is based in tradition and strongly connected to the prescriptions and proscriptions contained in Shariah law.

Such a reading of Islamic finance is generally uncontested among theorists. Having said this, due to its relatively young age and its strong religious underpinning, Islamic finance displays a number of features which do not sit comfortably with the typical Western investor and perhaps, also with that part of the Muslim population which choose to bank in the conventional way.

Shariah-compliant FinTech in the banking industry | SpringerLink

While the purpose of this paper is not to discuss these features in detail, it should be mentioned, for instance, that the lack of a wide choice in Shariah-compliant investment instruments can be a particular issue, something even more the case if we consider short-term investment instruments.

In addition, Shariah banks are quite rigid in that they are typically not in favour of giving out personal loans. Furthermore, these practices can harm the banks themselves. Since Islamic banks do not offer interest on deposits, they lag behind their conventional counterparts in terms of the amount of money deposited with them.

Last but certainly not least , Islamic banks are more liquid. Such attitudes arguably contradict one of the principles of Shariah, namely, to preserve resources and nurture wealth created by labour and effort as opposed to by risk and speculation. Furthermore, the issue of the wide credit gap is one of the challenges which Islamic finance has had to deal with in the past and even more so in the present.

One consequence of this issue is having a huge part of the overall Muslim population unrepresented in the context of financial services. Not only is this discriminatory, unfair and against the principles of Shariah which strive to achieve fairness, social inclusion and balanced distribution of wealth in society , but it is also short-sighted with respect to efficiently developing the Shariah-based system of financial services.

Furthermore, missing out on FinTech may mean losing the unders demography in Muslim countries. Considering that the majority of this tech-savvy generation owns a smart phone, it would be hard to imagine that they will not make use of the possibility to manage their financial needs, including paying bills, obtaining loans or even opening a bank account, digitally.

And if that means digitally crossing the border, inadvertently placing themselves outside the remit of Shariah, then this is what will perhaps happen. In addition, when they do decide to fund a project or to lend money, Islamic banks are known to charge higher rates compared to conventional banks. To this end, it is suggested that by incorporating FinTech-based solutions which evidently provide for faster, consumer-oriented and cheaper transactions , Shariah banks could create investment products that are both Shariah-compliant and cheaper.

Interestingly, it appears that Western FinTechs themselves would have interest to penetrate the Islamic financial market and to tap on its potential. These common denominators were however in stark contrast to what would be permitted under Shariah law.

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It will be useful, therefore, to explain the Shariah-specific prohibitions in order to better understand how Shariah-compliant finance compares to its Western counterpart in general and in particular, how it compares in the sphere of banking and moneylending.

Prohibitions under Shariah finance law The main Shariah prohibitions related to financial transactions are discussed below: A Interest riba 15 Arguably the most important Shariah law prohibition, riba means a restriction on usury or even on loaning of money with some interest. This suggests that perhaps FinTech will have very limited application in Islamic finance law. However, whether this is indeed the case, will be discussed in Part IV of this paper. It refers solely to games of chance where there are always two parties: a winner and a loser.

Such measures include the introduction in these contracts of terms and conditions, consistent with Shariah law. The reason why Shariah law prohibits maysir type of income is that it is a randomly generated, luck-based income rather than profit, accumulated through careful consideration of the transactional risks involved.

What is unacceptable is that maysir operates on the basis of immoral inducement and on the basis of qimar: When engaging in maysir, the parties to the transaction hope that they will profit by chance which is essentially gambling or speculation. As with other prohibitions, their purpose is to ensure that the participants in a commercial transaction will not be deceived due to unclear contract terms or uncertain quality of the product subject to the transaction or the transaction itself.

E Trading in some products or industries 29 Shariah law proscribes trading in products such as alcohol, pork and all meat not slaughtered in accordance with Shariah law , tobacco, illegal drugs and illegal activities, weapons, particularly those that cause collateral damage and products of the entertainment industry adult entertainment being the most obvious, although this prohibition also extends to erotic art, some types of non-Islamic music and films and gambling.

The issue of money As mentioned, the way money is treated appears essential for the division between conventional and Islamic banking. In that context, all property, including money, is treated as belonging to God Allah.

Furthermore, unlike conventional banking, Shariah finance does not treat money as a commodity but as having time-value. While the principle of the time value of money is not foreign for conventional banks in the sense that money today is deemed better than money tomorrow, the concept is taken much more to heart in its Shariah interpretation.

As was noted in the text above, Muslims are expected to shun interest riba.

Practice And Law Of Banking In Pakistan

By prohibiting the obtaining of interest on money lent or the paying interest on money borrowed Shariah law underlines the time-value of money 32 as value attached to the present time.

In this reading of Shariah, whatever value money can accumulate over time, should be unnecessary, not valuable and unacceptable. However, reality suggests that the practical approach of Shariah practitioners to this issue is slightly more flexible. It appears that in the course of an investment the time-value of money may be estimated not at the beginning but at the end, when the outcome of the transaction has become known.

As will be seen further below, this may have been partially why FinTech-enabled P2P lending has been seen as acceptable in the Islamic finance environment. The above should have helped to clarify that lending of money, which is one of the main activities of conventional retail banks, operates in a fundamentally different way when done in a Shariah-compliant setting.

The Islamic alternative to this are trade or equity-based Shariah-compliant transactions.

Banking Law And Practice Books

In this latter case, at the beginning the bank owns the majority of the shares in an asset but it sells them to you gradually, over the course of time. In comparison, in the murabaha example, the bank owns the asset outright and the customer receives ownership only upon paying in full. In the second example, the asset is owned by the partnership. It is evident that the above financial vehicles serve to provide an end result, which would be consistent with Shariah law, while remaining attached to the reality of the market.

It is arguable, therefore, that Islamic Finance could take the same approach with respect to FinTech with a view of incorporating as many technical innovations in its framework as would be practically possible.

Part Three What is FinTech and how does it relate to conventional banking? However, FinTech goes far beyond that—both generally and more particularly so in the banking context. This applies to both conventional and Shariah-compliant banks. However, incorporating all of the benefits derived from FinTech may not be so easy for either. To begin with, when considering the conventional banking context, it should be clear that the speed at which FinTech develops far exceeds that of conventional banks.

Nevertheless, some have counter-argued that this should not necessarily be the case and that, as a matter of principle, banks and FinTech should merge well as the simplicity of most of the products used in retail banking makes them well adapted to disruption. In the particular case of retail banks, their focus should be on how best to utilise their relationship with customers so that they can maximise financial gains for the bank while staying within the frame of banking regulation.

In a post-FinTech era this is easier said than done as banks experience fierce competition from FinTech-enabled third parties, attracting their former customers in large numbers. As well as offering old products in a new guise, FinTechs develop completely new services, such as cross-border peer-to-peer P2P payments, micro-lending or robo-investment platforms where almost all processes are based on algorithms, and barely any human intervention is required.

This makes some established offerings obsolete, and diminishes the profit pools of banks. Banks can for now still rely on the business provided by their corporate clients. However, in terms of retail bank customers, the danger presented by FinTechs to banks is a very serious one. This is due to FinTechs having their focus predominantly on consumer satisfaction and innovation, while keeping their overheads to a minimum.

This combination leads not only to FinTechs being able to provide their consumers with arguably better and cutting-edge banking services but an ability to do so at a significantly reduced price which consequently reduces the fees paid by consumers.

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