Stock exchanges are an essential part of contemporary economies. They are effective methods of obtaining saving and investing. Since the Qur'an prohibits gambling, distinguishing between gambling and taking stock-market risks is a must.
An owned good can be sold if it is indestructible and in accordance with a mutually acceptable contract. Speculation on stocks should be curtailed through a higher short-term capital gains tax or through a transfer fee. The Ulama should look into the practice of 'short sale.'
In Islamic law, a mudaraba is a business setup in which one party (the sahib-e-maal) supplies capital for a venture while another party (the mudarib) contribu
The stock exchange is becoming an increasingly more central institution in the Pakistani economy. The cabinet has approved some changes to securities laws. As a result, prices of participation-term certificates and mudaraba shares will increasingly be quoted on the stock exchange floor.
At this time very few financial institutions have addressed housing finance using Islamic methods. There are a number of problems facing the housing sector including, but not limited to: availability of huge funds, situations of governments of most
Much time and money has been spent on devloping the Islamic finance system and making it compatible with the needs of the modern world. The staff who are responsible for carrying out Islamic banking operations have been educated in the ways of Islamic finance. What is lacking, however, is the understanding of the general public and their inclination to participate in it once it is firmly established. Islamic banks need to do a better job reaching out to their customers and showing them how Islamic savings and insurance systems can be beneficial for them.
An International Financial Services Board has been set up comprising of Pakistan, Malaysia, Indonesia, Bahrain, Saudi Arabia, Sudan, Iran and Kuwait as founding members of the board. The board has been set up to set standards for an Islamic financial system. It is entrusted with setting standards for Islamic institutions and ensuring they conform to principles of shari`a laws.
Three of the leading Pakistani modarabas are aiming to come up with Islamic term finance certificates by the end of 2002. Managers of modarabas say there is a desperate need for TFC's to raise money as borrowing funds from banks is becoming more and more unfeasible. Islamic TFC's would be a profit and loss sharing debt instrument. The sharing of profit and loss would be based on an agreed upon ratio decided at the beginning of the TFC transaction. The profit garnered will be paid on a six-monthly basis and shall be a provisional or on-account payment, irrespectve of profit or loss.
After conducting an extensive tour of the Islamic financial institutions of various foreign countries, a Pakistani delegation suggested that Pakistan follow the example of Malaysia, Egypt and Saudi Arabia. In following that example, Pakistan would be adopting a dual and parallel banking system -comprised of both Islamic and conventional banks. The delegation suggested this after considering a number of weaknesses impeding Pakistan's current banking system.