By Shabbir H. Kazmi
About: Shabbir H. Kazmi
Shabbir H. Kazmi Shabbir H. Kazmi is an economic analyst from Pakistan. He has been writing for local and foreign publications for about quarter of a century. He also has his own blog at ‘shkazmipk blog’. He can be contacted at [email protected]
Read all posts by Shabbir H. Kazmi
November 22, 2013
Zubair Haider Shaikh joined the NBP Islamic Banking Group as SEVP/Group Chief in March 2013. He has over 22 years of experience with different financial institutions in Pakistan namely Meezan Bank Limited, Hongkong & Shanghai Banking Corporation (HSBC), NatLease Group and National Development Leasing (NDLC). He has also held senior positions at Banque Saudi Fransi, Saudi Arabia (joint venture between Calyon, French Banking Group, and Saudi sponsors)
Zubair Haider enjoys good market reputation and has very sound understanding of various areas of banking including Corporate, Commercial, Islamic Finance, and Trade Finance. His key areas of expertise are Business Development, Credit Risk, Strategic Planning, Policies, etc. Prior to joining National Bank of Pakistan, he served Meezan Bank Limited, leading Islamic bank in Pakistan, for around 5 years, as SEVP/Group Head, Corporate Banking.
He is a 1989 MBA graduate from the Institute of Business Administration, Karachi. Zubair has also done his LL.B. from Sindh Muslim Law College, Karachi.
Question: How do you review performance of Islamic banking in Pakistan?
Zubair Haider: Pakistan was a rather late beginner and various half-hearted attempts were made in the past to introduce Shariah compliant banking system. It will perhaps be correct to say that the real beginning was made in 2002 with the creation of Meezan Bank Limited, the first bank to obtain a license from the State Bank of Pakistan (SBP) as an Islamic bank. The apex regulator, SBP, decided to let the two banking systems run in parallel in the country. This decision was aimed at letting the people decide at their own rather than compelling them to opt for a system about which they may have certain reservations.
The strategy has paid off and today Islamic banks have approximately 10% share in the banking system in Pakistan. Over the years, Islamic deposits have posted an enviable growth rate of more than 30% per annum. Since commencement of global financial crisis, overall growth of regular commercial banks has remained subdued. However, a point to be noted that in the aftermath of the 2008 crisis, Islamic banks have not only emerged stronger but also performed relatively better as compared to conventional banks, notwithstanding the inherent credit risks.
Question: What are the key highlights of robust growth of Islamic banking in Pakistan?
Zubair Haider: At present five full-fledged Islamic banks are operating in the country and 14 conventional banks have also established dedicated Islamic banking branches. The total number of bank branches exceed 10,000 and out of these over 1,100 offer Islamic banking. As I said earlier, the share of Islamic banks in total banking business is also close to 10%. The credit of this robust growth goes to the Islamic banks and windows, the Central Bank, Shariah scholars and above all to the clients, who have reposed confidence in the system.
It is also on record that many multinational companies (MNCs) operating in Pakistan and despite enjoying special arrangements with international banks, have also concluded some landmark financing transactions with Pakistani Islamic banks. This is due to the confidence of these MNCs on unique transaction structuring, especially off-balance sheet ones, to cater to short and long-term financing and competitive pricing of Islamic banks.
Question: After working for the largest Islamic bank of Pakistan you have joined the largest public sector conventional bank. What the key objective you wish to achieve?
Zubair Haider: I was approached by National Bank of Pakistan (NBP) to head and revive the Islamic banking segment of the bank. I accepted the challenge and have recently come up with an elaborate 5 year Business Plan. Collectively, all of us believe that future growth of banking in Pakistan will be driven by Islamic banking and NBP would like to capitalize on this growth potential due to its inherent strengths; the biggest advantage being its scale, its diversified presence and outreach. At present NBP has 12 dedicated Islamic banking branches and we aim to increase the number to 25 by the end of year 2013. Going forward, we plan to open 25 additional dedicated Islamic branches annually to make our footprint visible throughout the country.
Question: Why does NBP wish to go for an ambitious branch expansion program?
Zubair Haider: The last decade has clearly established that now people believe in the strength of Islamic banking. They wish to have their accounts and carry out transactions with these banks, including designated Islamic branches of conventional banks. At present, NBP has over 1,300 conventional branches in the country, and only 12 dedicated Islamic Banking Branches. Therefore, NBP plans to open up more branches to get closer to those who wish to avail Shariah compliant banking and services.
Since all the NBP branches are ‘Online’, we also plan to offer this major advantage to our Islamic clientele. People maintaining accounts with designated Islamic banking branches will also be able to deposit/ withdraw cash at NBP’s any conventional branch, and vice versa, and also benefit from ATM and Inter-bank transfers, etc.
Question: What name would you like to give to this endeavor?
Zubair Haider: Despite the fact that NBP entered into Islamic banking segment in 2005 and so far have 12 designated Islamic banking branches in 9 cities, but very few people are aware about this. I will prefer to call the present endeavor, re-launching with greater fervor. Towards this end, we have recently launched “Aitemaad” as the brand name for NBP Islamic Banking.
Going forward, we will create awareness of this brand in particular and NBP Islamic in general, to get closer to people who wish to do Islamic banking, by offering innovative asset and liability products. NBP is a trusted name since decades and has been offering a wide range of banking products on the regular banking side, but we now intend to offer a wide range of Shariah compliant products and services to cater to the growing needs of both individual and corporate clients. You would agree in that offering Shariah compliant financing is not possible without enhancing deposits base for which new branches have to be opened at convenient locations and also integrated with the overall large branch network of NBP.
Question: What are the main facets of proposed strategy?
Zubair Haider: We have prepared a multi-pronged strategy that comprises of extending outreach through new branches, developing/ offering innovative products, training of staff to be placed at the branches as well as those working at NBP Call Centres. In the first phase, we intend to cater to those clients who already have fairly good knowledge of Islamic banking and like to have more options. At the same time, NBP also wishes to go for undertaking awareness programs. It is very encouraging that the Central bank has also initiated generic awareness campaigns, which will benefit all the banks offering Shariah compliant products and services.
I must add that Islamic Banking industry receives excellent pro-active support from the Central Bank and more specifically through its Islamic Banking Dept., which is one of the main drivers in growth of Islamic banking industry.