Islamic Banking Products, Services and Objectives: Perspectives of Shariah Supervisors and Regulators

Abstract

The study is aimed at assessing the opinions of vital Islamic banking stakeholders including members of various Islamic banking Shariah Supervisory Boards (SSBs) and pertinent personnel from Pakistan’s central bank – The State Bank of Pakistan (SBP). The research analyzes the percepts of respondents regarding various aspects relevant to Islamic banking (IB) products, service and objectives. The paper employs qualitative research approach in analyzing the Shariah and regulatory experts’ viewpoints regarding Islamic banking. The study is conducted using semi-structured interviews of twelve Shariah supervisors and nine SBP staff members serving in the Islamic banking department and Islamic banking focus groups in the regional/field offices of the State Bank of Pakistan. The study is of pioneering nature involving qualitative research design and inclusion of two of the most significant stakeholder groups from the Islamic banking sector of Pakistan who have not been included in the past studies regarding Islamic banking perceptions. The research findings highlighted that Shariah objectives are top priority of Islamic banks as per the views expressed by members of Shariah boards of various banks while in opinion of Islamic banking regulators, Islamic banks’ major concern is to achieve their business objectives. Keywords: Islamic Banking, Islamic Finance, Pakistan, Products, Perceptions, Shariah Compliance.

Determinants of customer loyalty in Islamic banking: the role of religiosity

“…As such, according to Aqib and Hussain (2021), Islamic banks provide a range of Sharia -compliant products and services to attract more customers, in three major groups: namely, partnership-based products (structured on the basis of Mudaraba and Musharaka concepts and are typically applied and adopted to offer depository and investment products of Islamic banks to their customers involving income-generating savings accounts, investment instruments and short-term profit-sharing checking accounts); (ii) trade-based products (based on the Islamic sale concepts of Murabaha , Salam and Istisna , which are frequently used to facilitate and finance the procurement of raw materials, assets, equipment and trade commodities); and lease-based products (based on the Islamic leasing variant termed Ijarah , which are generally used to finance consumer products and vehicles). However, in addition to Sharia -compliant products and services, the attitudes and behaviors of Islamic bank employees are expected to conform to Islamic principles (Gheitani et al , 2018).…”

“…Islamic banks provide a variety of financial services and products that appeal to both Muslim and non-Muslim clients. Because of this wider product coverage, Islamic banking (IB) is gaining popularity across the globe and among Muslims and non-Muslims (Aqib and Hussain, 2021). As a result, products and services provided by Islamic banks are competing with those offered by conventional banks, whose success rate is determined by customer loyalty (Muflih, 2021).…”

“…Therefore, religiosity is not consumers’ affiliation with a religion, but rather the extent to which they follow the teachings and conduct of the religion that is likely to influence their behavior (Iqbal et al , 2018). The overall guiding principles of Islamic finance are likely to influence religious Muslims’ decision-making process with respect to IB products and services, and their ethical nature is likely to attract religious non-Muslims who are increasingly patronizing Islamic banks (Aqib and Hussain, 2021). In fact, interest charges are condemned in both the holy Qur’an ( Surat Baqara verse 274) and the Holy Bible (Deuteronomy 23 verse 19).…”

“…This may be the reason IB has caught the interest of both Muslims and non-Muslims. IB has now become a worldwide phenomenon with a track record of success in both Islamic and non-Islamic nations (Aqib and Hussain, 2021). Similarly, IB is receiving more attention from both Muslims and non-Muslims in Tanzania, a secular nation where Muslims make up roughly 55% of the total population (Khamis and AbRashid, 2018).…”

Factors that Influence to Costumers Sharia Bank Loyalty: An Empirical Study of Students at Universitas Darussalam Gontor Ponorogo

“…Sharia banking provides a diverse range of financial services and products appealing to customers, encompassing both Muslims and non-Muslims. This extensive product coverage has propelled sharia banking to global popularity among both Muslim and non-Muslim communities (Ali & Hussain, 2021;Tegambwage & Kasoga, 2023). Consequently, the products and services offered by Islamic banks compete with those of conventional banks, with their success significantly dependent on customer loyalty (Muflih, 2021;Tegambwage & Kasoga, 2023).…”