The Knowledge of Halaal and Haraam with respect to one’s income is a matter of grave importance, highly emphasized in our Deen. The Prophet ﷺ stated that eating from haraam earnings is one of the things that prevent du‘aa’s and righteous deeds from being accepted.
Allah says in the Quran,
‘O you who have believed, eat from the good things which We have provided for you’
[Source: al-Baqarah 2:172].
In the explanation of the above verse, Prophet ﷺ mentioned a man who has travelled on a long journey and is disheveled and covered with dust; he stretches forth his hands to the heaven, (saying) “O Lord, O Lord”, but his food is haraam (from haraam earnings), his drink is haraam, his clothing is haraam, he grew up nourished from haraam earning, so how can his du’aa’ be accepted?”
[Source: Sahih Muslim].
Hence, we can safely conclude that an indifferent attitude towards this discipline can be detrimental for ones Duniya and Akhira.
Unfortunately, many Muslims around the world lack the opportunity to invest in corporations or equities in a Shariah Compliant way. Some countries do offer such opportunities via Islamic Banks, however, they do not adequately satisfy the Muslims in general due to their low returns and limited access to a few cities of those countries. By the grace of Allah, Pakistan has opened different opportunities for Non-Resident Pakistanis worldwide to invest their excess liquidity, cash, or savings to these types of investments which are completely Halaal, Alhamdulilah.
Overseas Pakistanis can enter Pakistan’s capital markets by opening a Roshan Digital Account(RDA) in any of the 8 eight designated banks. Under an RDA scheme 60,000 RD accounts have opened till now and over USD $200 million have inflowed in the country. Apart from many functional Islamic banks and mutual funds, Shariah conscious RDA customer can also freely trade shares by opening of Shariah Trading Account with Central Depository Company(CDC) and Meezan Bank partner brokers.
Pakistan Stock Exchange(PSX) also offers three indices: All Pakistan Islamic Index, KMI- 100, and KMI-30. PSX-KMI All Share Index, developed by PSX and Meezan Bank, comprises of all shariah-compliant companies listed on the PSX Ltd. The index enlists 226 companies with 24 additions and 24 expulsions made in 2019. Any Pakistani can invest in these companies and be confident in the fact that they are completely Shariah Compliant.
A recent Shariah compliant investment opportunity for Non-Resident Pakistanis is the Islamic Naya Pakistan Certificate (INPC). INPC is based on Mudarabah mode of finance. INPC company is a special purpose vehicle(SPV) owned by the Government of Pakistan that acts as Mudarib to invest and manage funds of NRP customers who invest as Rab-ul Maal. INPC company will invest these funds into Shariah compliant financing transactions with Ministry of Finance and Government of Pakistan. Islamic Naya Pakistan Certificate (INPC) till now has attracted USD $ 50 million of home remittance.
Instead of fixed profit rate INPC announces Profit Sharing Ratio (PSR) and Weightages before each month. Actual Profit earned from such investment activities during the month will be distributed among depositors as per profit sharing ratio (PSR) and weightages. Islamic Naya Pakistan certificate is approved by Meezan Bank and Shariah Advisory Committee of State Bank of Pakistan.
The rates of return on dollar denominated INPC are far higher than the non-resident Pakistani’s can earn in their host countries. These profit rates range between 5.5% to 11% depending on the maturity period of 3 months to 5 years. Table below highlights the profit rate in the month of November 2020.
A worth mentioning milestone is the establishment of the very first Digitalized Shariah Compliant Platform. Meezan Bank in collaboration with CDC and Brokers now allows investors through Meezan Roshan Digital Account-MRDA to trade through this platform. At this point of time 6 brokers are on Meezan Digitalized Platform to provide investment only in shariah compliant shares.
Many investors hesitate to invest in PSX directly as they do not understand Shari’ah processes. This platform reassures Shari’ah conscious investors, as Digitalized Trading System is inclusive of all Shariah principles.
An eco-system for the establishment of “Riba Free Pakistan” has already been provided for 8.5 million Non-Resident Pakistanis by the Government of Pakistan. From acquiring a digital account within 48 hours from anywhere in the world, a shariah compliant investor will have access to Capital Market, Real Estate, and investments in Islamic Naya Pakistan Certificate.
“Those who eat Riba (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitan (Satan) leading him to insanity. That is because they say: “Trading is only like Riba (usury),” whereas Allah has permitted trading and forbidden Riba (usury). So whosoever receives an admonition from his Lord and stops eating Riba (usury) shall not be punished for the past; his case is for Allah (to judge); but whoever returns [to Riba (usury)], such are the dwellers of the Fire – they will abide therein.” [ Al – Baqarah 275 ]
We at Usmani and Co. would urge all NRPs to explore these avenues further to help build a Riba free, progressive Pakistan.
By: Sadaf Sawant (Panel Member UCO)