Riyadh, Asharq Al-Awsat- In 1990, a new player emerged in the Islamic banking market, signifying a huge leap in the Islamic banking industry. It was a landmark year in the history of Islamic banking, indicating the beginning of an industry in terms of expansion, growth, variation and creativity as the National Commercial Bank inaugurated its first branch for Islamic services in the Saudi Arabian city of Jeddah. Dr. Mohammed al Qarri was one of the key figures behind this transition.
In 1992, the bank established an independent department called the Islamic Banking Service department. It was chaired by Dr Saeed al Martan, and the aim of its establishment was to Islamize the entire bank in line with a gradual plan under the supervision of a legitimate body comprising of a number of experts and economists, according to Dr. Martan’s research paper entitled ‘Assessment of Applied Institutions of the Islamic Economy’.
It was a courageous decision for the bank’s management and board to take at the time. It was also a real challenge for the Islamic Banking Service department and the legitimate body to prove the appropriateness of the decision and its benefits for the bank, especially after they sensed how much responsibility they were shouldering. In fact, they spared no effort towards the success of the experiment as they knew that this would provide a model for other banks but its failure would mark the end of the experiment.
Today, the figures speak for themselves and demonstrate the success of the experiment: the bank’s 266 branches operate in accordance with Islamic legislations and laws, 96 percent of the bank’s investments are Islamic, 99 percent of its personal funding is Islamic and 62 percent of the commercial funding is also Islamic. In addition, the bank set a precedent in developing Islamic products upon which several banks became entirely dependant (though there are some reservations about some of these products from a Sharia standpoint).
The success of Islamic banking gave the impression that the National Commercial Bank became an Islamic bank and that all its transactions were Sharia compliant. However, the truth is that the bank still offers some conventional services that are not in line with Sharia, especially in the field of treasury and company funding, (I would like to draw the reader’s attention to the fact that the bank completely owns an Islamic treasury in Bahrain). Therefore, the bank relinquished its pioneering role in converting conventional banks into Islamic banks though it was responsible for initiating this. Several new and less experienced banks inside and outside the kingdom of Saudi Arabia have managed to surpass it in this regard.
To give up such a pioneering role indicates that the bank was losing the required momentum to become an Islamic bank, and today this is within its reach more so than ever before. The delay in this process can only be attributed to the loss of motivation to turn it into a Sharia-complaint bank, only then could it proceed towards breaking new ground in the field of Islamic banking. Furthermore, it would give the executive management and board members a place in history.
It would be wonderful if this decision were implemented during the holy month of Ramadan during which the reward for good deeds is multiplied and sins are forgiven.