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Behind the Money

Why Islamic banking is taking off

Behind the Money

Topher Forhecz

Markets, Investing, News, Banking, Finance, Business, Business News, Crypto

4.4350 Ratings

🗓️ 2 April 2025

⏱️ 22 minutes

🧾️ Download transcript

Summary

A huge chunk of any typical bank’s profits comes from charging interest. But what happens when you can’t do that? This week, we’re traveling to Pakistan with the FT’s Humza Jilani, where the country has decided to make its entire banking sector align with Islamic law, which forbids charging interest. We’ll discuss how Islamic banks function and if this banking model can become Pakistan’s dominant system. 


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For further reading:

Meezan Bank’s soaring shares herald rise of Islamic finance in Pakistan

Clerics’ rule change threatens to throw Islamic debt market into turmoil

World Bank approves 10-year $20bn Pakistan lending package

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Follow Humza Jilani (@humza_jilani) and Saffeya Ahmed on X (@saffeya-ahmed), or follow Saffeya on LinkedIn for updates about the show and more. 


Read a transcript of this episode on FT.com



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Transcript

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0:00.0

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0:47.1

It's a March morning in Islamabad, and my colleague Hamza Jalani is out at a branch of Pakistan's most successful bank, Mizan bank.

0:55.9

It's almost the end of Ramadan, and the big celebration of Eid is just days away. Once Hamza makes his way inside the bank, he finds lots of people taking out cash to give his gifts.

1:01.6

It's an age-old tradition for the holiday.

1:04.3

He stops and he talks to one guy who is sitting with a bank teller to do exactly that.

1:09.0

Islamic banking, basically as a Muslim, what is an interest, you have,

1:15.5

Ali Shams is a 46-year-old bank vault hall owner in Islamabad, essentially owns a venue that's

1:22.7

very popular for weddings.

1:24.0

It's one of the big spend items in Pakistan.

1:26.5

What's unique about the bank that Ali is using is that it's an Islamic one.

1:30.3

And that means that you can't charge interest because that's strictly forbidden in Islam.

1:36.2

Hamza is here at Mizan to talk to people about why they would prefer this type of banking.

1:48.4

He's saying that it doesn't bother him that he gets less of a return at Mizan, an Islamic bank, and he might

1:53.2

get at a conventional bank, because the satisfaction he gets in his soul when he goes to bed

1:58.5

at night, knowing that he's not stuck in the forbidden world of interest is priceless to him.

...

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