- Musharakah is an accepted form of financing and growing rapidly
Interview with Mr. Faisal Saifullah — Executive Vice President and Head of House Finance, Meezan Bank Limited
Tell me something about yourself, please:
Faisal Saifullah: Currently, I am working as Executive Vice President and Head of House Finance at Meezan Bank Limited. I have a well-diversified banking experience spanning over 22 years including 16+ years of experience in Islamic banking. During the journey, I was instrumental in setting up Auto & Mortgage business units from technical initiation to commercial implementation. I possess solid technical background and keen business development acumen with a core skill set encompassing Business Management, Team building, Product Development, Policy/procedure formulation & Credit Risk Management of both secured and unsecured products. I have gotten proven management skills accentuated by strong process re-engineering skills. I have a track record of developing motivated teams and optimizing productivity, able to execute multiple projects within tight deadlines. I always believe in making things better with a simpler approach. I identify matters — apply solutions -— achieve and excel.
Consumer goods have gotten expensive so what are new ways to improve buying power and how is it being done through consumer financing?
Faisal Saifullah: Effective individual financial management and affordable and sustainable Consumer Finance products can improve individuals’ purchasing/buying power. As currently, we are walking on a double-edged sword i.e. ever higher inflation and higher profit/interest rates making it really a tough ask. On a lighter note, increase your income. Truly, speaking the stressed economy has burdened each and every individual up to upper-middle earners. It is high time that government should intervene and come up with subsidized rates for consumer financing products especially House Finance in consultation with the State Bank of Pakistan. This will result in improved sales for the automobile sector on one hand and increased demands for housing units for the mortgage industry, which will in turn result in the economic activities accelerating and ultimately releasing the stressed economy to revive upward.
What is your take on credit cards?
Faisal Saifullah: It is quite an effective and convenient financial instrument to increase individual cash flows. Being associated with the consumer finance segment for quite a long time, I have seen a lot of ups and downs in the credit card business.
In a time of high inflation and a stressed economy, burdening the buying power of individuals, the credit card business witnesses delayed payment, defaults, and write-offs. It is always a challenging business with high risk and returns. Since Islamic banking is gaining popularity with every passing day and increasing its share, the major players of Islamic banking must work on the alternatives of credit cards to Shariah-compliant credit cards.
How would you comment on Musharakah’s mode of financing in Pakistan?
Faisal Saifullah: Musharakah is a form of business in Islamic finance that is being adopted rapidly by most of the customers in Islamic banking and finance. Islamic finance is rapidly growing and people are practicing different modes of Islamic finance and Musharakah being the most popular mode in terms of consumer finance products. The house financing portfolio of Islamic banks is based on diminishing Musharakah, whereby the customer and banks enter into a Musharakah contract for the purchase of a housing unit i.e. as partners, and then the Islamic bank gives its undivided share in the property to the customer on rent as consideration.
How useful is technology to promote consumer financing in Pakistan?
Faisal Saifullah: Very pivotal, automation is the future of CF whether it be customer initiation, onboarding, lead management, disbursement, and post-disbursement activities use of technology/automation is the way forward.
The world is moving very fast. Courtesy Covid-19 which helped people across the globe and particularly in developing countries to switch toward a digital platforms for availing banking services. The bank’s management should focus on automating their consumer finance business. They should develop applications whereby a consumer finance customer can sign-up for availing consumer finance products without physically visiting a bank branch. The application and approval process should be made easy. Customers should have the facility to fill in the application form electronically and upload the required documents for approval.