Radical changes required as Mufti Taqi Usman offers help
When the Taliban took Kabul earlier this month, spokesman Zabiullah Mujahid claimed life would return to normalcy as banks were going to open from Wednesday, August 18. Over a week down the line, Afghanistan’s banks and money markets have still not opened and Afghans, both ordinary citizens and traders, continue to face a liquidity crisis. A likely explanation: The Taliban wants monetary affairs to be governed by the Sharia laws, but Afghan’s traditional banking model is not compliant with Sharia.
Evidently, in the coming weeks and months, the Taliban would be revamping the country’s banking system, tax laws, and currency exchange regulations – a possibility that has caused concerns and confusion among Afghans.
It has left many with the question what monetary model was to emerge under the Taliban.
People familiar with Afghanistan’s politico-economic affairs say since the Taliban had come to power in the name of a sharia-based government, it would be compelled to not only alter the political structure of the country but also introduce significant changes to banking, customs, and currency systems.
Such changes may prove radical and could make it harder for the country to engage in international trade or deal with monetary institutions such as the IMF and the World Bank.
Shaikh ul Hadith Mufti Kamaluddin Almustarshid from Jamia Islamia Clifton Karachi says tax laws reforms would be easier than other monetary changes for the Taliban. Islam prohibits unfair taxes, so the Taliban could revise the tax rates, reducing them to equitable levels, he said adding that currency exchange could also continue with negligible procedural changes.
“However, Afghanistan’s banking system would require radical changes because it is based on the traditional interest-based banking model,” Almustarshid said Speaking to SAMAA Digital.
He said an alternative to the traditional model was being practised in various Muslim countries including Pakistan, Egypt, and Malaysia. The Taliban could replicate this Islamic banking system in their country, Almustarshid suggested.
To a question, Almustarshid said working with the IMF and other international monetary institutions could be permissible under certain circumstances.
Meezan Bank’s Head of Product Development and Sharia Compliance Ahmed Ali Siddiqui says only Islamic banking could provide a suitable alternative to traditional banking in Afghanistan. He said many of the Afghan bankers have already been trained at Pakistan’s National Institute of Banking and Finance – a subsidiary of the State Bank of Pakistan – and many more could be sent to Pakistan to be trained in Islamic banking.
Speaking to SAMAA Digital Siddiqui said Afghanistan’s central bank may seek guidelines from the State Bank of Pakistan on Islamic banking regulations.
Siddiqui believes Pakistani banks have the potential of opening branches in Afghanistan, while Afghanistan’s Islamic banks would possibly be investing in Pakistan’s Sukuk bonds.
The Taliban was hard-pressed to reform the banking sector when it ruled Afghanistan from 1996 to 2001. It was a time when Pakistan had not yet developed its interest-free Islamic banking system. The work on Islamic banking at Jamia Darul Uloom Korangi Karachi was still in its early stages. People familiar with events says the Taliban was keenly interested in the banking model being developed at Darul Uloom. It did not get a chance to implement the model and was soon driven out of government by the US bombers.
Now, when Afghanistan has come full circle there is a possibility that the Taliban could benefit from the Islamic banking model prevalent in Pakistan.
Mufti Taqi Usmani, who pioneered Islamic banking research, has circulated a voice message addressed to the Taliban Emir (supreme leader) Maulana Hibatullah Akhundzada and Deputy Emir Mullah Yaqoob (who’s Mullah Omar’s son) saying that they must focus on Afghanistan’s economy and if they needed assistance he was ready to extend help.