Via Pakistan’s Online News Network today:

KARACHI: Governor State Bank of Pakistan Dr. Shamshad Akhtar has said that Islamic Banking industry is showing promising signs of sustainable growth. She expressed these views while briefing the media while inaugurating Meezan Bank’s 100th branch here on Thursday.

She said that the beauty of Islamic finance system is that if it is adapted in letter and spirit it is the most transparent and ethical system of finance. She said that Islamic finance system has a great potential to meet the financial requirements of society at large and would continue to grow its market share exponentially in the years to come in Pakistan…

Speaking on the occasion Mr. Irfan Siddiqui, President and CEO of Meezan Bank said that Meezan Bank, the first and largest Islamic Bank in Pakistan is committed to fulfilling its vision of establishing Islamic Banking as banking of first choice. He said that Meezan Bank is now present in 31 cities of Pakistan and branch expansion will continue during 2008 making the Bank one of the fastest growing Banks in the history of Pakistan…

The article offers additional specifics about the growth of Islamic banking in Pakistan. What really caught my eye in Dr. Shamshad Akhtar’s comment that the Islamic banking system ” is the most transparent and ethical system of finance.”

That’s absolutely true and it’s a fact that is often overlooked in discussions about Islamic finance. Islamic finance (revolving around the prohibition of ribaa but not confined to that) is not just a quirk of Islamic law. It’s not just a modern innovation designed to allow Muslims to follow the Shari’ah. It’s not just a “new alternative.”

Islamic finance is, at its heart, the most productive, honest and ethical system of finance for humanity. That’s the whole point. It is a system of finance that does not exploit the poor, or take advantage of anyone. It allows investors to profit in a free market system without oppressing anyone.

So am I saying that the interest-based system that dominates world markets is oppressive? Of course it is! Just look at what is happening today with the sub-prime mortgage crisis in the United States. Millions of people are losing their homes. Look at the huge burden of debt carried by many third-world countries, who spend as much as 30% of 40% of their GNP to simply pay the interest on massive loans. The interest-based system is inherently oppressive.

All Islamic laws and systems have been designed for the benefit of humanity as a whole, and this includes the Islamic finance system. It’s good to remember this fact in any discussion of Islamic finance. It’s great to hear that it is growing worldwide and even becoming the dominant system of finance in some countries.