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2013 November

“The Crime” in Pakistan: 0.02% of Pakistani owns 40% of Bank Deposits

Latest figures shared by the State Bank of Pakistan reveals that top 24,000 millionaire account holders in Pakistan owns Rs 2,118 Billion.

The interesting aspect of this data is that in last four years, which are presumed to be the worst years for Pakistan’s Economy, the number of Crorepati (millionaires) in Pakistan increased by 50% to 36,500 from 24,000 in 2008.

The new 12,000 millionaires added about Rs 80,000 Crore (800 Billion) in bank deposits in the last three years. Of course they are not depositing everything. There must be properties and other investments involved which are not included in this figure. (Do I need to remind you how much Pakistani investors love to invest in Property). So if we take that ‘unknown’ figure, I’m sure this club of 36,000 elite millionaires will total way more than 70% of Pakistan’s total wealth.

These 36,000 people represents only 0.02% of Pakistan’s total population of 18 Crore people and yet they hold almost 40% of Pakistan’s total wealth in bank accounts. About 24,423 account holders, having an amount Rs 1 Crore and above, made a total deposit of Rs 1,323 Billion at the end of December 2008. The figure of account holders rose by 12,086 to 36,509 by the end of December 2011, taking the total amount to Rs 2,118 Billion.

The economic growth during last four years hovers around an average of 2 per cent and one might question about the source of income of these 12,000 people who mysteriously becomes millionaires while Pakistan’s economy was facing joblessness, security conditions, trade barriers and rising fuel costs.

How did it happen?

The answer is the banking system did it. Fractional reserve banking and the endless supply of credit to the elite while the majority of the population agonizes in poverty with an unrecorded inflation of nearly 20%. The fact that the government deficit is 1/3 of the total budget ensures that things are not going to change.

Fractional Reserve Banking allows banks to create money out of thin air. This feeds inflation for the masses and endless supply of credit to the elites. Inflation is theft. The unfair distribution of credit is immoral. If you do not know what fractional reserve banking means, you better learn. Start with Wikipedia.

Fractional-reserve banking is the practice whereby a bank retains only a portion of its customers' deposits as readily available reserves from which to satisfy demands for withdrawals. Reserves are held at the bank as currency or held as deposits in the bank's accounts at the central bank. The remainder of customer-deposited funds is used to fund investments or loans that the bank makes to other customers. Most of these loaned funds are later redeposited into other banks, allowing further lending. Because bank deposits are usually considered money in their own right, fractional-reserve banking permits the money supply to grow to a multiple (called the money multiplier) of the underlying reserves of base money originally created by the central bank.

History. Fractional-reserve banking predates the existence of governmental monetary authorities and originated many centuries ago in bankers' realization that generally not all depositors demand payment at the same time.

Savers looking to keep their valuables in safekeeping depositories deposited gold and silver at goldsmiths, receiving in exchange a note for their deposit (see Bank of Amsterdam). These notes gained acceptance as a medium of exchange for commercial transactions and thus became as an early form of circulating paper money.


As the notes were used directly in trade, the goldsmiths observed that people would not usually redeem all their notes at the same time,and they saw the opportunity to invest their coin reserves in interest-bearing loans and bills. This generated income for the goldsmiths but left them with more notes on issue than reserves with which to pay them. A process was started that altered the role of the goldsmiths from passive guardians of bullion,charging fees for safe storage, to interest-paying and interest-earning banks.Thus fractional-reserve banking was born.Inflation is a tax on the poor. Only those who borrow profit from inflation: they have to pay less. While this practice of fractional reserve banking continues banks and borrowers profit.The people who do not even have bank accounts are paying for the crime of Riba and they do not even know.

Fractional reserve banking allows the bank to expand the money supply with credit and lower the interest rates. Borrow is made easy for the elite with collaterals. Money goes to money. The elite acquires the infrastructural resources while the people (and even the government) cannot afford their living expenses. And no-one has a solution.

National Debt grows. National Debt is not Islamic. Nobody should pay for the debt incurred by somebody else, even if they claim an Anglosaxon law gives them the right to do so. That debt will never be paid. It is there to inflict further humiliation on the government of the elites, and the people. The day will come when this debt is repudiated by the free people of Pakistan.

Independence has not come yet. The 1947 so called independence was a sham. Independence of Pakistan will only come when Riba is eliminated from Pakistan. When there is no Central Bank, when there is not National Debt, when there is not legal tender fiat money. When the Shariah is restored and the land is free from nationalism and open to the muminun. If Israel can declare every Jew in the world its citizen, Pakistan should declare every Muslim in the world the citizen of dar al-Islam. A Dar al Islam without Riba will free the world from its present banking tyranny. The issue is no other but Riba. Riba is the ultimate injustice.

The economic elite does not care. They think their wealth is their due.

The intellectual elite are lost in useless debates. Those who understand a bit of the situation are further lost in supporting the outrageous Islamic banking fantasies, whether is the conventional Islamic banking fraud or other fantasy theories like TMCL.

The ulema do not know what Riba is, let alone what fractional reserve banking is, or what money is in Islam. They have for too long followed the modernist thesis of Rashid Reda and ignored the traditional roots of the deen. Reda redefined riba al-nasiah as interest, and got rid of riba al-fadl that ironically includes interest. Islamic banks have continued to propagate this false definition. Many of them have not moved away from trivial distractions in the face of a fire that is destroying the people. The fire is Riba. When your house is on fire to go and fix the windows is suicidal.

The focus has been moved away from Riba. The Islamic reformers made riba halal through Islamic banks just like the christian reformers allowed banks into christianity. Just like the Christian reformers they have reduced religion to personal morality, particularly centered on sexuality and perversely centered on how woman dress. The Quakers (christian reformers), for example, did not fail to dress their woman from top to bottom but when it came to usury they created Barclays Banks and Lloyds Banks. The result of this is that while the weight on the issues pertaining woman’s sexuality and dress code have overtaken all religious priorities, the matter of Riba has fallen into complete liberal oblivion. Yet, Rasulullah, salallahu alaihi wa salam, reminded us that: “Riba has seventy segments, the least serious being equivalent to a man committing adultery with his own mother.” The issue is fight riba and leave women alone. Here distraction is part of allowing riba to perpetuate its crime.

None of them have any solution. The masses are left on their own. Keeping them in ignorance is the best way to control them.

This is the Pakistan I encountered when I came almost a year  ago.

I am teaching with the Muwatta of Imam Malik, the Mudawana of Sahnun, the Risala of ibn Abi Zaid al-Qairawani, the Mukhtasar al-Khalil, the Tafsir of al-Qurtubi, the Ahkamul Qur’an of Ibn al Arabi  and the Bidayat al-Mujtahid of Ibn Rushd. I am going back to the roots of Islamic Education and building up the teachings of Muamalat. Muamalat has been forgotten in Pakistan.

I am teaching what the Dinar and Dirham are, what is the suq of the Sunnah, what is a caravan, what is qirad or mudharaba, how Muslims created guilds to organise production, the application of Islamic contracts within that model.

I want to introduce the Shariah currency so that inflation is eliminated, replace the banks with wadiahs, replace the supermarkets and malls with Islamic markets (suqs), replace the monopoly of exports with open caravans, replace the factory model with the guilds, reintroduce trading finance with qirad and bring shirkat back as within the rules of the Shariah.

I am teaching the Tasawwuf of Imam Junaid by the transmission of the Qadiri-Shadhili-Darqawi silsila. I am calling upon the living shuyukh of all the Tariqas to support our movement to restore the Shariah, because there is no growth in the inward when the outward has collapsed.  Shariah and Haqiqa must go together. They are listening but they have the scepticism of the common people.I reminded them that Allah and His Messenger have declared war on Riba and that means that Riba is already defeated. What we have in front is a deadly corpse on top of us. Riba does not work and it is a ruin. This ruin is best illustrated by the towers of Dubai built by our enslaved Pakistani brothers. Those towers are the expression of the surrender to Kufr.

Only Allah can change the situation. To Him I pray to give me courage to continue to call upon the people to TRUST ALLAH. He has given us the means to succeed. He has given us the clear instructions to achieve Victory in Him. There is no power except Him. And Victory Belongs to Allah.

Shaykh Umar Vadillo