Master of Science in Islamic Banking & Finance


Department of Finance

Faculty/ School

Faculty of Business Administration (FBA)

Date of Submission

Fall 2020


Dr. Saqib Sharif, Associate Professor, Department of Finance, Institute of Business Administration (IBA), Karachi


What kinds of issues are being encountered by Islamic banking institutions (IBIs) while lending to the agriculture sector? Is Muzaraa (crop sharing contract based on the concept of partnership) contract may be offered as a solution to problems faced by IBIs? These types of questions are explored in this thesis. Islamic banking has now been recognized as an alternative banking system that offers Sharīʿah-based financial solutions and facilitates all the pillars of the economy. However, the agriculture sector which is the main contributor to the GDP of different countries could not get the expected consideration of Islamic banking institutions.

Salam was introduced as an agricultural product but it could not acquire the desired attraction of the farmers due to its limitation and strict Sharīʿah requirements. This indicates that there is a huge potential for Islamic banking institutions to tailor some new products which are mutually acceptable to farmers and Islamic banks. This study attempts to fulfill the gap and proposed two Muzaraa based models; the consumer and Sukuk model. Muzaraa was used for agricultural activity in the era of the Holy Prophet but it has never been offered by Islamic banks as a product in Pakistan. To achieve the desired objective, a qualitative research method is applied based on in-depth interviews of qualified industry experts and practitioners.

The study reviews the existing products of Islamic banks offered for agriculture in Pakistan and suggests that Muzaraa can be the useful alternative/solution for the growth of agriculture sector portfolio because it carries the features of revolving credit as offered by conventional banks/ counterparts. The thesis also highlights the issues confronted by IBIs in agriculture sector lending. Overall, the findings contribute to the existing literature and facilitate the researchers, policymakers, government, and practitioners in their future work on agriculture finance.

Document Type

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