SBP plans 35pc Islamic banking by 2025

KARACHI: The central bank’s deputy governor said on Tuesday that the target of the State Bank of Pakistan (SBP) was to boost the share of Islamic banking up to 35 percent by 2025.

Presently, the share of the Islamic banking industry is 20 percent.

“Our people prefer Islamic banking, and we want to promote it further so that more people may take advantage of it and have more access to financing. This will make people's lives better,” said the SBP deputy governor Sima Kamil at an Islamic banking summit organised by a local bank.

Kamil said Faysal Bank, once conventional, had become completely Islamic, adding that because the SBP regulates banks, it would offer the facility to any conventional bank that wanted to convert its 100, 200, or 300 branches to Islamic.

She noted that switching from conventional banking to Shariah-compliant banking was challenging. “In this regard, the SBP is completely cooperating, and will present revised work to improve this shift.”

The central bank official assured that the SBP would remain committed to provide all possible support and facilitation to the banks during their conversion process. She was of the view that finance was a fundamental pre-requisite for growth of any economy and Islamic finance by virtue of its faith based nature offers inherent synergies with risk and rewards mechanisms which offer an ideal solution.

“Islamic finance structures are derived from Shariah, which dictates that Islamic financial transactions should be supported by underlying productive activities and emphasizes on a close relationship between financial transactions and the real economy.”

Kamil said a key challenge was the adequate supply of Islamic finance experts. There is a growing need for qualified Islamic finance professionals who can spearhead the financial industry to the next stage, according to the SBP deputy governor.