MCB sets up Islamic banking subsidiary

KARACHI: The State Bank of Pakistan (SBP) has issued ‘Certificate of commencement of banking business’ to MCB Islamic Bank Limited, a wholly-owned subsidiary of MCB Bank.
"Subject to completion of formalities, existing 34 Islamic banking branches of MCB Bank will be merged into MCB Islamic Bank,” a bourse filing said.
As of June 30, Islamic banking business of MCB was operating with a network of 34 branches having an asset base of Rs21.015 billion.
The MCB’s Islamic banking business posted a net profit of Rs408.228 million for the half-year ended June 30, 2015.
Islamic banking industry in Pakistan has been growing at a fast pace ever since its re-launch in 2001. Starting from almost scratch the Islamic banking industry now represents 10 percent of overall banking system with 19 banking institutions offering Islamic banking products and services.
The SBP initiated three-prong strategy in 2001 and facilitated setting up of Islamic banks, Islamic banking subsidiaries of commercial banks and dedicated Islamic banking branches by the conventional commercial banks. The SBP has issued detailed licensing criteria, instructions and guidelines for Shariah compliance, instructions for profit & loss distribution and pool management and also adopted few IFSB prudential and AAOIFI Shariah standards.
Although the industry has shown rapid growth, there are still areas which require concerted and proactive efforts by stakeholders to further develop and nurture the industry.
To augment the existing growth momentum and to lead the industry to the higher level of professionalism, SBP has prepared “Strategic Plan for Islamic Banking Industry of Pakistan 2014–2018”.
The plan focuses on initiatives necessary for improving public perception of Islamic banking and promoting it as a distinct and viable system to address the financial services need of the public in general and business community in particular.