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New rules for Islaming banking

Pakistan’s central bank has issued new rules for the operation of Islamic banking windows, aiming to strengthen their role in the world’s second-most populous Muslim nation. The new requirements come at a time when Pakistan is stepping up efforts to develop Islamic finance, prompting several banks to expand their operations in the sector. Banks will have to obtain written approval from the State Bank of Pakistan before opening each Islamic window, as well as providing the regulator with additional details on staffing, training and marketing arrangements. Islamic windows allow conventional lenders to offer Islamic financial services, provided client money is segregated from the rest of the bank. As of December, Pakistan’s full-fledged Islamic banks had a combined network of 767 branches while conventional banks had 441 Islamic branches and 96 sub-branches. The rules could help consumers better distinguish Islamic financial products from conventional ones, improving the industry’s perception and overall uptake.

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