Pakistan to push Islamic banking

Reported by: |Updated: January 29, 2014

is bankThe central bank of Pakistan is stepping up its push to develop Islamic banking, encouraging lenders to expand their operations in the country. Pakistan was one of the first countries to introduce Islamic banking at a national level in the 1970s, but the industry’s share of the overall banking system has lagged levels in some other countries. As of September, Islamic banks held Rs 926 billion of assets or 9.5% of the total, up from 8.1% a year earlier. That compares with around 25% in the GCC region. The Central Bank of Pakistan aims to double the industry’s branch network and reach a 15% share of the banking system in the next five years, and is taking fresh steps to achieve that. The regulator has named a new deputy governor to focus on Islamic banking and enlisted renowned scholar Muhammad Taqi Usmani to its Sharia board, part of efforts to improve consumers’ perception of the industry. Pakistani banks currently include five full-fledged Islamic banks and 14 which operate Islamic windows. A number of conventional banks aim to grow or spin off their existing Islamic windows, while new entrants are expected.