KARACHI – State Bank of Pakistan (SBP) Deputy Governor Yaseen Anwar has said that the central bank is committed to provide a supportive legal, policy and regulatory framework for the cultivation of Islamic banking in the country.
He was delivering an address at an event, ‘Narrowing the gap between philosophical underpinnings of Islamic finance and its practices’, presented by Dr Abbas Mirakhor, a renowned economist and Islamic finance export and former International Monetary Fund Executive Director at the SBP office. Anwar stressed that the central bank is undertaking a number of initiatives for the promotion of Islamic finance in Pakistan.
It was elaborated that in addition to developing the regulatory, supervisory and Shariah compliance framework; SBP is also collaborating with the industry to create awareness of the utility of Islamic banking and finance in achieving socioeconomic prosperity at the individual as well as community and state levels. “SBP also is helping to build human resource capacity which is critically important for the industry for sustaining the growth momentum and improving its footprint and share in the banking system,” he added.
SBP deputy governor said that the Islamic banking industry has grown manifold since its launch in 2001 and presently constitutes about 6.7 percent of the total banking system in Pakistan. The industry now has a network of more than 750 branches across the country and given the strong growth momentum and rising acceptability, it is poised to augment its share to 10-12 percent within the next two to three years, he reasoned.
“The overall outlook for the industry in Pakistan is thus positive and the prospects for further strides in the foreseeable future are very bright,” he added. Anwar said that the global outlook of the Islamic finance industry is also positive as it has been growing at a fast pace and extending its reach beyond Muslim countries. Since 2006, the industry grew on average 28 percent annually with its asset base reaching about $1.0 trillion, he added.
He said that the recent crisis in the western financial markets has also given a big boost to the credibility and promoted Islamic banking as a more stable and prudent system than its conventional counterpart. “The inherent checks and balances in the Islamic financial system, which prohibits Islamic banks from dealing in speculative activities and strongly linking growth of financial assets with that of the real economy largely kept the Islamic banks insulated from the financial crisis,” he added.
