Provincial Minister for Finance Dr Ayesha Ghous Pasha has said that Islamic banking gained enormous international attention during the past decades due to its large growth and resilience to financial crises as well as the nature of sharia-compliant finance models.
The International Monetary Fund (IMF) has endorsed the principles of Islamic finance by saying that Islamic finance can help to promote macroeconomic and financial stability. Its principles of risk-sharing and asset-based financing will promote better risk management by both financial institutions and their customers, as well as discourage credit booms, she said.
She expressed these views while addressing the 5th global forum on Islamic finance by the COMSATS Institute of Information Technology here on Wednesday.
She said that as a fast-growing emerging market and a major economy within the countries of the Organization of Islamic Cooperation, Pakistan had a mature financial industry has been focusing on broadening the sharia-compliant sector in a country with more than 190 million people.
Islamic finance is expected to take off in Pakistan in the coming years due to new regulations on sharia-compliant banking, new industry-supporting regulatory bodies, as well as rising demand from foreign investors.
Pakistan’s Islamic banking industry has been growing at over 30% per annum over the past five years, which is above the average global rate. If this trend continues, it can be expected that by 2018 Islamic banking assets in the country would be worth $17.6 billion. This growth is supported by the strategy of the State Bank of Pakistan, which seeks to double the number of Islamic banking branches from around 1,200.
The government is serious in supporting the growth of Islamic Banking in the country, the finance minister said. It has taken steps required for the effective implementation of Islamic finance that include formation of a task force under the leadership of Senator Ishaq Dar, the federal finance minster and SBP Deputy Governor Saeed Ahmad to undertake amendments in the legal and regulatory framework.
The issuance of sukuks by the government during the last three years, including the recent issuance of $1 billion international sukuk, is proof of the government’s commitment to Islamic finance, the provincial finance minister said, adding that the government is also exploring options of Islamic borrowing instruments at the provincial level.
Dr Ayesha Ghous Pasha congratulated COMSATS on holding the forum on Islamic finance and ensuring the presence of representatives from 8 countries. She said that she expects experts, researchers and universities to play their role in promoting Islamic banking.
