Recently news is appearing that Bank of Sindh and Bank of Balochistan shall soon start functioning. A bank with the name of Bank of Azad Kashmir is also under consideration. Before giving permission, the regulatory authority must appraise whether incorporation of such banks is really necessary.
The banks already functioning are providing every type of facility to public sector, Provincial Governments and Government of Azad Jammu and Kashmir. What service these banks shall provide is not clear and their feasibility may be questionable.
There are also news that 6 new foreign banks are interested to start Islamic banking in Pakistan. This should also be considered on merit, specially their feasibility in a market, which is not very large like India.
If Provincial Governments are thinking to give employment to few hundred persons and the Federal Government publicises that foreigners are to invest in Pakistan, then it is not appropriate.
The judgement of Supreme Court and Federal Shariat Court on Riba was not accepted and was annulled. So it must be seen whether it is really Islamic banking or public is being camouflaged.
If the State Bank of Pakistan has decided to run parallel system, then the present NIB nomenclature be abolished and again the word 'interest' be used and side by side Islamic banking should operate.
Fine, it is an era in which the private sector is being encouraged and those who are not fit will not survive.
This should not be made very open for banks/financial sector. The decision should be on merit as the depositors' money is at stake.
We have seen in the early 1990s, regulators happily allowed many banks to start operations, but very soon some of these banks proved a disaster for the banking sector and also created a bad image to Pakistan.
How sponsors managed clearly showed that the permission granted to them was not on merit.
Other banks of that period and of later period are functioning, but facing hardships due to various prudential regulations and capital requirement, which are increasing year by year.
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