Islamic banking is now an important segment of the global financial markets as Islamic financial Institutions are diverse and becoming increasingly innovative.
They are operating in over 70 countries in one form or the other and the value of their assets has reportedly exceeded $ 250 billion with a steady growth rate of about 15 percent per annum.
This was stated by Pervez Said, Director Islamic Banking Department of State Bank of Pakistan Karachi, while addressing a seminar on "Awareness on Islamic Banking," organised by State Bank of Pakistan here on Monday.
In his key note address, while highlighting the importance of Islamic Banking in any financial system, Pervez said Islamic Banking is a form of banking desired by Muslims however is not understood very well by most of the stakeholders of the banking industry.
In order to promote Islamic banking in the country, he said SBP has recently established a full fledged Islamic banking department, which would also serve as a focal point for all matters related to Islamic banking and finance in the country.
Pervez Said mentioned that a parallel approach has been adopted by SBP, (which is a hybrid of the Malaysian and Bahrain model) and added that meanwhile Islamic banking has been introduced side by side with traditional banking.
Over the time, he said this approach would enable SBP to refine and strengthen the rules and regulations introduced for Islamic banking operations.
Pervez Said informed the participants that a Shariah Board has also been established in the State Bank to advise the Bank on modes, procedures, laws and regulations for Islamic banking applicable in Pakistan ensuring Shariah compliance and smooth operations of Islamic Banks.
State Bank has issued the criteria for establishment of Independent Islamic banks, creation of subsidiaries and stand-alone branches by existing commercial banks to conduct Islamic banking in the country, he said.
A Musharaka-based Export Refinance Scheme has been designed by the State Bank in order to provide export finance to eligible exporters on the basis of Islamic modes of financing.
Efforts are underway to develop Islamic money market instruments like Ijarah or leasing certificates to facilitate the process of Islamisation of the banking system in Pakistan, the director Islamic Banking Department SBP said.
State Bank, he said has also made an arrangement with M/s Ford Rhodes Sidat Hyder (FRSH) for conducting Shariah compliance audit of Islamic banks, creating a Shariah audit manual and training of SBP officers.
Pervez Said informed the gathering that the efforts made by SBP have resulted in the creation of Meezan Bank Limited with nine branches. Muslim Commercial Bank and Bank of Khyber have opened one stand-alone branch each, operating exclusively on Shariah compliant basis. Bank Al-Falah has recently opened five stand-alone branches and Habib Bank AG Zurich is about to open a stand-alone branch, he said.
A foreign group has shown interest to open an Islamic Bank in Pakistan during 2004, he added.
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