Speakers at the two-day 'Islamic Banking and Money Market Conference', held at a local hotel on Tuesday emphasised the need to look forward to capitalise on excess liquidity available in the Gulf region and other Muslim countries, looking for Shariah-compliance banking system.
Pervez Said, Director, Islamic Banking, and Adviser to State Bank of Pakistan Governor, said in his brief remarks that Pakistan was well positioned to serve as a bridge between the need and gainful utilisation of excess liquidity available in the Gulf and other Muslim countries. He said that Pakistan is the gateway to these investments and an effective bridge between the need and its fulfilment.
Looking at the investment trend in Pakistan and other Muslim countries it could be said that people in the Muslim countries would want to go for Islamic banking, provided it offered better care of their investments. They have already begun to show interest in interest-free banking, musharka, mudaraba and other similar means of investment/financing, he added. He said that it was time for the banking and non-banking financial institutions to take initiative. "Whoever controls the flow of this liquidity will get the benefit."
He said that the basic infrastructure for growth of Islamic banking was there but it needed fine-tuning. He said that by the end of this year there would be five big banks in Islamic banking sector.
Said that Islamic banking should be taken as a sub-set of Islamic economic system, and a little more thinking and detailed investigation into its operational system would contribute towards its improvement. He said that the regulatory system was in place, and the private sector should come up and play its role.
Khalid Rafi, Chairman, Islamic Capital Partners, in his address of welcome said that banking sector in Pakistan is a $125 billion market at present and it is growing at 6 percent annually. The forecast shows that the growth would sustain.
He said that at present there is $1 billion in the Islamic banking system. In the next ten years, it would be in the vicinity of $13 billion to $15 billion, and its rate of growth would be about 10 percent.
Azhar Qureshi of SBP said that the central bank had been working on developing regulations for effective promotion of Islamic banking system in Pakistan. With the encouragement came Meezan Bank in 2003 and, by 2006, there are six full-fledged banks in the system. He said that of total assets of banks, 2.5 percent is the share of Islamic banking system.
Later, the speakers addressed questions such as whether introduction of Islamic banking was simple banking or it was an agent of change; should Islamic banking be taken as a system to serve as bridge between the excess liquidity and a Shariah-compliance channel to do business, or it is just another way to legitimise the existing banking system in the Islamic world.
The conference would conclude on Wednesday when State Bank Governor Shamshad Akhtar would speak in the opening session and a former SBP governor Dr Ishrat Hussein would make final remarks in the concluding session in the evening.
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