Islamic banking in Pakistan is consistently growing and its share has reached 3.8 percent in the banking industry, while branches mounted to 290. However, the share in total deposits surged to 3.6 percent of the banking sector.
The State Bank of Pakistan issued a detailed report on the performance of Islamic banking, which showed that overall Islamic banking assets registered a growth of 12 percent during July-September of fiscal year 2008 and overall assets mounted to Rs 178 billion in September 2007, which previously stood at Rs 159 billion on June 30, 2007.
Islamic banking services in Pakistan have recorded a noteworthy progress during the quarter under review constituting deposits base of over Rs 124 billion at end September, 2007 as compared to Rs 108 billion at the end of June 2007.
SBP said that it is expected that this share will grow considerably in the years to come. As at December end there were six full-fledged licensed Islamic banks, while the branches of Islamic banks'' have mounted to 187 across the country.
In addition, 12 commercial banks are offering Islamic banking services through 103 branches. The increasing interest of conventional banks in opening Islamic branches and applications for opening full-fledged Islamic banks show the promising future prospects for the growth of Islamic banking in Pakistan.
SBP said that as a first step, a three pronged strategy was laid out for the promotion of Islamic Banking in Pakistan which allows financial institutions, to decide at their discretion, to establish either full-fledged Islamic banks in the private sector or stand alone Islamic Banking branches of the existing commercial banks.
It may be mentioned here that the State Bank of Pakistan has formed a comprehensive regulatory framework aimed at the establishment and promotion of an Islamic banking system in line with best international practices. These measures are primarily demand-driven and provide an option to the customers to choose between the two banking systems in accordance with their preference.