IT is heartening to see present government’s greater emphasis on promoting Islamic financing in the light of Federal Shariat Court’s decision which ruled that Pakistan should implement an interest free banking system in next five years.
Chairing a meeting in Islamabad on Saturday, Finance Minister Ishaq Dar announced all out support for implementation of Federal Shariat Court’s ruling, stressing the need for all stakeholders to work with commitment, sincerity and understanding to overcome all hurdles and make the interest-free system feasible.
The fact of matter is that there is great demand of Islamic financing in our country because of which we see a greater number of banks emerging in this sector while others also coming up with Islamic products, and if the court orders are implemented effectively, we believe Islamic finance industry would receive an immediate boost.
The development of Islamic banking industry especially beyond Muslim jurisdictions is recognition of its viability as a competitive alternative to conventional banking.
According to Financial Stability Report 2018 issued by Islamic Financial Services Board (IFSB), its asset base has grown by 8.3 percent to surpass US$ 2 trillion mark.
With expanding scope and size of Islamic finance and emerging global challenges, it is gaining importance from financial stability perspective.
Inherent strengths of being asset backed and prohibition on speculative activities in Islamic finance lead to better resilience of Islamic banking institutions against excessive risks.
We have no doubt in saying that Islamic finance has the potential to support our broad based economic growth and we are confident that State Bank of Pakistan will leave no stone unturned with the support of other stakeholders including religious scholars to make the banking system interest free in the given timeline, which in fact will be a great achievement and a model for others to emulate.
