SHARIAH Complaint banking has gradually become an important part of the domestic economy with its market share increasing close to one-fifth of the overall banking industry in terms of deposits and assets over the past two decades.
Still, there is enormous potential for the industry to grow fast considering that the Muslim community dominates the population landscape in the country. Increased awareness of Islamic banking may help it achieve the next level of growth.
In this context, this paper has always remained at the forefront and forthcoming to underline the potential and need of the Islamic banking in the country.
Under the aegis of this paper, a fourth round table conference on Islamic banking was held in Karachi on Monday which was attended by President Arif Alvi and other top level government officials.
Whilst projecting high growth prospects, President Alvi very rightly emphasized that the promotion of Islamic banking is vital to address the issues of poverty and unemployment.
Indeed God Almighty will shower His blessings on this land, when it will align its financial regime in accordance with Shariah.
The country’s constitution also dictates that all laws should be in conformity with the Islamic injunctions.
As such, the state is responsible for the application of Shariah in various socioeconomic institutions.
It is a matter of satisfaction that the State Bank of Pakistan (SBP), under the leadership of Governor Reza Baqir, launched a five year plan to support Islamic banks in expanding their outreach nationwide earlier this year. The plan aims to make Islamic banking one-third of overall banking industry by 2025.
At present, 22 Islamic banking institutions are offering Shariah compliant products and services through a network of 3,456 branches and 1,638 Islamic banking windows.
But as the concentration is in urban areas, it is highly important to expand the outreach of Islamic banking institutions to un-served/underserved areas.
Given the significant contribution of branchless banking towards improving financial inclusion, there is a need for the Islamic banking industry to capitalise on fintech to sustain its growth momentum.