IN a welcome development, State Bank of Pakistan has launched a third five-year plan (2021-25) to support Islamic banks in expanding their outreach nationwide, advising them to increase online banking and capitalize on fintech to sustain the growth momentum.
The plan is aimed at making Islamic banking one-third of the overall banking industry by 2025.
Islamic banking is not new in Pakistan as already there are five full-fledged Islamic banks and 17 conventional banks have standalone Islamic banking branches offering Shariah-compliant products and services.
There are 3,456 branches of Islamic banks and 1,638 Islamic banking windows at conventional branches successfully doing business to the satisfaction of the management as well as their customers in 124 districts of the country.
However, it is also a fact that there is enormous potential to expand Islamic banking as there is growing realization among the predominant Muslim population of the country to get rid of ‘Riba’ based economy as per injunctions of the Holy Quran and Sunnah.
Article-227 of the Constitution provides that all existing laws shall be brought in conformity with the injunctions of Islam as laid down in the Holy Quran and Sunnah while Article 37 dealing with Principles of Policy enjoins upon the State to eliminate Riba as early as possible.
It is regrettable that 47 long years have elapsed since adoption of the Constitution but these important provisions could not be implemented in letter and spirit mainly because of lack of political commitment.
The Council of Islamic Ideology and several other institutions have done commendable research work on the subject of Islamic banking and substantial progress can be made towards Islamization of the economy if this work is given practical shape under the guidance of experts.
Though the targets given in the third plan are not aggressive, one has to realize that only a gradual approach can work in a system that is dominated by Riba-based operations.
