Minister for Finance and Economic Affairs Ishaq Dar on Friday reiterated the government’s resolve to switch over from conventional banking to Islamic banking and finance to enhance shariah compliant assets.
«The Shariah compliant assets currently stand at 10 per cent of the total banking products in Pakistan», Dar said this while addressing a seminar here. The Seminar titled «Promoting excellence in Islamic Finance» was organised by State Bank of Pakistan (SBP) in collaboration with UK aid, Department of International Development with an aim highlight the importance of Islamic banking. Dar said that Pakistan has been the early promotor of shariah compliant as government has taken several steps to promote Islamic banking and finance in Pakistan.
The government has issued sukuk bonds in international market which received overwhelming response and Pakistan was entered in the Sukuk market after nine years, he said. He said that government has also formed a steering committee headed by SBP deputy governor which was actively working on the development of reliable database and human resource needed by the Islamic banking. Dar said at present, the Islamic finance industry of Pakistan consists of 19 Islamic banks with a network of 1,200 branches spread across 80 districts, 27 Mudaraba companies, 15 mutual funds and 5 Takaful companies.
The industry now constitutes over 10 per cent of Pakistan’s financial system and maintains strong growth momentum, adding that Islamic finance industry in Pakistan needs trained human resource in order to realise the true market potential and emerge as a strong player in the global financial arena, he said. He said that various local institutions are offering educational programs related to Islamic banking and finance, however, these are relatively few while the demand and supply gap is huge. He said that 10 per cent share of Islamic banking against the total banking sector was much below than the existing potential and needed to further enhanced as globally shariah compliant assets are expected to grow by 15-20 per cent per annum over next few years. He informed that Islamic financial assets are likely to hit $5 trillion mark by 2020 and there were opportunity to find Islamic finance solutions to find achieve the millennium development goals.
He stressed the need for introducing different short and long term courses for preparing the skilled Islamic financial experts as skill human resource play vital role in development. Replaying to a question, he said that 80-85 per cent concerns regarding constitution of Judicial Commission were addressed and negotiation on three clauses was in progress. Speaking on the occasion, SBP Governor Ashraf Mahmood Wathra said that the event was aiming to promote excellence in Islamic banking, adding that about 2 billion people across the globe have no access to finance.
SBP, he said has taken several steps for marginalised segments of the society and started financial inclusion programme adding that over 10 billion earmarked for the programme. Globally the size of Islamic finance industry had reached to $1.8 trillion in 2013 and according to some estimates it is likely to reach $5 trillion by 2020, he remarked. He said that the total assets of Islamic banking in Pakistan reached over one trillion by end of December 2013 from adding that the total Islamic Banking deposits reached Rs. 868 billion in December 2013 which accounts 10.4 per cent of the total deposits of the banking sector. SBP governor said that the bank has fixed a target to enhance the share of Islamic banking up to 20 per cent which currently stood at 10.4 per cent by increasing banking network up to 2,000 branches from existing 1,400 branches.
Source: Daily Times