Title: Islamic Banking Continues to Witness Growth in Pakistan’s Financial Landscape
Islamic banking in Pakistan is gaining traction at a rapid pace, with its share in the overall banking sector surpassing 21 percent. This growing market share is a testament to the increasing preference of individuals and businesses for banking products and services aligned with Islamic principles. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) highlighted this trend during a seminar titled The Role of Islamic Finance in Solving Economic Challenges.
According to FPCCI President Irfan Iqbal Sheikh, Islamic banking operations in Pakistan have been successful and prudent, with a market share of deposits and assets reaching 19.4 percent and 18.6 percent, respectively, in 2021. This speaks volumes about the industry’s ability to cater to the needs of a diverse customer base.
Furthermore, net financing offered by Islamic banking institutions experienced an impressive growth rate of 38.1 percent in 2021. This significant increase demonstrates the robustness and potential of Islamic financing within Pakistan’s financial system.
Recognizing the surge in demand for Islamic banking, the State Bank of Pakistan has set a target to make all banking transactions in the country free from riba (interest) by 2027. This move aligns with the teachings of Islam and reflects the commitment of regulators and policymakers to promoting Islamic finance as a viable alternative to conventional banking.
During the seminar, FPCCI Senior Vice President Suleman Chawla emphasized the importance of adhering to the Federal Shariat Court’s judgment, which mandates the elimination of riba from the economy by 2027. Chawla called for consolidated efforts from the Ministry of Finance, Ministry of Law, State Bank of Pakistan, Banking Council, and other stakeholders to work collectively towards establishing Pakistan as a riba-free country. He emphasized the absolute prohibition of riba in all its forms, aligned with the teachings of the Holy Quran and Sunnah.
The growth and acceptance of Islamic banking in Pakistan also highlight the potential for Islamic finance to address economic challenges. By adhering to ethical and Sharia-compliant principles, Islamic banking can contribute to sustainable economic development and financial inclusion.
The high-profile seminar organized by the FPCCI attracted top officials from the central bank, Islamic finance scholars, prominent businesspersons, and FPCCI members. Their presence reflects the industry’s growing recognition and the importance of Islamic finance in addressing economic concerns, both domestically and globally.
As Islamic banking continues to gain prominence, it is crucial to maintain a balanced view of the broader banking landscape. While Islamic banking offers unique features and adheres to specific religious principles, it coexists alongside conventional banking to cater to the diverse financial needs of individuals and businesses.
In conclusion, Islamic banking in Pakistan has surpassed a 21 percent market share, highlighting the increasing preference for Islamic financial products and services. With a robust growth rate in net financing, Islamic banking is positioned to play a pivotal role in the country’s financial landscape. The commitment of regulators and policymakers to gradually eliminate riba from the economy by 2027 further reinforces the potential for Islamic finance to contribute to sustainable economic development.
