Pakistan: Islamic banking robust.

The State Bank of Pakistan believes that Islamic banks are on the edge of combining their market position in the banking industry only if the key hurdles faced by these institutions are highlighted in a appropriate manner. The Islamic banks have shown flexibility in the middle of the global financial crisis which is surrounding the local banking industry and in addition to that the State Bank is confident of the share of the banks increasing up to 12% of the market in the coming 2 or 3 years.

Basically Islamic banking was introduced in this country in 2001 when the government decided to promote the Shariah system and the Islamic way has shown marvelous development by gaining more than 6% of the market share in June of this year. Plus the number of Islamic banks have increased to 19 in the country. The assets of SBP’s have grown by 31 percent along with the financing and investment portfolio showing that the performance have improved as compared to last year, though there have been some problems faced which could decrease their progress such as lack of awareness amongst the business community regarding the genuineness of Islamic banking. The biggest is the controversies among the religious scholars about the interpretation of Shariah banking practices. This further adds to the confusion of general public.

So SBP has started an awareness campaign to remove all misconceptions about Islamic banking and to start the promotion of the basics on which it operates. As part of the campaign, the field offices of SBP are now more accessible to the public and the business community as well which would in turn improve awareness about Islamic banking.