According to a yearly Global Islamic Finance Report in the UK, Pakistan’s growth rate in the industry was at 30% cumulative over the course of 5 years. The Report ranks over 50 countries across the world according to their position in the Islamic financial services industry.
This was above average global growth rate of Islamic banking and finance and if the trend continues, Pakistan’s Islamic banking assets will reach a value of $17.6 billion by 2017.
Second Largest Market for Islamic Banking
State Bank of Pakistan in compliance with the trend, seeks to double the number of Islamic banking branches from their current number which stands at around 1200. It is also aiming to increase the market share of Shariah-compliant banking from 10% to 15% before 2020. Pakistan is the second largest market for the Islamic banking industry.
Islamic financial services industry of Pakistan is housing microfinance banks, modaraba (Islamic asset management), Islamic mutual funds, takaful companies and Islamic Real Estate Investement Trusts.
CEO of First Habib Modaraba, Muhammad Shoaid Ibrahim says,
The branch network of Islamic banks is continuously expanding throughout the country at a fast pace and catering to the demand for Shariah-compliant banking products. The State Bank of Pakistan has played a leading role in further promoting and developing Islamic banking within the country on sound footings. In particular, Islamic mutual funds, modaraba and takaful companies are growing very well and are contributing to the development of Islamic finance in the country.
Microfinancing has also been on the rise in Pakistan as a lot of Pakistani households are taking interest-free loans based on Islamic law from microfinance institutions. Majority of the clients were women.
Infrastructure Financing via Islamic Finance Services
Pakistani banks arranged a ten year Islamic sukuk worth $955 million to finance the construction of a hydroelectric power plant, this was the biggest energy deal ever using Islamic financing in Pakistan.
Finance Minister Ishaq Dar says that Pakistan wants to make Islamic finance the first choice for infrastructure and long-term financing needs and also wants to shift 40% of its debt financing to Islamic sources of finance. This is also for infrastructure projects worth $45 billion which were agreed upon by Pakistan and China’s government for the China-Pakistan Economic Corridor.
Via Gulf Times