Govt and SBP Support Islamic Banking in Pakistan

The policymaker and regulator threw their weight behind the Islamic banking sector, expressing their different viewpoints about the industry and its future in Pakistan on the second day of the 3rd World Islamic Finance Forum organized by the Institute of Business Administration (IBA).

Federal Minister for Finance and Revenue, Miftah Ismail, vowed that Pakistan would go for the implementation of the Riba free banking system, per the ruling of the Federal Shariat Court.

Addressing the concluding session of the 3rd World Islamic Finance Forum-2022 (WIFF) as the chief guest via zoom, the Finance Minister said the FSC order is a step in the right direction, and “there is nothing to fear for Pakistani investors as the Court has taken very enlighten view in its ruling”. It would be an evolutionary process of conversion of conventional banking into Riba-free Shariah-compliant banking.

“Riba-free banking will attract a number of Muslims who otherwise do not engage in the banking system. By doing just conventional banking, we actually ignore a significant number of Muslim populations around the world, including Pakistan, thereby compromising our prosperity. It’s very important to cater to the financial needs of these Muslims who do not wish to have anything to do with conventional interest-based banking. For us to have inclusive growth, we have to allow the unbanked to do interest-free banking,” the minister remarked.

The Acting Governor of the State Bank of Pakistan (SBP), Dr. Murtaza Syed, said Islamic banking has a key role in the growth of the economy while it has been growing at a fast speed, particularly in Pakistan. He said Islamic banking has a central role in the growth of home financing in the country. He said that there is no doubt that Islamic banking is the future of banking. He said Islamic banking has a big role in the growth of the economy.

The Islamic economic system focuses on providing decent and provides prosperous lives to all human beings and ensuring everyone has a minimum level of welfare. The major characteristics of Islamic finance are aligned with sustainable development and prosperity, he remarked.

“To develop practical solutions on Sukuk structures especially Asset Light Sukuk Structures, #SBP is constituting a working group comprising SBP, SECP, MoF, PBA, Shariah Scholars and Centers of excellence in Islamic finance, says Dr. Murtaza Syed, Governor (A), at WIFF2022,” a tweet by the SBP read.

Islamic banks face challenges due to irregular issuance of Sukuk. SBP is working with all stakeholders to ensure regular availability of Sukuk,” the SBP said in another tweet.



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