All branches of United Bank Limited (PSX: UBL) in Khyber Pakhtunkhwa and Balochistan have been converted into Islamic banking branches, the bank said in an emailed response on Tuesday.
United Bank Limited (UBL) has transitioned to Islamic banking in accordance with the recent passage of law to shift the entire banking sector towards Shariah compliance by 2027.
The transformation follows the National Assembly’s passage of a law in December 2024 requiring all conventional banks to convert to Islamic banking. This stems from the Federal Shariat Court’s directive to eliminate riba (interest) from the financial system.
As of 2023, Pakistan’s Islamic finance sector comprised 21 percent of the total banking industry. The State Bank of Pakistan (SBP) reported that Islamic banking assets reached Rs. 7.2 trillion by mid-2023, up 24 percent year-on-year.
Deposits also rose to Rs. 5.8 trillion, representing nearly 23 percent of the country’s total banking deposits.
Currently, only 5 of Pakistan’s 42 commercial banks operate as fully Islamic institutions. The conversion of conventional banks involves significant restructuring, including loan portfolio adjustments, staff training, and the development of Sharia-compliant products.
To support this transition, SBP has implemented a Transformation Plan (2023-2027) with technical guidance and incentives to ensure a smooth and effective shift to Islamic banking for all banks.