The State Bank of Pakistan (SBP) aimed to increase the percentage of Islamic banking to 35% by 2025, according to the deputy governor of the central bank on Tuesday. Currently, 20 percent of the financial sector is made up of Islamic institutions.
“Our people prefer Islamic banking, and we want to promote it further so that more people may take advantage of it and have more access to financing. This will make people’s lives better,” said the SBP deputy governor Sima Kamil at an Islamic banking summit organized by a local bank.
Since the SBP oversees banks, Kamil claimed that Faysal Bank, which was formerly conventional, had converted to Islam entirely. He added that any conventional bank wishing to convert its 100, 200, or 300 branches to Islam may take advantage of this possibility.
She noted that switching from conventional banking to Shariah-compliant banking was challenging. “In this regard, the SBP is completely cooperating, and will present revised work to improve this shift.”
The central bank representative gave the banks his word that the SBP would continue to be committed to helping them convert in whatever way it could. According to her, finance is a crucial prerequisite for any economy’s progress, and Islamic finance, with its inherent linkages with risk and reward systems and faith-based foundation, provides the perfect answer.
“Islamic finance structures are derived from Shariah, which dictates that Islamic financial transactions should be supported by underlying productive activities and emphasizes on a close relationship between financial transactions and the real economy.”
A major issue, according to Kamil, is the lack of qualified professionals in Islamic finance. According to the SBP deputy governor, there is an increasing need for qualified Islamic finance experts who can lead the financial sector to the next level.