GROWTH OF ISLAMIC BANKING IN PAKISTAN pdf download

Growth Of Islamic Banking in Pakistan

GROWTH OF ISLAMIC BANKING IN PAKISTAN

In Pakistan Islamic banking emerged as a response to both religious and economic needs. Efforts for economy wide elimination of Riba started during 1970s and most of the significant and practical steps were taken in 1980s.

The mid-80s attempt was a significant step in the evolution of Islamic banking system in the country. In a technical sense it was the most advanced model compared to any other model being practiced anywhere in the world at that time.

However that system fell apart as it did not adequately address issues such as putting in place an effective Shariah compliance mechanism, giving emphasis to capacity building, and opting for a flexible and evolutionary approach.

In any case this effort provided a valuable experience that has been taken into account while formulation of SBP’s current strategy to re-launch Islamic Banking in Pakistan .

 Amendments in financial system to allow the issuance of new interest-free instrument of corporate financing, promulgation of ordinance to permit the establishment of Mudaraba companies and floatation of Mudaraba Certificates, constitution of Commission for Transformation of Financial System (CTFS),

and the establishments of Islamic Banking Department by the State Bank of Pakistan are some of the key steps taken place by the governments.

The initiative to re-introduce Islamic Banking in Pakistan was launched back in 2001 when the government decided to promote Islamic banking in a gradual manner and as a parallel and compatible system that is in line with best international practices.

Following the decision of the government to shift to interest free economy in a phased manner without causing any disruptions the effort was envisaged to be based on a market driven and flexible approach.

Furthermore it aims at building a broad based financial system in the country to enable all segments of the population to access financial services.