«The Roots & Development of Islamic Banking in the World & in Pakistan Muhammad Aqib Ali Director and Country Head, International Islamic Finance & ...»
depicted by the amazing facts and figures in the latest SBP Islamic Banking Bulletin (2013) which states that the total number of Islamic banking branches in the country is 1100 (till March 2013) as compared to only 99 in February 2006; the total deposits of Islamic banks stands at an encouraging figure of 9.7% out of total bank deposits and net finance and investment operations percentage is 8.5%. The trend was accurately forecasted in 2006 by Al-Refai who projected that the aggregate Islamic banking deposits will be estimated to be at staggering 13 billion US$ approximately 10% of the total bank deposits in the country by
2014. The progress is still taking place as all the industry stakeholders are playing their role in the strengthening of Islamic finance including the central bank of Pakistan, the State Bank of Pakistan (SBP). SBP recently started a massive media campaign in the country to enhance awareness and to promote acceptance of Islamic finance, its products and services. The campaign is part of an initiative that also includes a proposal to establish a country level Shariah Board to supervise the activities of Islamic financial institutions and to ensure greater levels of Shariah compliance in the products and service offerings of Islamic banks and other Islamic financial institutions. (Bernardo 2013)
Islamic banking has shown an outstanding potential and has gradually grown from strength to strength in the last five decades, globally. An annual growth rate of over 16% demonstrates the phenomenal expansion of Islamic banking and finance paradigm in the world. When we specifically survey the progress of Islamic banking in Pakistan, this can be said that it has been quite encouraging and consistent. The facts and statistics support the splendid growth of Islamic banking initiative in the country; for instance in the initial years of Islamic banking in Pakistan i.e. from the late 1970s to 1990s, a growth rate of 13% was observed while it has been more than 30% according to the latest estimates (Dawn 2014). Apart from the positive progress, there are also some challenges and issues like Shairah compliance, negative perceptions of people towards Islamic banking, and mighty conventional/interest-based system,that act as hurdles to the overall expansion of Islamic banking in Pakistan. These issues must be addressed discreetly and effectively to make sure that Islamic banking keeps on the right track and continues to progress in the right direction. The potential and vision of Islamic banking can only be realized if it favorably impacts all of the relevant stakeholders, principally its customers, and this can be achieved through greater focus on research, innovation, product diversity, customer satisfaction & awareness.
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