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SBP to include SMEs, agri, micro finance in Islamic Banking soon

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Points of Essence:

  • The State Bank of Pakistan will soon include SMEs, agriculture and micro finance to enhance its existing regulatory framework on Islamic finance in Pakistan.
  • The new approach will aptly apply its 5 regulatory principles to focus on evolving a regulatory framework, enhancing the spectrum of Islamic Banking, strengthening Shariah compliances mechanism, consulting internal and external stakeholders for better liaison and strengthening human resources.
  • SBP targets to enhance market share of Islamic Banking to 12 percent by the year 2012.

By Nauman Tasleem

LAHORE: The State Bank of Pakistan (SBP) would soon include Small and Medium Enterprises (SMEs), agriculture and micro finance to regulate and strengthen Islamic Banking.

This was stated by Pervez Said, Director Islamic Banking Department and Advisor to SBP Governor during the 2nd International Conference on Islamic Banking and Finance held at Aiwan-e-Iqbal on Monday, which was arranged by Al Huda Centre for Islamic Banking and Economics. Bankers from different countries participated in the international conference held to promote Islamic Banking in the country.

He said, “SBP would broaden the horizon of Islamic Banking and agriculture, while SMEs and micro finance would be given special attention in the new policy.”

He said like five pillars of Islam, the policy also has five principles and the SBP would focus on these steps and would ensure its implementation. “In the Islamic Banking policy, we would focus on evolving a regulatory framework, enhancing the spectrum of Islamic Banking, strengthening Shariah compliances mechanism, internal and external stakeholders would be consulted for better liaison and special focus would be made on strengthening human resources,” said Mr Said, adding that the SBP targets to enhance market share of Islamic Banking to 12 percent by the year 2012.

He said Pakistan has made leaps in Islamic Banking over the last five years. “In 2003, the market share of Islamic Banking in the country was only 0.5 percent with only one full fledge bank and one branch of a conventional bank, but now the deposit of Islamic Banks is Rs 160 billion which is 4.5 percent of the market share,” the SBP Director said, adding that there are six full fledge banks with 230 branches, 12 conventional banks having 103 Islamic branches. He said that the Islamic Banking development in Pakistan is very positive as compared with other countries, where Islamic Banking is going for the last one or two decades. “Indonesian Islamic banks could grasp only 1.5 percent market share in more than 10 years while Malaysian Islamic banks could accumulate 12 percent in more than 20 years,” he said. Mr Said was of the view that there is a lot of potential for setting up educational institutes for training the Islamic bankers and we have to be patient in developing Islamic banking. He said that there is a need for step-by-step development. “We have started from zero and to reach 100, there is need of patience. We should not go for a jump of 100 steps rather one step approach would make us successful,” he said.

Mr Shafqaat Ahmad, Country Head Al Baraka Bank said that Islamic Banking provides solution to all economic crises being faced by the world. He said that there is a need to develop a comprehensive strategy for encouraging the banking system.

Source: http://www.dailytimes.com.pk

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Written by Suapi Shaffaii

August 26, 2008 at 3:06 am

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