SBP to develop rules for Islamic banking
Aims to define roles of scholars, five-year plan for the sector.
DUBAI:
The State Bank of Pakistan (SBP) has announced it will develop rules defining the roles and responsibilities of all those involved in the Shariah compliance process of Islamic banks, including scholars.
The rules aim to strengthen governance of the Islamic finance sector, the central bank said in a statement on Tuesday. However, it did not give details of the new rules.
The SBP also said it was developing a five-year plan for Pakistan’s Islamic banking sector in the 2013-2017 period.
“The new plan will set the strategic direction for the Islamic banking industry. This would define the strategies and action plans to move the industry to the next level of growth,” said SBP Deputy Governor Kazi Abdul Muktadir.
Islamic banking will grow to 15% of the country’s total banking sector in the next five years, he added. Islamic banks held Rs644 billion ($6.8 billion) or 7.7% of the total banking assets in March this year, central bank data shows.
The SBP will also be willing to offer ‘necessary support’ to Islamic banks to build portfolios in non-traditional sectors such as agriculture and small and medium-sized enterprises (SMEs), the statement said.
Financing by Islamic banks is currently dominated by the mainstream corporate sector at 73.9% of total financing, with agricultural financing representing just 0.1% and SMEs 5.1%, central bank data shows.
“Expanding into these sectors will not only improve their repute amongst the masses but will also provide them an attractive avenue to develop and expand their assets portfolios,” Muktadir said.
The country’s Islamic banking industry includes five full-fledged Islamic banks and five takaful – Islamic insurance – firms, with an additional 12 conventional banks offering services through Islamic windows.
The Securities and Exchange Commission of Pakistan announced new takaful rules last month, aiming to boost competition and lift the sector’s market share by allowing the entry of conventional players. However, this prompted a legal challenge from takaful providers and it is unclear when the new rules will actually be implemented.
Published in The Express Tribune, September 6th, 2012.
The State Bank of Pakistan (SBP) has announced it will develop rules defining the roles and responsibilities of all those involved in the Shariah compliance process of Islamic banks, including scholars.
The rules aim to strengthen governance of the Islamic finance sector, the central bank said in a statement on Tuesday. However, it did not give details of the new rules.
The SBP also said it was developing a five-year plan for Pakistan’s Islamic banking sector in the 2013-2017 period.
“The new plan will set the strategic direction for the Islamic banking industry. This would define the strategies and action plans to move the industry to the next level of growth,” said SBP Deputy Governor Kazi Abdul Muktadir.
Islamic banking will grow to 15% of the country’s total banking sector in the next five years, he added. Islamic banks held Rs644 billion ($6.8 billion) or 7.7% of the total banking assets in March this year, central bank data shows.
The SBP will also be willing to offer ‘necessary support’ to Islamic banks to build portfolios in non-traditional sectors such as agriculture and small and medium-sized enterprises (SMEs), the statement said.
Financing by Islamic banks is currently dominated by the mainstream corporate sector at 73.9% of total financing, with agricultural financing representing just 0.1% and SMEs 5.1%, central bank data shows.
“Expanding into these sectors will not only improve their repute amongst the masses but will also provide them an attractive avenue to develop and expand their assets portfolios,” Muktadir said.
The country’s Islamic banking industry includes five full-fledged Islamic banks and five takaful – Islamic insurance – firms, with an additional 12 conventional banks offering services through Islamic windows.
The Securities and Exchange Commission of Pakistan announced new takaful rules last month, aiming to boost competition and lift the sector’s market share by allowing the entry of conventional players. However, this prompted a legal challenge from takaful providers and it is unclear when the new rules will actually be implemented.
Published in The Express Tribune, September 6th, 2012.