According to the latest data issued by the central bank, the asset base of the Islamic banking industry reached Rs926 billion, while deposits increased to Rs775 billion by the end of September. ILLUSTRATION: JAMAL KHURSHID
KARACHI: MCB Bank yesterday announced that it would set up a wholly-owned Islamic banking subsidiary.
The State Bank of Pakistan (SBP) has issued a no-objection certificate (NOC) in response to the application submitted to establish a standalone Islamic bank, according to a statement issued by the bank.
Global Securities Research Analyst Umair Naseer, while speaking to The Express Tribune, said that it was the first time in the history of Pakistan that a conventional bank was going to create a separate banking entity to cater to its specific set of clientele.
“In accordance with the SBP’s requirements, the paid-up capital of this subsidiary shall be Rs10 billion. Once the licence is issued, the existing 27 Islamic banking branches of MCB Bank will be merged into the new entity,” the company’s statement added.
According to the latest data issued by the central bank, the asset base of the Islamic banking industry reached Rs926 billion, while deposits increased to Rs775 billion by the end of September. In terms of their market share in the overall banking industry, assets and deposits grew 9.5% and 10.1%, respectively, during the July-September quarter.
Currently, the largest player in the Islamic banking industry is Meezan Bank with deposits and other accounts amounting to Rs268 billion at the end of September 2013, the latest quarter for which official data is available. Even the combined deposits of the rest of the four dedicated Islamic banks do not exceed those of Meezan Bank.
Other than five Islamic banks, as many as 14 conventional banks also run Islamic banking operations through windows.
Among conventional banks, Bank Alfalah and Standard Chartered run the largest window operations with 118 and 10 Islamic banking branches, respectively.
Besides Bank Alfalah, only Faysal Bank (52), Bank of Khyber (40), Habib Bank (38) and Askari Bank (33) operate more Islamic banking branches than MCB Bank.
Published in The Express Tribune, January 17th, 2014.
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Keeping growth of Islamic banking in the country, it would take few more years when country would mark end of conventional banking. I.e. Interest free banking