“The government has formed a steering committee to speed up work on the promotion of Islamic financing in Pakistan,” Federal Minister for Finance Ishaq Dar said on Monday.
Addressing a conference through an online video link, Dar said that the government was committed to promoting and nurturing Islamic financing in the country.
The 2014 Global Forum on Islamic Finance, titled Developments and the Way Forward, was organised by COMSATS Institute of Information Technology (CIIT) in collaboration with several institutions, including the Higher Education Commission, Lancaster University and the Securities and Exchange Commission of Pakistan.
Dar said the government was firm in its belief that Islam provided guidance to its followers in all fields, including financing.
He said the Islamic finance industry constituted over 10 per cent of the country’s financial system and had maintained strong growth momentum. However, he said, it was still below its huge potential.
“We are a country of over 180 million people, predominantly Muslims, with a significantly large population excluded from the financial system due to faith sensitivities of the masses, a large agricultural base which meets its financial services needs largely from informal players as only 20 percent of the farmers have access to the formal financial system, and just five to six per cent of small and medium enterprise, among other reasons.”
Dar said Pakistan’s banking system had taken the initiative to develop financial instruments, in keeping with the spirit of the Islamic economic system.
Zahid Hamid, federal minister of science and technology and CIIT chancellor, said that the market share of Islamic financing in the country stood at almost 10-12 per cent. He said that by 2018, it was expected to reach 18 per cent. He said Islamic financing was witnessing an unprecedented growth globally. An Islamic financing centre, he said, would soon be established at the CIIT which would offer academic research and proposals for its promotion.
CIIT Director Mahmood Ahmad Bodla said that Islamic financing was increasing not just in the Muslim world, but also in other parts of the world.
After the global economic crunch in 2007, he said, the importance of Islamic financing had increased many folds.
He said the research papers presented in the conference would help generate a greater awareness of the subject and encourage academic research in the area. He also said its recommendations would later be shared with government institutions.
State Bank of Pakistan Executive Director Muhammad Ashraf Khan said that the Islamic financing share in Pakistan stood at 12 per cent. He said the State Bank was working on factors, including capacity building and compliance with the shariah mechanism for promotion of Islamic financing. Khan said the government was taking steps in this regard, an example of which was the formation of a steering committee.
Sessions on governance, theories and development and challenges in Islamic banking, comparative analysis between conventional and Islamic financing and the way forward for Islamic financial institutions will be included in proceedings over next two days. Habib Bank Limited, Al Baraka, Muslim Commercial Bank, Meezan Bank, Bank of Khyber and United Bank Limited have also set up their stalls at a banking exhibition organised under the conference.
According to the organisers, the forum aims at bringing together knowledge, expertise and understanding of Islamic financing. Representatives from Malaysia, Qatar, Bahrain, United States, Britain, Saudi Arabia, Jordan, United Arab Emirates and Canada are participating in the conference.
Published in The Express Tribune, March 11th, 2014.