Under the strategy, the central bank will strive to get a 20% market share for Islamic banking during the five-year period compared to present 10%. ILLUSTRATION: JAMAL KHURSHID
The State Bank of Pakistan (SBP) has evolved a comprehensive five-year strategy aimed at promoting Islamic mode of banking in the country.
SBP Deputy Governor Saeed Ahmed stated this while speaking at the Lahore Chamber of Commerce and Industry on Wednesday.
Under the strategy, the central bank will strive to get a 20% market share for Islamic banking during the five-year period compared to present 10%.
Ahmed said not only the business community was being taken on board, but educational institutions were also being motivated to initiate research on this segment of banking that was gaining currency with the passage of time.
The SBP is in regular contact with the Institute of Business Administration (IBA) Karachi for establishing a centre of excellence on Islamic banking. As soon as the first centre is established, three more centres will be established in Lahore, Islamabad and Karachi.
Ahmed stressed that Islamic finance was one of the fastest growing segments of the global and domestic financial sectors.
“Islamic finance is all set to establish itself as a better alternative to the conventional financial system having capacity to ensure financial stability and inclusive economic growth,” he said.
The 2008 global financial crisis prompted western financial experts to look for an alternative under which the international financial system could overcome the weaknesses of the conventional system based on fixed predetermined return in the form of interest.
The search was for a system that could lead to equitable treatment of all stakeholders under all circumstances. A lot of attention was focused on solutions that were not far from Islamic financing that allowed fairness of return, sharing of risk and reducing income inequalities, he pointed out.
Published in The Express Tribune, May 1st, 2014.
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