Shariah compliant: SBP urges Islamic banks to be equitable
Islamic banks posted profits before tax of Rs12 billion in the third quarter of last year
The State Bank of Pakistan (SBP) governor has urged the country’s Islamic banks to develop ways to reward their customers in line with a surge in the sector’s profitability, or face regulatory action.
Islamic finance is experiencing a revival in the country, aided by an ambitious five-year plan that regulators hope will double the industry’s share of the banking sector to 20% by 2020.
A growing client base and improving asset quality helped Islamic banks post profits before tax of Rs12 billion in the third quarter of last year, almost double the year-earlier amount, central bank data shows. But regulators want to tackle consumer perceptions that Islamic banks falter when it comes to social responsibility and ethical banking practices.
The average financing-to-deposit spread – the difference between what banks charge for financing and what they pay their depositors – for all lenders, Islamic and conventional, remains high and should be “reasonably rationalised,” State Bank Governor Ashraf Wathra said in a speech to a gathering of industry executives on Monday.
Published in The Express Tribune, January 30th, 2015.
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