Strategic Plan for Islamic Banking Industry in Pakistan

SBP:This is the Startegic plan for Islamic Banking Industry in pakistan.please do check out the information in the PDF form:

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SBP issues guidelines on Islamic banking

The News International: The State Bank of Pakistan has decided to revise clause 1 (vi) of Appendix A to Annexure I of IBD Circular 2 of 2008, regarding the Essentials of Islamic Modes of Financing (Murabaha) with a view to facilitating the Islamic financial industry.

A circular issued here on Saturday said that now clause (vi) reads: Wherever possible, the invoice issued by the supplier shall be in the name of bank- account client eg 1st Islamic Bank ABC Company as the commodity would be purchased by an agent on behalf of such financier.

In case it is not possible, then specific approval from the Shariah adviser should be sought for the transactions. It is preferable that the payment for such commodities should be made by the financier directly to the supplier or credited in an Escrow Account.

In both the cases, the Murabaha financing account shall be debited only after completion of offer and acceptance between the customer and the Islamic banking institution (IBI). If direct payment to the supplier by the IBI is not feasible for valid reasons, such reasons shall be recorded by the IBI for making payment to the supplier through the agent for purchase of goods. However, in this case proper utilisation of funds shall be ensured by the IBI.

The banks have been advised to see IBD Circular No2 dated March 25, 2008 on the above subject. Other instructions on the subject shall remain unchanged, the circular said.

Islamic financial services awareness programmes

Daily Times: The State Bank of Pakistan (SBP) will host five Islamic financial services awareness programmes here from October 27-31, under the auspices of Islamic Financial Services Board (IFSB).

The programmes will be held in conjunction with the 13th Meeting of the Council of the Islamic Financial Services Board (IFSB), which is also being hosted by the State Bank of Pakistan in Karachi on October 29, a statement said on Thursday.

The programmes include the 3rd International Conference on Islamic Banking & Finance (Risk Management, Regulation and Supervision), co-organised with the Islamic Research and Training Institute (IRTI) and Islamic Development Bank (IDB), 2nd Public Lecture on Financial Policy and Stability, Interactive Session on the Financial Health of Islamic Financial Services, 5th International Seminar on Challenges facing the Independence of Shari’ah Supervisory Boards and Seminar on Monetary Operations and Liquidity Management

The Islamic financial services awareness programmes will be addressed by top executives from among the industry’s regulatory and supervisory bodies, as well as leading international experts in the Islamic financial services industry, the statement said. The chairperson of IFSB Council, Dr. Shamshad Akhtar (Governor, State Bank of Pakistan), while appreciating the efforts of IFSB, said that global interest in Islamic finance industry and Pakistan’s success in laying basic foundation and developing core infrastructure of Islamic financial system lends confidence that the country has good potential and prospects to further develop this industry.

Pakistan has shown a robust growth in Islamic banking, which can serve as a key vehicle to improve and strengthen the access to development finance by bringing in financial innovation that can cater adequately to diverse demands of the population as well as corporate sector’s and country’s infrastructure financing requirements, she said.

Secretary General of the IFSB, Professor Rifaat Ahmed Abdel Karim said, “Looking at the growing integration of the Islamic financial services industry into the global financial framework, it is imperative for the international financial community to keep itself abreast with the developments and issues inherent within the industry.

SBP to include SMEs, agri, micro finance in Islamic Banking soon

Daily Times: The State Bank of Pakistan (SBP) would soon include Small and Medium Enterprises (SMEs), agriculture and micro finance to regulate and strengthen Islamic Banking.

This was stated by Pervez Said, Director Islamic Banking Department and Advisor to SBP Governor during the 2nd International Conference on Islamic Banking and Finance held at Aiwan-e-Iqbal on Monday, which was arranged by Al Huda Centre for Islamic Banking and Economics. Bankers from different countries participated in the international conference held to promote Islamic Banking in the country.

He said, “SBP would broaden the horizon of Islamic Banking and agriculture, while SMEs and micro finance would be given special attention in the new policy.”

He said like five pillars of Islam, the policy also has five principles and the SBP would focus on these steps and would ensure its implementation. “In the Islamic Banking policy, we would focus on evolving a regulatory framework, enhancing the spectrum of Islamic Banking, strengthening Shariah compliances mechanism, internal and external stakeholders would be consulted for better liaison and special focus would be made on strengthening human resources,” said Mr Said, adding that the SBP targets to enhance market share of Islamic Banking to 12 percent by the year 2012.

He said Pakistan has made leaps in Islamic Banking over the last five years. “In 2003, the market share of Islamic Banking in the country was only 0.5 percent with only one full fledge bank and one branch of a conventional bank, but now the deposit of Islamic Banks is Rs 160 billion which is 4.5 percent of the market share,” the SBP Director said, adding that there are six full fledge banks with 230 branches, 12 conventional banks having 103 Islamic branches.

He said that the Islamic Banking development in Pakistan is very positive as compared with other countries, where Islamic Banking is going for the last one or two decades. “Indonesian Islamic banks could grasp only 1.5 percent market share in more than 10 years while Malaysian Islamic banks could accumulate 12 percent in more than 20 years,” he said.

Mr Said was of the view that there is a lot of potential for setting up educational institutes for training the Islamic bankers and we have to be patient in developing Islamic banking. He said that there is a need for step-by-step development. “We have started from zero and to reach 100, there is need of patience. We should not go for a jump of 100 steps rather one step approach would make us successful,” he said.

Mr Shafqaat Ahmad, Country Head Al Baraka Bank said that Islamic Banking provides solution to all economic crises being faced by the world. He said that there is a need to develop a comprehensive strategy for encouraging the banking system.