To advance the Islamic banking system in Pakistan, the State Bank of Pakistan (SBP) has instructed commercial banks to expand their Islamic banking operations.
According to the circular sent to banks, it has been agreed to permit banks and Microfinance Banks (MFBs) with Islamic banking operations to update their Annual Branch Expansion Plan (ABEP) for 2023 in order to include new Islamic banking branches, offices, and conversion plans.
The government’s announcement that the country’s Riba-based banking system and the economy would be eliminated within the next five years prompted the release of the notification.
This results in the development of an alternative financial system, specifically the Islamic banking system, which has been expanding rapidly in the nation as most people favor it over interest-based banks.
These commercial and microfinance banks (MFBs) might also think about substituting Islamic banking branches and offices for conventional ones, as suggested in the ABEP 2023.
Additionally, those banks and MFBs that did not choose to expand in 2023 are urged to submit their ABEP-2023 together with their plans for the opening of new Islamic Banking branches and offices as well as conversion proposals.
The transformation of the banking system from conventional to Sharia-compliant mode in light of the decision of the Federal Shariat Court and the growth in digital technologies offer a huge opportunity for the growth of the banking industry, according to Jameel Ahmed, Governor SBP, at a recent conference organized by the National Institute of Banking and Finance (NIBAF) in collaboration with the Institute of Cost and Management Accountants of Pakistan (ICMA Pakistan).
He reiterated SBP’s steadfast support for Sharia-compliant mode transformation in the financial sector as well as its assiduous assistance for the advancement of digital transformation.
To read our blog on “Current Riba-based system of Pakistan will be ended in 5 years, Ishaq Dar,” click here.
