Business Finance

Business community urges to promote Islamic banking in Pakistan

The business community of Pakistan has expressed its need for more efforts to promote Islamic banking and finance system in the country, which is based on the principles of sharia law and does not involve interest or riba.

Islamic banking has potential to grow in Pakistan

According to Ijaz Afridi, the acting president of Sarhad Chamber of Commerce and Industry (SCCI), Islamic banking has great potential to grow in Pakistan, as it can foster economic development and social welfare. He said that Islamic financing has increased by 20 per cent in the banking sector and the State Bank of Pakistan (SBP) is striving to increase this share to 35 per cent.

He also said that Islamic banking can reduce poverty and inequality, which are the main objectives of economic policy makers. He cited the example of Malaysia, which has achieved remarkable progress in Islamic banking and finance.

Business community urges to promote Islamic banking in Pakistan

Challenges and opportunities for Islamic banking in Pakistan

However, Afridi also pointed out some of the challenges and opportunities for Islamic banking in Pakistan. He said that there is a need for more awareness and education among the business community and the general public about the benefits and features of Islamic banking. He also called for more training and capacity building for the staff and management of Islamic banks.

He urged the central bank to issue directives to banks to maximize their focus on promoting Islamic banking in Khyber Pakhtunkhwa (KP), a province that has been adversely affected by terrorism. He also emphasized that banks should be instructed to enhance their lending ratio and financing facility for the business community in KP.

He appreciated the efforts of Bank of Khyber (BoK) and Institute of Management Sciences (IMSciences) in organizing an awareness session on Islamic banking and finance for the SCCI members. He said that such sessions should be held regularly to increase the understanding and acceptance of Islamic banking among the business community.

Global trends and developments in Islamic banking

Islamic banking is a fast-growing segment of the global financial system, with assets estimated at $2.7 trillion in 2020. It is expected to reach $3.8 trillion by 2023, according to a report by Gartner, a research and advisory firm.

Islamic banking is not only popular among Muslim countries, but also among non-Muslim countries that have large Muslim populations or are interested in diversifying their financial markets. Some of the leading countries in Islamic banking are Malaysia, Saudi Arabia, Iran, UAE, Kuwait, Bahrain, Indonesia, Turkey, Pakistan, Bangladesh, Egypt, Nigeria, and others.

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