KARACHI (March 05 2004): State Bank of Pakistan Governor Dr Ishrat Husain said on Thursday Islamic banking has been provided with level playing field and there is tremendous potential for its growth in the country.
He was addressing a joint press conference with Sheikh Ebrahim Bin Khalifa Al-Khalifa, chairman, Board of Directors, Meezan Bank, and Under-secretary Ministry of Finance and National Economy Sate of Bahrain.
Sheikh Nasir Al-Merri, chairman, Pakistan Kuwait Investment Company, was also present at the conference along with Dr Mahmood Ghazi, chairman, Shariah Board.
Dr Ishrat said Islamic banking has just started and only one bank is operating in the country. He said recently Bank Al-Khyber has converted its one branch into Islamic banking and the NWFP government has shown great interest in it.
To a question, the SBP governor said that work is underway to replace Treasury Bills from an Islamic product.
To another question, he said, the business community is also interested in Islamic funding, especially those who want to start new business or are planning to expand their existing business or have any reservations on non-Islamic banking.
The governor said that the Islamic Bank would also help those who have cash, gold or other assets, but reluctant to keep into bank because of non-Islamic banking.
While introducing the members of the Shariah Board headed by Dr Mahmood Ghazi, he said, the board would provide guidelines to the State Bank, which would make policies for the Islamic products.
He said Pakistan would benefit from the expertise of Islamic banking in Bahrain and Malaysia where Islamic banking has developed. Kuwait has also entered into the field.
He said Sheikh Nasir is also helping us. We would issue licence only to Islamic banks and not to non-Islamic banking. He said already 40 non-Islamic banks were operating in the country and a number of them were going to merger shortly.
“We don't want to take hasty steps which may fail the plan for the growth of Islamic banking,” the SBP governor said.
He made it clear that it was not up to the regulators to decide that Pakistan should switch over to Islamic banking, but it was the individuals who would decide how to use the available options for investment and banking.
He said one of the biggest challenge in the field of Islamic banking is the shortage of skilled and experts in Islamic banking. “We have to work very hard to get this goal,” the governor said.
Dr Imran Usmani, Syed Riaz-ul-Hassan Gillani (lawyer) and Ebrahim Sidat will be the members and Pervez Said (director, Islamic Banking Department, SBP) will be the ex-officio member/secretary of the board.
Sheikh Ibrahim said there was vast potential in Pakistan for the growth of Islamic banking. He said that Islamic banking is the fastest growing financial sector in the world of which annual growth is 15 percent.
He said the State Bank governor has done a very precious job for the promotion of Islamic banking in the country.
Ibrahim said Meezan Islamic Bank has firmed up its roots and is growing with the ambition to develop fast. Meezan Bank is utilising its expertise, which it has because of its experience in Bahrain. He said the new Shariah Board would explore avenues for new Islamic banking products with the assurance of 100 percent Shariah compliance.
Dr Mahmood Ghazi said that the board would do utmost to ensure that banking products were in compliance with the Shariah. He said the board would try its best to complete the job.