Islamic banking industry’s assets and deposits have more than doubled during the last five years and it now has 17% share in assets and 18.3% in deposits of the overall banking industry.

This means Islamic banks have now taken 5% share of conventional banks as their share in deposits increased from 13.3% in 2015 to 18.3% in 2020.

“This growth in assets and deposits of the Islamic banking industry is encouraging, particularly due the fact that the industry was also faced with the Covid-19 pandemic challenges during 2020,” the State Bank of Pakistan said.

“The industry (Islamic Banks) also has taken 60% share in the housing finance,” said Ahmed Ali Siddiqui, the IBA Center for Excellence in Islamic Finance director. “It has also taken 40% share in mutual funds and 63% share in pension fund in the industry.”

Siddiqui said that Pakistan has been one of the most financially excluded nation.

“Several surveys, including that of a State Bank, have revealed that many people are reluctant to get financially included because conventional banking system is interest-based,” he said.

This is the reason that the central bank is pushing Islamic banks to enhance their share in the industry, Siddiqui said.

The SBP has set a target of increasing Islamic banks’ share in the industry to 25% by 2025. Pakistan’s National Financial Inclusion Strategy (NFIS), which is headed by Queen Máxima of the Netherlands, has set a target of 30% penetration of Islamic banks in the banking industry by 2025

“They are doing it because it will help improve Pakistan’s economy as it will help in increasing financial inclusion,” Siddiqui said.

The industry reported the highest growth during the calendar year 2020, according to SBP. The overall assets and deposits of the Islamic banking industry have shown a growth of 30% and 27.8% respectively during 2020. This is the highest increase in assets in a year since 2012 and in deposits since 2015.

The assets of Islamic banking industry increased to Rs4,269 billion, whereas deposits reached Rs3,389 billion by the end of December 2020.

Siddiqui said that Islamic banking is asset-based, which helps trigger growth in real economy. It doesn’t get involved in speculation and artificial derivatives, he added.

Courtesy by :https://www.samaa.tv/news/2021