Around 21% banks become Shariah-compliant: Dar.

ISLAMABAD -- Minister for Finance and Revenue Senator Mohammad Ishaq Dar on Monday said almost 21 percent of the banks operating in the country had so far been aligned with Islamic laws due to concerted efforts of the policymakers.

Addressing Pakistan's first international conference on 'Islamic Capital Markets,' jointly organized by the Security and Exchange Commission of Pakistan (SECP) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), he said the banks converted into the Islamic system were fully satisfied and wanted to continue with it.

The minister said a strategic plan was in place to develop a vibrant Islamic financing system for which the government had already devised a 'National Financial Inclusion Strategy,' encompassing the essential areas in it.

Ishaq Dar said Pakistan was among one of the few countries which have a well-developed regulatory framework for the micro finance institution, adding the SECP and State Bank of Pakistan (SBP) had done a good job in this regard.

'Pakistan has a comprehensive system of Zakat collection and distribution at both private and public levels,' he added.

He said the Islamic financial service industry worked within the regulatory preview of the SECP, consisting of Islamic institutions like Mudarabah, Islamic non-banking financial institutions, Shariah-compliant businesses and Shariah advisors.

The minister mentioned that the size of Islamic financial institutions in Pakistan was estimated to have surpassed $42 billion in 2022; with assets and deposit standing at Rs7.2 trillion and Rs5.2 trillion, respectively.

'Assets of Islamic banking industry posted year-on-year a growth 29 percent in the fiscal year 2022; and the network of Islamic banking industry consists of 22 Islamic banking institutions,' he said, adding six out of 22 banks were full-fledged 'Islamic banks' and 16 conventional banks were operating with stand-alone Islamic banking branches.

To further strengthen the Shariah-compliant framework and to harmonize the Shariah practices in the Islamic banking industry, the said SBP had adopted four more Shariah-standard accounting and auditing organizations for the Islamic financial institution in July 2022 , and now the total number of Shariah-standard entities reached 20.

As per the Islamic Finance News of Malaysia, Ishaq Dar said the SBP had been reorganized as the best central bank...