ISLAMABAD: Finance Minister Ishaq Dar Monday said Pakistan has a strategic plan in place for the development of Islamic finance, adding that the National Saving Centre was directed to launch Shariah-compliant products for the first time in the history of Pakistan.
He stated this while speaking at the inaugural Islamic Capital Markets (ICM) Conference, jointly organised by the Securities and Exchange Commission of Pakistan (SECP) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), here.
Dar added that the products would be in accounts for one year, three years, and five years. He stated that very soon more details would be shared with the public.
The finance minister said the government is committed to promoting Islamic finance to eliminate an interest-based system in Pakistan and expressed hope that the target would be achieved within the timeline given by the Federal Shariah Court.
He said that in South Asia two out of 10 microfinance banks are in Pakistan which started offering Islamic services.
He said that Pakistan has a strategic plan to develop Islamic finance and the subject is very close to his heart. He said that according to data provided, 21 percent banking sector has been converted into Islamic banking.
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He said that the SBP and NBP have withdrawn their application from Supreme Court against the judgement of the Federal Shariah Court and a steering committee has been constituted for providing strategic guidelines for the implementation of Shariah court judgement on Riba and the committee would also remove bottlenecks.
He said that the size of the Islamic finance industry has surpassed $42 billion and assets and deposits of Rs7.2 trillion and Rs5.2 trillion respectively with year-on-year growth 29 percent.
The committee has formed five working groups to overcome the technical issues and these are actively deliberating on a comprehensive set of proposals to ensure serious transition of our system into Shariah-compliant Islamic finance system.
The finance minister said that the government has directed National Savings to launch Shariah-compliant products for investors for the first time in the history of Pakistan. He said that very soon more details would be shared with the public.
He said that risk-sharing and assets-based Islamic financing and its potential to contribute to inclusive growth and prosperity has considerable merit, particularly in the light of mounting evidence of negative effect of conventional debt on the economy.
The finance minister said that in Pakistan, we have a financial inclusion strategy that covers all the components needed to create Islamic financing.
The finance minister also highlighted that Pakistan is one of the few countries with a well-developed regulatory framework for microfinance institutions.
He added that major financial markets all across the globe have exhibited evidence that Islamic finance has already been mainstreamed, parallel to the global financial system and that it has the potential to address the challenges to ending extreme poverty and boosting shared prosperity.
He said that this conference is very important as it would help the government in determining the future directions of the Islamic capital market given the fast-changing dynamics of the market.
He added that Islamic financing is one of the most rapidly growing sectors of global financing and emerged as an effective tool for financing development worldwide including in non-Muslim countries.
He said that Islamic banking promote risk sharing and connect the financial sector with the real economy. While referring to the Islamic Finance Development Report, he mentioned 1,679 Islamic financial institutions including 560 banks with year-on-year growth of 17 percent.
Dar said the SBP has been reorganised as the best central bank of 2022 across the world in promoting Islamic finance by the Islamic Finance News of Malaysia.
The finance minister initially tried to avoid the questions with regard to his failure to reach an agreement with the IMF and that for the first time, he faced a difficult economic situation and was unable to handle the difficult economic situation.
All Dar said that “You can give judgement and we will see it later.” He said Pakistan has met all international obligations in time.
Copyright Business Recorder, 2023