Page 90 - CMA Journal (Mar-Apr 2025)
P. 90

SECTOR  BRIEF




                                                                                         S       B














                   Islamic Banking Sector in Pakistan




                                    By ICMA Research and Publications Department

              Timeline of Pakistan's Islamization Process      2015 – Pakistan issues international Sukuk to boost
                                                                       Islamic finance.
              1949 –  Objectives Resolution establishes Islam as
                                                               2019 –  SECP enforces Shariah Governance Regulations.
                     supreme constitutional principle
                                                               2020 – SBP sets 20% Islamic banking market share
              1956 –  First constitution declares Pakistan an Islamic
                                                                       target by 2025
                     Republic
                                                               2021 –  Roshan Digital Account adds Islamic banking
              1962 –  Council of Islamic Ideology (CII) created to
                                                                       option for overseas Pakistanis
                     advise on Shariah compliance
                                                               2022 –  FSC orders complete transition to interest-free
              1973 – Current  constitution  strengthens  Islamic       banking by 2027
                     provisions, establishes Shariat benches
                                                               2023 –  SBP launches Islamic Finance Growth Strategy
              1977 – Start  of  systematic  Islamization  under
                                                                       targeting 30% market share
                     Zia-ul-Haq's regime
                                                               2024 –  Government issues $1 billion Sukuk for
              1979 –  Hudood Ordinances introduce Islamic criminal
                                                                       infrastructure development
                     penalties
              1980 –  Federal Shariat Court (FSC) established for   Growth and Resilience of Islamic Banking in Pakistan
                     Islamic legal review                      Islamic banking in Pakistan is experiencing strong
                   –
              1980  Zakat/Ushr   system   institutionalized  as  growth, with major players expanding their branch
                     compulsory Islamic welfare                networks. Meezan Bank leads with 900 branches,
              1980 –  Islamic banking initiated through profit-loss   followed by Al Baraka Bank (775), Faysal Bank (700), Bank
                     sharing accounts                          Islami (330), and Dubai Islamic Bank (235). In addition,
                                                               several conventional banks operate dedicated Islamic
              1985 –  Revival of the Islamic Provisions Order (RIPO)
                                                               banking divisions.
                     constitutional amendments introduced
              1990 –  Shariat Appellate Bench formed in Supreme   As of September 2024, the State Bank of Pakistan (SBP)
                     Court to hear FSC appeals.                reported a 17.4% year-on-year increase in Islamic
              1991 –  Shariat Act makes Quran/Sunnah supreme law  banking assets, reaching Rs. 9,881 billion. Deposits grew
                                                               by 23.3% to Rs. 7,596 billion, while net financing rose by
              1999 –   FSC ruling declares interest (riba) un-Islamic
                                                               7.5% to Rs. 3,252 billion and investments increased by
                     (later stayed)
                                                               22.3% to Rs. 4,803 billion. Islamic banking now accounts
              2002 –  Meezan Bank launches as first full Islamic   for 19% of the total banking industry’s assets and 23.2%
                     commercial bank
                                                               of deposits.
              2002 –  State Bank of Pakistan (SBP) establishes Islamic
                                                               Islamic banks have also demonstrated greater resilience
                     Banking Department
                                                               during economic downturns, largely due to their
              2003 –  SBP Shariah Board formed for Islamic finance
                                                               asset-backed financing model, which offers more stability
                     oversight
                                                               compared to interest-based conventional banking. A
              2005 –  BankIslami begins operations as Islamic bank  notable milestone was achieved when Lucky Investments
              2006 –  Dubai Islamic Bank Pakistan was established  Limited raised Rs. 50 billion (USD 170 million) in a single
              2008 –  SBP adopts AAOIFI standards for Islamic   day through the IPO of its Lucky Islamic Money Market
                     banking.                                  Fund — the largest Shariah-compliant mutual fund
                                                               launch in Pakistan’s history.
              2013 –  SECP introduces Islamic capital market framework.


              88    ICMA’s Chartered Management Accountant,  Mar-Apr 2025
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