KARACHI: The Islamic banking industry of Pakistan has posted 30% and 27.8% growth in overall assets and deposits respectively during 2020, the highest such increase since 2012, central bank data shows, driven by increasing access to shariah-compliant financial instruments and growing faith-based demand.
Twenty-two Islamic banking institutions currently operate in Pakistan: five Islamic banks and 17 conventional banks with standalone Islamic banking branches.
The overall assets of the industry increased to Rs4.3 trillion while deposits reached Rs3.4 trillion by the end of December 2020, accounting for 17% of all assets and 18.3% of all deposits of the country’s entire banking industry, according to the State Bank of Pakistan (SBP).
“This is the highest increase in assets in a year since 2012 and in deposits since 2015,” the SBP said on Wednesday in its Islamic Banking Bulletin report for the quarter that ended on December 31, 2020.
“Over the last five years, both assets and deposits of the Islamic banking industry have more than doubled,” the central bank said. “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.”
Financing for the Islamic banking industry also grew by 16% during 2020, and the non-performing finances (NPFs) to financing (gross) ratio declined from 4.3 %, as of the end of December 2019, to 3.2%, as of the end of December 2020.
Bankers say the growth in Islamic banking, where under shariah the payment and receipt of interest is strictly prohibited, is driven main due to increasing access.
Sana Tawfik, banking sector analyst at Arif Habib Limited, said the central bank had been promoting the sector’s development through the introduction of legal, regulatory and shariah-compliant frameworks for instruments such as Naya Pakistan Certificates (NPCs) under the Roshan Digital Account (RDA) initiative, which are available to overseas Pakistanis and those who had declared assets abroad.
“Steps taken by SBP to promote Islamic banking, inflows through RDA in NPCs, Islamic sukuks and the increasing frequency of sukuk auctions are the other couple of reasons driving it,” Tawfik said.
Ahmed Ali Siddiqui, senior executive vice president of Meezan Bank — Pakistan’s first full-fledged Islamic bank — told Arab News there was “stronger public demand” for shariah based or interest free banking.
“It is continuously fueling growth,” he said. “The development of Islamic capital market and availability of financial instruments like Sukuk expedited the growth.”
He added that the COVID-19 pandemic had proven the stability of Islamic banking.
“Surprisingly Islamic banking has shown strongest growth during COVID-19 crisis,” Siddiqui said. “This shows the stability factors of the Islamic economic system based on real economic conditions.”
Pakistani Islamic banking sector posts 30% growth — central bank
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Pakistani Islamic banking sector posts 30% growth — central bank
- Overall industry assets increased to Rs4.3 trillion, deposits reached Rs3.4 trillion by end of December 2020
- Bankers say growth driven by increasing access to shariah-compliant financial instruments and growing faith-based demand
Pakistan offers Turkmenistan its Arabian Sea ports for wider access to ‘South Asia and beyond’
- PM Sharif meets Turkmen president in Ashgabat, calls for deeper trade and energy cooperation
- Islamabad cites Karachi and Gwadar as key to boosting regional connectivity, including TAPI links
ISLAMABAD: Pakistan on Thursday urged Turkmenistan to expand trade and connectivity through Karachi and Gwadar, saying its Arabian Sea ports offer Turkmen businesses and exporters a direct route to South Asian and global markets, Prime Minister Shehbaz Sharif’s office said after high-level talks in Ashgabat.
Pakistan and Turkmenistan have long discussed regional transport corridors and energy cooperation, including the Turkmenistan–Afghanistan–Pakistan–India (TAPI) gas pipeline, a proposed multibillion-dollar project that would carry Turkmen natural gas south through Afghanistan into Pakistan and India. Islamabad has also pushed to link the landlocked Central Asian states to the sea by offering transit access through its deep-water ports, which sit at the crossroads of the Middle East, Central Asia and South Asia.
On Thursday, Pakistan's Sharif met Serdar Berdimuhamedov, the president of Turkmenistan, in Ashgabat as both countries look to revive momentum in bilateral engagement after years of regional instability. Pakistan has supported Turkmen neutrality policies at the United Nations, while Ashgabat has backed Pakistan during crises, including helping evacuate Pakistani nationals caught in Iran during the Iran–Israel conflict earlier this year.
“The Prime Minister reaffirmed Pakistan’s desire to enhance connectivity with Turkmenistan through land and sea routes and said that Karachi and Gwadar ports were ideally located to be utilized by the Turkmen side to enhance their outreach to South Asia and beyond,” Sharif’s office said in a statement.
Sharif reiterated his intention to deepen trade and economic ties with Turkmenistan, saying enhanced transport links and energy cooperation could anchor long-term regional integration. He invited President Berdimuhamedow and Turkmenistan’s national leader, Gurbanguly Berdimuhamedow, on official visits to Pakistan next year.
Sharif is on a two-day visit to Turkmenistan for the International Forum on Peace and Trust, accompanied by Deputy Prime Minister and Foreign Minister Ishaq Dar, Energy Minister Awais Leghari, Information Minister Attaullah Tarar and senior officials.
Turkmenistan’s president thanked Sharif for attending the UN-backed peace forum and said Ashgabat was keen to expand cooperation across multiple sectors, according to the statement.
