KARACHI: A leading bank in Pakistan on Sunday announced it had launched the country’s first Shariah-compliant point of sale (POS) machine by publishing an advertisement in local newspapers that carried an image of a green device.
“At the backend, the POS machine is supported by the Islamic banking merchant accounts and will reject any non-compliant transactions,” Farhan Ahmed, head of corporate affairs at the HBL Islamic Banking that published the ad, told Arab News on Monday.
“We are installing the machine at different business venues which are Shariah-compliant,” he said.
Ahmed added the POS machine would “only facilitate Shariah-compliant transactions, backed by a Shariah-compliant merchant establishment agreement.”
Financial experts maintain the launch of the POS machine will be helpful for businesses that are reluctant to use interest-based financing modes.
“This will encourage businesses to open Islamic banking accounts, especially the entities that are sensitive to non-compliant dealing,” Ahmed Ali Siddiqui, director at the Center for Excellence in Islamic Finance, said. “Apart from that, it will inspire merchants to open Islamic bank accounts.”
Pakistan, a Muslim-majority country of about 225 million people, has witnessed a robust growth of interest-free or Islamic banking in recent years with asset of over Rs4 trillion and deposits of Rs3.4 trillion.
According to the State Bank of Pakistan (SBP), the assets and deposits of Islamic banking institutions (IBI) achieved a year-on-year growth of 30.6 percent and 28.4 percent, respectively, in March 2021.
The central bank’s record shows the market share of Islamic banking industry’s assets and deposits in the overall banking industry stand at 17 and 18.7 percent.
The SBP wants to achieve a growth target of about 30 percent in the assets and deposits of the country’s Islamic banking sector by 2025.
“The central banking is working on the capacity building of banks and training of human resources to achieve this target,” Mufti Muhammad Zahid, who is associated with the Soneri Bank, said. “We believe the country can easily achieve that growth target by 2025.”
Pakistan became the sixth most important Islamic financial market in the world in 2020, according to the Global Islamic Finance Report, a London-based publication covering developments in the Islamic financial services industry in the world.
The country has five Islamic banks, 17 Islamic banking windows, a vibrant Modaraba sector and a growing Islamic funds management industry with an ever-increasing focus on Islamic microfinance, the report maintained.
It also acknowledged that the country had developed an excellent framework to implement Islamic banking on a comprehensive scale, though it added that Pakistan’s bureaucracy needed to be fully educated and convinced about the potential of Islamic finance.