KARACHI: Mashreq Pakistan has obtained approval from the central bank to launch Islamic banking operations in the country, a press release said on Wednesday, with the CEO saying the institution would deliver the “best Islamic banking solutions” to meet the needs of the Muslim-majority South Asian nation.
Mashreq Pakistan is part of Mashreq, Dubai’s third-biggest lender by assets.
Islamic banking operations in Pakistan have risen in the past few years, with some local banks like Faysal Bank completely shifting to a Shariah compliant setup.
The market share of assets and deposits of the Islamic Banking Industry (IBI) in the overall financial sector stood at 19.6 and 22.5 percent, respectively, by the end of September. However, the Pakistani central bank has set the target to increase the share of Islamic banking system to 35 percent by 2025.
“We are poised to be an Islamic-first digital bank in the country, aspiring to deliver the best Islamic banking solutions to not just meet Pakistani’s expectations, but to exceed them,” Mashreq Pakistan CEO Muhammad Humayun Sajjad was quoted as saying in a statement.
“Receiving the In-Principal Approval for Islamic banking operations is a pivotal step toward realizing our vision of offering innovative, customer-centric banking solutions that cater to the diverse needs of the Pakistani market.”
The statement said the bank was committed to providing an “ethical, robust and innovative banking system” to the country based on Shariah principles, highlighting that Mashreq Al Islami was recently recognized as the World’s best Islamic digital bank by the Euromoney Islamic Finance Awards 2024.
“Our advanced digital capabilities have set a benchmark in the global Islamic banking industry, and we are excited to bring the same level of excellence to our operations in Pakistan,” the press release said, quoting Group Head of Retail Banking at Mashreq Fernando Morillo.
The statement added that the bank’s strategic vision aligned with economic empowerment objectives focusing on the society’s underrepresented segments and demographics such as women, youth, and SMEs.
“The State Bank of Pakistan (SBP) has worked proactively over the years to promote and develop Islamic Banking in Pakistan through the introduction of comprehensive legal, regulatory and Shariah compliance framework,” SBP Director of Islamic Finance Policy Department GM Abbasi said.
“These efforts are part of a SBP’s strategy to foster a more inclusive financial environment in Pakistan, which will include digital banks like Mashreq.”
In April 2022, Pakistan’s Federal Shariat Court had ruled that “riba” (interest) was prohibited in all forms, mandating Pakistan’s shift to an interest-free economy by December 2027.
