ISLAMABAD: The State Bank of Pakistan (SBP) on Friday said the Islamic Banking Industry (IBI) had recorded the “highest ever growth” in Pakistan as its assets surpassed the Rs5 trillion mark to reach Rs5,577 billion with the highest ever increase of Rs1,308 billion.

A portion of the demand for banking services in Pakistan is faith-sensitive and there is a large market for Shariah-compliant services. Over the years, the Islamic banking industry has established a strong footing and gained a sizable share of the banking industry. 

Twenty-two Islamic banking institutions currently operate in Pakistan: five Islamic banks and 17 conventional banks with standalone Islamic banking branches.

“The Islamic Banking Industry (IBI) has reached new peaks during CY21 [Calendar Year 2021] as its assets surpassed the 5 trillion mark to reach Rs5,577 billion with the highest ever increase of Rs1,308 billion, whereas deposits reached at Rs4,211 billion with an increase of Rs822 billion,” the central bank said in its report.

The report said in the last calendar year, the Islamic Banking Industry grew by 30.6 percent, while deposits increased by 24.2 percent.

“The increase in assets of IBI was driven by both financing to the private and public sector and investments in Shariah compliant securities,” the central bank added.

The growth in deposits is also owed to the fact that the availability of Islamic banking services increased in the country with the addition of 500 new Islamic banking branches. The total number of branches now stands at 3,956 across 125 districts, which is around 25 percent of the total number of commercial bank branches in the country. 

“State Bank has also been recognized as the best Central Bank of 2021 across the world in promoting Islamic finance by the Islamic Finance News (IFN), an arm of RED money Group, Malaysia. Previously, SBP was bestowed with this coveted award for the year 2015, 2017, 2018, and 2020,” the report read.