KARACHI: Islamic banking is gaining traction in Pakistan as its share has grown to a quarter of the entire banking system from zero some 20 years ago, according to State Bank of Pakistan’s (SBP) former governor Ishrat Husain.
“Many businesses that once avoided conventional banking due to religious conviction have found a home in Islamic finance. Islamic banking system has mobilised savings and national investment has grown, and the economy has benefited from it,” Husain said while speaking to a book launch and storytelling session on Meezan Bank titled ‘Unconventional – The Bank No One Saw Coming’.
“The share of Islamic banking has reached 25% of the country’s banking industry from zero some 20 years ago,” SBP’s former governor said.
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“Islamic banking has the potential to drive financial inclusion, alleviate poverty, support both farmers and entrepreneurs and invest in human capital. It can offer affordable housing, improve income distribution and posture inclusive growth.
“Unlike capitalism that often leaves marginalised people behind or socialism that collapses under its own weight, I would humbly submit that Islamic finance offers a balanced path, combining efficiency with equity, and growth with justice,” Husain said.
Meanwhile, SBP deputy governor Saleem Ullah stated that Pakistan’s banking banking industry could fully covert to Islamic banking by December 2027, a deadline given by the Federal Shariat Court.
“The (Shariah-compliant banking) journey is gaining traction satisfactorily. It is on the way,” he said.
On the regulatory front, Saleem Ullah maintained, the central bank would keep on collaborating with the banking industry so that the regulatory framework could remain conducive for the growth of Islamic finance.
“We would love that this growth should remain demand driven. The value propositions should pull even conventional mindset towards Islamic financing and Islamic banking services. We are fully committed and we are positive that the regulatory and legal framework would remain supportive,” he said.
Irfan Siddiqui, CEO of Meezan Bank, announced he would retire from the post in December 2025 at the age of 70 and his deputy CEO Syed Amir Ali would take over the charge.
