KARACHI: Pakistan’s much touted 5 million housing project, pledged by the government of Pakistan Tehreek-e-Insaf (PTI) led by Prime Minister Imran Khan, would require around PKR 15 to 17 trillion financing during the next five years, officials say.
“One of the opportunities is the initiative of PTI government of 5 million houses. The best product for that is the Diminishing Musharaq. There is already a niche market. This is something that can be developed. 5 million houses translated amount could be anywhere between PKR 15 to PKR 17 trillion, that is going to be required for the next five years,” Tariq Bajwa, Governor of State Bank of Pakistan (SBP) said on Wednesday.
Speaking as chief guest at the launching ceremony of Urdu version of the Book ‘Sharaie Mayaarat’ (translation of Shariah Standards) in collaboration with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), Bajwa said that the prime minister has put behind political weight to increase deposit ratio of Islamic banks from 15 percent to 25 by 2023.
Islamic finance globally is worth $2 trillion. The first Islamic Bank in Pakistan was launched in 2002 and currently there are five full-fledged Islamic Banks, along with 16 conventional banks, with Islamic Branches and Windows.
The Total Islamic Banking Network has reached PKR 3,969 billion with total deposits of PKR 2,033 billion and asset portfolio at PKR 2,482 billion.
Islamic Banking share of overall Pakistani Banking Industry is 12.90 percent of total assets and 14.80% of total deposits.
“The Islamic finance industry has grown at a fast pace. The development of Islamic banking industry especially beyond Muslim jurisdictions is a recognition of its viability as a competitive alternate to the conventional banking,” Bajwa noted. “Islamic banking industry has expanded its network to over 2700 branches in 111 districts across the country, he added.
The Islamic banking also faces potential risks and challenges that Islamic banking industry needs to address for its sustainability and stability. “Effective liquidity management has been key challenge of Islamic banking industry. This issue has gained more prominence owing to factors like dearth of Shariah compliant investment opportunities, limited availability of Shariah compliant money market instruments and absence of Shariah compliant SBP standing facility,” Bajwa observed.
The inherent advantage of Islamic financial industry to fund projects on equity participation and profit sharing basis enables it to cater to the huge, unmet demands of under-served sectors such as agriculture and SMEs.
However, like conventional industry, Islamic banks are also not effectively serving these sector, the governor noted adding “ KAP (Knowledge, Attitude and Practices of Islamic Banking in Pakistan) survey based study of SBP, also indicates these areas as potential growth avenues for Islamic banking industry. SBP is persuading the industry to capitalize on its innate strengths to cater to the needs of these under-served sectors.”
Appreciating the launch of the book, governor Bajwa said “translation of global standards into our national language is an important milestone, as it would remove language barriers to understand Shariah Standards.”
Irfan Siddiqui, Chairman Steering Committee, while speaking on the occasion hoped that the proposed PKR 300 billion Pakistan Energy Sukuk would further energize the Islamic banking industry.
Shaikh Ebrahim Bin Khalifa Al Khalifa, Chairman of AAOIFI Board of Trustees, informed the participants that AAOIFI Shariah Standards are now available in six languages including French, Russian Urdu and Turkish while translation in Mandarin language is being finalized.
Mufti Muhammad Taqi Usmani, Chairman of AAOIFI Shariah Board, said work on the Riba-free economy was started some 20 years ago. “Practicability of interest-free economy remained the discourse among masses and scholars because the ideas was considered Utopian and impossible but now the efforts are bearing fruit,” said Usmani.