Trends of Islamic Banking in Pakistan
Trends of Islamic Banking in Pakistan The First Islamic Bank: Islamic banking originated from Egyptian town of Mit Ghamr in 1963 whereby the first Islamic Bank was established (under a conventional name) that would operate on a profit sharing basis. In 1972, the Mit Ghamr Savings project became part of Nasr Social Bank which, till date, is in business in Egypt. The Pakistani Scenario: The first practically litigated step for promoting Islamic Banking was taken in 2003 whereby, for the promotion of Islamic Banking in the country SBP issued policies as per BPD circular No. 1 of January 2003. A three pronged strategy was introduced in this regard; • Establishment of full-fledged Islamic Bank(s) in the private sector • Setting up subsidiaries for Islamic banking by existing commercial banks • Allowing Stand-alone branches for Islamic banking in the existing commercial banks All Islamic banks, subsidiaries, and stand-alone branches in Pakistan offer the Sharia compliant products and services only where ‘Sharia compliant products and services’ means banking product and services offered by banks to their clients duly approved by their Sharia advisers/ Sharia Supervisory Committee. In 2005, word was raised in the media of the entrance of two large Islamic Banks in Pakistan by the mid-2006. Dubai Islamic Bank, the world's oldest Islamic lender, and Emirates Global International Islamic Bank, formed by a group of investors from the Middle East and Malaysia were granted preliminary approval in 2005 and these banks started operations in 2006. Information derived from the data based on Circular No. DS. BS.