Pakistan’s Islamic banking industry witnessed remarkable expansion in the third quarter of 2023, boasting a substantial 22% growth that propelled it to a historic high of Rs8.417 trillion. This surge is largely attributed to a burgeoning number of customers opting for Shariah-compliant finance, drawn by the supportive regulatory framework in place.
By September, Islamic banking deposits soared past six trillion rupees, registering Rs6.160 trillion. The sector has solidified its position, commanding a formidable 19.6% market share in assets and 22.5% in deposits within the broader banking landscape. The driving forces behind this surge include heightened levels of investments and financing activities.
A pivotal aspect of this growth strategy is the State Bank of Pakistan’s initiative to transition conventional banks into Islamic ones, aligning with the nation’s strategic vision. This deliberate shift is expected to further consolidate Islamic banking’s influence.
Religious convictions play a pivotal role in propelling the demand for Islamic banking services in Pakistan, as evidenced by a recent study. The Federal Shariat Court’s mandate for full Shariah compliance in the banking sector by 2027 has set ambitious expectations, providing a clear roadmap for the industry’s future trajectory.
The Islamic banking sector in Pakistan is experiencing a robust growth phase, fueled by regulatory support, increased customer preference for Shariah-compliant services, and strategic initiatives by the central bank. The convergence of these factors positions Islamic banking as a substantial player in the country’s financial landscape, with further expansion and integration anticipated in the coming years.
