C,x7ik y7ku`w2History of Islamic Banking in Pakistan
Efforts to Islamize the economy of Pakistan started in the mid 60s. However a significantattempt was made in the mid 80s
to convert the banking system to an Islamic banking system.The Banking Companies Ordinance (BCO, 1962) was amended to accommodate non-interest based transactions and the industry was given a specific timeline to convert to the non-interest based system. In early 90s, the whole exercise was challenged in the Federal Shariat Courtwhich declared some products and processes being used by the banking system un-Islamic.Prior to the re-launch, to study the experience of different countries in Islamic banking, adelegation from Ministry of Finance (MoF), led by Advisor to Finance Minister, Dr. TariqHassan visited Malaysia, Egypt and Saudi Arabia in September 2001
. Based on therecommendations of this delegation and the past experience of SBP, the policies for promotionof Islamic banking were formulated. Accordingly, State Bank of Pakistan issued detailed criteriafor setting up of Islamic banks in December 2001.Al-Meezan Investment Bank Limited applied under the criteria issued by SBP to convert itself into an Islamic commercial bank. They were issued a license in the name of Meezan Bank Limited to operate as full-fledged Islamic bank in January, 2002
Current Status of Islamic Banking Industry in Pakistan
As at end of the year 2003 only one bank operated as a full-fledged Islamic bank and threeconventional banks were operating Islamic banking branches. Today there are 6 full fledgelicensed Islamic banks (IBs) and 12 conventional banks have licenses to operate dedicatedIslamic banking branches (IBBs).
The total assets of the Islamic banking industry are over Rs. 225 billion as of 30th June, 2008which accounts for a market share of 4.5% of total banking industry assets. The market share of deposits stands at 4.2%. Total branch network of the industry comprises of more than 330 branches with presence in over 50 cities & towns covering all the four provinces of the countryand AJK
Aurangzeb Mehmood, “Islamisation of Economy in Pakistan: Past, Present and Future” Islamic Studies.
2 Strategic Plan for Islamic Banking Industry of Pakistan, by Islamic Banking Department of State Bank of Pakistan3 www.meezanbank.com4 PAKISTAN ISLAMIC BANKING: PAST, PRESENT AND FUTURE OUTLOOK Bu Dr. Shamshad Akhtar (Governor State Bank of Pakistan, 11 September 2007)