Global & Pakistan Scene
PROF. DR. KHAWAJA AMJAD SAEED*
Mar 12 - 18, 2007
ISLAMIC BANKING: GLOBAL OUTLOOK
Islamic Banking has registered a steady growth in the world in the last three decades. The annual growth has been 15%. By now, Islamic Banking is being practiced in nearly eighty countries of the world. However there are some countries where Islamic Banking is being practiced with Parallel, Banking System. These countries include Malaysia, Bahrain and some Gulf Islamic Banks and Financial Institutions. Alone in Bahrain there are twenty six Islamic Banking net works which are operating. Excellent intellectual work has been conducted in Bahrain by Auditing and Accounting Organization for Islamic Institutions. In Malaysia and Indonesia the growth of Islamic Banking has been very fast.
It is hoped that with passage of time more or more countries will have Islamic Banks.
Following the issuance and guidelines through BPD circular No.1 dated 1st January, 2003 by the State Bank of Pakistan for permission to establish stand alone branches for Islamic Banks, leading to the issuance of the 1st Islamic Banking Branch licence to MCB Bank in May 2003, six branches started commercial business, while applications of other banks were later considered and some of them were granted licence.
As of December 31, 2005, there were eleven Islamic Banks operating with seventy branches. Their position is captured in Box-1.
Box –1: ISLAMIC BANKS IN PAKISTAN
NUMBER OF BRANCHES
NUMBER OF BANKS
- Full-fledged Islamic Scheduled Banks
- Stand - alone Islamic Branches of existing Scheduled Banks
Source: Compiled from: Statistics on Scheduled Banks In Pakistan, December 2005, SBP, Statistics Department, Karachi, Table - 10, P. XXI.
In respect of operational position of full-fledged Islamic Schedule Banks and Stand- alone Islamic Branches of existing scheduled banks relating to June 2005 and December 2005, the position is included Box-2.
Box- 2: ISLAMIC BANKS BRANCH NETWORK
DECEMBER 2005 (NUMBER)
JUNE 2005 (NUMBER)
Full-Fledged Islamic Scheduled Banks:
1. Meezan Bank Ltd.
2. Al-Barka Islamic Bank BC
Stand-alone Islamic Branches of Existing Scheduled Banks:
MCB Bank Limited
The Bank of Khyber
Standard Chartered Bank Ltd
Habib Bank AG Zurich
Habib Bank Limited
Metropolitan Bank Limited
Soneri Bank Limited
Source: Computed from: Statistics on Scheduled Banks In Pakistan, December 2005, SBP, Statistics Department, Karachi, Table - 9, P. XX.
Besides the above position an interesting analysis has been carried out by us in respect of Deposits, Financing and Investments and the over all position is captured in Box-3.
Box-3:ISLAMIC BANKS: DEPOSITS, FINANCING & INVESTMENTS
Amount (Rs. b)
2. FINANCING (*)
Amount (Rs. b)
Source: Edited from:Statistics on Scheduled Banks In Pakistan, December 2005, SBP, Statistics Department, Karachi, Table - 10, P. XXI. (*) Includes advances and bills.
It is high time that business schools in Pakistan may start offering MBA either in Islamic Banking or offer specialization in Islamic Banking. This will produce a new breed of Pakistan Bankers who will logistically equip Islamic Banks to operate the same in a befitting manner.
Moreover, it is suggested that the scope of Islamic Banking should be aggressively pursued with competitive spirit. Innovative products should be developed by Islamic Banks so that they can reach wider market and capture it.
* Principal, Hailey College of Banking & Finance, University of the Punjab, Lahore Pakistan,
Member Governing Council, International Federation of Accountants (IFAC) (1997-2000), President, South Asian Federation of Accountants (SAFA) (1997), President, Institute of Cost and Management Accountants of Pakistan (1997-2000), President, Association of Management Development Institutions of South Asia (AMDISA) (1993-96), Pro Vice-Chancellor University of the Punjab, Lahore (1994-1996), Founder Director, Institute of Business Administration (IBA), University of the Punjab, Lahore (1973-1996).