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Islamic finance a growing business area for conventional banks

According to World Bank, the growth of Islamic finance has been rapid at 10-12 percent annually over the past two decades, with the industry surpassing approximately US$ 2,500 billion in size by 2018. Islamic finance has emerged as an effective tool for financing development worldwide, including non-Muslim countries. Accordingly, Islamic financial institutions are gradually becoming an integral part of the financial system. Growth is expected to be maintained by the banking needs of over 1.5 billion Muslim customers globally as an alternate to conventional banking.

Allied Bank Limited

Promoting Islamic Banking amongst vast potential customer base remained part of ABL’s strategy during 2018 with expansion in branch network. Shariah board is in place consisting of distinguished scholars and banking professionals providing oversight and guidance. ABL’s Islamic Banking operations have been branded as ‘Aitebaar’ representing customer perception and gearing upgradually to serve the needs of this niche segment. ABL continues to introduce asset products including Islamic Export Refinance, Staff Financing (HBF and Auto) and liability products including Allied Islamic Express Account. The Bank also approved Allied Car Ijarah as well as Musawama mode of financing. During 2017, ABL also introduced Islamic Banca Insurance product offering their niche customers another avenue to develop a savings culture. ABL entered into Project Financing arrangements with blue-chip obligors like SNGPL and LDA. In recognition of strides made since its launch, Allied Bank was awarded ‘Best Emerging Bank in Islamic Finance’ by Global Forum on Islamic Finance (GFIF) recognizing the Bank’s efforts for the promotion of Islamic Finance.

ABL in line with Bank’s commitment to enhance financial inclusion and encourage use of formal banking channels conducted seminars in multiple cities on Islamic Banking with the objective of creating awareness among the masses about the practical concepts of Islamic Banking. Going forward, ABL intends to increase footprint expansion through establishing Islamic Window within conventional branches thus serving the valuable customers with innovative and technology driven Shariah compliant products and services under the guidance and supervision of bank’s knowledgeable Shariah Board.

MCB Islamic Bank Limited

MCB Islamic Bank Limited (the Bank) is the wholly owned subsidiary of MCB Bank Limited and commenced its operations in 2015 with nation-wide network of branches. The aim of MCB Islamic Bank Limited is to be the first choice Shariah Compliant Financial Services Provider for the customers and to carry out business purely in accordance with the Shariah rules with full conviction and devotion. The Bank currently operates to provide Shariah compliant value-added and high-tech innovative banking solutions for customers under the supervision of Shariah Board which is being headed by renowned Islamic scholar Prof. Mufti Munib-Ur-Rehman. The Bank focuses on building strong lasting relationships and delivering an experience that satisfies all types of customers across Corporate, Commercial, SME, Customer, Agriculture and Micro sectors. The Bank offers wide range of Riba-free and Shariah compliant products for both the personal and business needs.

Habib Bank Limited

HBL-IB has one of the widest dedicated nationwide Islamic Banking network. At present, HBL-IB is offering products ranging from the traditional financing to savings and investment solutions catering individuals, commercial, SME and corporate customers. HBL-IB has also provided structured financings to corporate customers and participated in various syndicated transactions. They have taken new initiatives and enhanced its product range by launching Running Musharakah and Currency Salam product focused on strengthening the assets portfolio and trade business. HBL-IB has provided Shariah compliant Salary Account and Car Ijarah facilities to Bank’s staff and has also strengthened and streamlined its existing products by revamping and updating product manuals, policies and processes. Their Shariah Board has approved new products to enhance the availability of range of products for its customers including the Running Musharkah, Tijarah Finished Goods Financing, Staff Salary account, Margin account, Placement and Acceptance of Funds for treasury. Besides new products, SB has also reviewed the existing products and policies to improve the Shariah compliance environment including Diminishing Musharkah, Corporate Ijarah, Al Mukhtar, Al Irtifa, Al Samarat, PLS account, FCY PLS account, Asaan account and Charity Policy.


United Bank Limited (Ameen)

On assets side, to cater financing needs of corporate customers, two new products namely Ameen Musharakah Running Finance and Ameen Islamic Export Refinance were successfully launched, during 2017 after detailed review and approval of Shariah Board, while Ameen Istisna launched in 2018 was reviewed comprehensively and approved by Shariah Board. On liabilities side, Ameen Wiz Card was launched after consent from Shariah Board. The prepaid card has been designed with the purpose to facilitate the unbanked sector. It enables purchases and withdrawals at POS or over the internet within a limited budget. It also acts as card for travelers and others for remittances and salary disbursements etc. The portfolio of Bancatakaful, which was efficaciously, launched pan-Pakistan in 2016 with EFU and JLI as Takaful operators has now grown manifolds. While Islamic Banking window operations is being done from over 200 UBL branches, new branches are being converted to UBL Ameen Islamic Banking Operations. Conversion process is being effectively done with end to end review from Shariah Board and subsequent approval from State Bank of Pakistan.

National Bank Of Pakistan

In 2018, NBP Aitemaad Islamic Banking has launched five deposit products to their different segment-based customers. Thereafter, 12 products have been included in deposit product menu. Further, three new products have recently been launched namely Aitemaad Merchant Account, Aitemaad Minor Savings Account and Aitemaad Foree Remittance Account. At present, seven financing products are being offered through Aitemaad platform out of which six are for corporate/commercial/SME and one for consumer.

In addition to above, most of the conventional banks have Islamic windows that deal in normal Islamic banking transactions.

  1. Bank of Punjab Taqwa Islamic Banking
  2. Bank Alfalah Islamic
  3. Saadiq by Standard Chartered
  4. Summit Bank Riba Free Banking
  5. Askari Bank Islamic Banking
  6. Bank Al Habib Islamic Banking
  7. Silk Bank Emaan Islamic Banking
The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan

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