KARACHI: The State Bank of Pakistan (SBP), Governor Syed Salim Raza, on Wednesday said that the central bank is working with the industry and the federal government to develop Shariah compliant short-term securities that will be issued on regular basis.
He was speaking on the occasion of a talk on ‘Current Islamic Banking Paradigm and the Way Forward’ by Dr. Umer Chapra, a renowned international scholar on Islamic Economics and Finance at SBP.
The governor said that SBP’s immediate objective was to improve and diversify avenues for short-term liquidity management for the Islamic banking industry.
“Islamic banks in Pakistan have to live with the big constraint of only being able to place their surplus funds with other Islamic banks, in the absence of suitable investment opportunity,” he said and added that this market gap both limits earnings, and inhibits aggressive deposit mobilization drives.
Raza said the Islamic banking in the country, from a modest start in 2002, has made a good progress and achieved six per cent market share. “The heightened global interest in the subject, particularly after the recent financial crisis, leads one to expect that Islamic banking will make more rapid strides globally and in Pakistan,” he said.
SBP governor stressed the need to improve understanding among investors more broadly about those principles in Islamic finance that provide investors assurance about risk evaluation and risk management frameworks and practices that improve upon most conventional counterparts.
He said that the central bank has taken a number of initiatives in the past to train the Islamic bankers, as the pace of growth of the industry is faster than the supply of trained and qualified Islamic bankers. “A strategy is, therefore, being developed to improve the skills of the Islamic banking industry professionals, which include collaboration with reputed national and international institutions offering and sponsoring Islamic banking trainings,” Raza added.
Source The News
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