ISLAMABAD: Pakistan aims to eliminate interest from its banking system under the Islamic Sharia law by 2027, the country’s top banker said on Monday. Addressing the Islamic Capital Markets conference in Islamabad, State Bank of Pakistan (SBP) governor Jameel Ahmad said that the Security and Exchange Commission of Pakistan and the central bank were working together on reforms to promote the Islamic finance sector.
“In the past decade, the country has seen a 24% rise in Islamic banking, with the Islamic capital market growing to around $3 trillion,” he was quoted as saying by Express Tribune newspaper. Asserting that the growth has reflected positively in the overall state of the country’s economy, Ahmad said, “Islamic banking now makes up 20% of the banking sector in Pakistan.” He added that there are ongoing discussions for funding from the capital market through Sharia compliance and added that the financial requirements of the government could also be met through Sukuk (Sharia-compliant bonds) issuance. Islamic banking is defined as a banking system which is in consonance with the spirit, ethos and value system of Islam and governed by the principles laid down by Islamic Sharia. As per Ahmad, Pakistan has issued Sukuk bonds worth Pakistan Rs 2.8 trillion, and a committee has been formed within SBP to convert government debt into Sukuk.