ISLAMABAD - SECP is striving to establish a comprehensive Islamic financial system to cater for the needs of people which are not inclined to use conventional financial products, a top government official said Saturday.

Today, the Islamic financial industry has expanded beyond the traditional borders of the Islamic world into the major industrial economies to become an integral component of the global financial system, said Chairman SECP Tahir Mehmood. Speaking at inauguration ceremony of United Window Takaful Operator (Amaan), the first window Takaful (Islamic insurance) operator in Pakistan, he said that SECP has permitted conventional insurance companies to launch Takaful operations which will result in rapid development of this sector.

Tahir Mehmood said that the decision is having a positive impact on overall growth of the Islamic financial system in Pakistan paving way to the accelerated economic progression.

He further added that the majority of Muslims abstain from buying conventional insurance products because of their belief shall benefit from Takaful, which would definitely accelerate Takaful penetration in Pakistan.

Speaking at the occasion, Chairman UIG Group Mian Shahid said that evolving a dynamic and vibrant Takaful industry that is responsive and sustainable so that it can support overall economic growth is a challenge.

The development of an Islamic financial system needs to include Islamic banking industry, Takaful industry and Islamic capital and money markets with strong linkages, interdependence and synergies, he added.

Mian Shahid said that although Takaful has been in the market for long, it has yet to make significant inroads as the concept is clouded by unfamiliar terms and principles for commoners resulting in hesitancy.  Despite competition with the deeply entrenched conventional financial markets, Islamic finance assets worldwide continued their upward trend to cross $ 2 trillion mark but meaningful cross-border alliances is an area unappreciated by many in the Islamic financial business, the insurance veteran said. 

Mian Shahid said that in absence of a viable Islamic capital market the adequate supply of quality financial instruments can be a difficulty, he observed.

Shariah Adviser Mufti Zeeshan Abdul Aziz in his speech said that the market penetration level of overall insurance business is very low which that represents an enormous potential for Takaful operators.

Islamic finance has shown strong resilience despite the slowdown in the global economy; in fact, global Islamic finance assets have doubled since the start of the economic downturn, he informed.