LAHORE - Provincial Minister for Finance Dr Ayesha Ghous Pasha said on Wednesday that Islamic banking gained enormous international attention over the past few decades due to its huge growth and resilience to financial crises as well as the nature of Sharia-compliant finance models that focus on principles of investment in real assets and risk-sharing.

The International Monetary Fund (IMF) has endorsed the principles of Islamic finance by saying that it can help promote macroeconomic and financial stability. Its principles of risk-sharing and asset-based financing will promote better risk management by both financial institutions and their customers, and discourage credit booms, she said while addressing the 5th Global Forum on Islamic Finance at COMSATS Institute of Information Technology, Lahore.

She said that as a fast-growing emerging market and a major economy within the countries of the Organisation of Islamic Cooperation, Pakistan had a mature financial industry that, in the recent past, had been focusing on broadening the Sharia-compliant sector in a country with more than 190 million people. Islamic finance is expected to take off in Pakistan in coming years due to new regulations on Sharia-compliant banking, new industry-supporting regulatory bodies, as well as rising demand from foreign investors. Pakistan’s Islamic banking industry has been growing at over 30 per cent per annum over the past five years, which is above the average global rate. If this trend continues, it can be expected that by 2018 Islamic banking assets in the country would be worth $17.6 billion. This growth is supported by the strategy of the State Bank of Pakistan, which seeks to double the number of Islamic banking branches from about 1,200.

The government is serious in supporting the growth of Islamic Banking in the country. It has taken steps required for effective implementation of Islamic finance that includes formation of a taskforce under the leadership of Senator Ishaq Dar, federal minster for finance, and Saeed Ahmad, deputy governor of the SBP, to undertake amendments to the legal and regulatory framework.

The issuance of sukuks by the government during the last three years, including the recent issuance of $1 billion international sukuks, is proof of the government’s commitment to Islamic finance. “We are exploring options of Islamic borrowing instruments at provincial level, she said.

Dr Ayesha Ghous Pasha congratulated the COMSATS for holding the forum on Islamic Finance and ensuring presence of representatives from eight countries. She said that she expected from experts, researchers and universities to play their due share to promote Islamic Banking .