Islamic Windows of Banks Can Now Be Converted into an Islamic Banking Branch - Android

State Bank of Pakistan has issued instructions for the banking industry allowing them to convert an Islamic banking window into… Read More

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State Bank of Pakistan has issued instructions for the banking industry allowing them to convert an Islamic banking window into a full-fledged Islamic banking branch within three years.

The scope of services and operations have been expanded for Islamic banking windows due to increasing acceptability of the system among the public which ultimately paved the way towards increasing financial inclusion and the banked population in the country.

The Islamic banking industry consists of different arms including full-fledged Islamic banks, Islamic banking division with full-fledged Islamic banking branches of the conventional banks, and the Islamic banking windows operating in a conventional branch of a conventional bank.

Expanded Role of Islamic Banking Windows

Islamic Banking Windows (IBWs) can now offer all types of financing products to their customers including Corporates, SMEs, Agriculture, Housing, and Consumers, according to a notification issued by SBP.

Presently, Islamic banking products and services are being offered by full-fledged Islamic banks, Islamic banking subsidiaries, and Islamic banking branches of conventional banks after getting approval/license from SBP.

Conventional banks can open IBWs, which are dedicated counters in conventional branches, after getting permission from SBP; however, these banks were not allowed to offer any financing products other than opening accounts previously.

With the introduction of the revised scope of work, 1,400 IBWs of 11 banks currently operational will improve access to finance significantly. Further, it will contribute towards an increase in financial inclusion through the provision of Shariah-compliant financing facilities to the vast majority of the population.

It is expected that this new policy will contribute towards achieving the targets set under National Financial Inclusion Strategy for Islamic banking, which envisages attaining a share of 25% percent in total assets and deposits of the banking industry and 30% share in the total branch network of the industry by the end of 2023.

At present, the market share of Islamic banking assets and deposits in the overall banking industry was recorded at 15.2 percent and 16.9 percent, respectively by end-March, 2020.

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