Details about the Islamic banking system in Pakistan and give an overview of Islamic banking in any Islamic country. It gives some help for the fresh students to learn about Islamic banking.

1. Start with the name of Allah, the most Gracious, the
most Merciful

2. Our topic is
ISLAMIC BANKING IN
PAKISTAN

3. Presented by
 Atif Shahzd(ciit/sp18-bcs-021/atk)

4. We will be Discussing…
 Introduction
 History
 Vision and Mission
 Strategy
 Principle
 Growth
 Future Prospects
 Modes
Of Islamic
Banking

5. Introduction
 Islamic banking gives service to its customers free
from interest, the giving and taking of interest have
prohibited in all transaction. Islam stops Muslims
from taking interest (in Arabic Reba),and this
interdediction makes an Islamic Banking system
different fundamentally from a conventional banking
system.

6. What is the Islamic Banking?
 Banking in rapport with the culture and value system
of Islam.
 Following the principles of the Islamic Shariah.
 Banking without any interest
 Should also be considered performance of capital
while rewarding the capital.

7. History of Islamic Banking
 Steps for Islamization of banking and financial system
of Pakistan were started in 1977-1978.
 Elimination or removal of interest from HBFC,ICP and
NIT in July 1979 and Elamination of commercial
banks during January 1981 to June 1985.
 Ordinance to permit the establishment of Mudaebaha.

8. Considerations for state Bank
 Making the subsidiaries by commercial banks for
purpose of conducting Shariah complaint
transactions.
 Specifying braches by the commercial banks,
exclusively dealing in Islamic products.
 Al Meezan investment Bank received the 1st Islamic
commercial baning license from SBP in january 2002.

9. Vision & Mission of Islamic Banking
Department of SBP
State Bank of Pakistan, in its role as central bank, has
developed the following vision and mission:
 1. VISION
“To make Islamic Banking the banking of first choice
for the providers and users of financial services”.
 2. MISSION
“To develop and promote Islamic Banking industry in
line with the best intersectional practices, ensuring
Shariah conformation and transparence”.

10. STRATEGY FOR THE ISLAMIC BANKING
IN PAKISTAN
THERE ARE THREE STRATEGIES
In Pakistan, SBP has developed three points
strategies for the development of Islamic Banks:
1. Fully fledged banks can be accomplished in
Pakistan.
2. Islamic Banks can arrange their subsidiaries.
3. Islamic Banking branches which is stand-alone
can be opened by conventional banks in Pakistan.

11. HISTORICAL RUNDOWN (Continued)
a. Pakistan was established of Islamic Ideology.
Islamic Banking gets support for its
development.
b. Constitution of Pakistan
Article 38 (f) of the 1973 Constitution of Pakistan
is quoted below:
“The state shall eliminate riba as early as
possible”.

12. HISTORICAL RUNDOWN (Concluded)
c. 1970s to 21st Century
i. 1970s: efforts, in their initial stages, started to eliminate
riba.
ii. 1980s: Pakistan linked the race of three countries in the
world for interest free banking. Several existing laws were
reviewed. New financial instruments were introduced,
Twelve Non-Interest Based (NIB) modes were released to
replace riba based practices, Profit & Loss Sharing
concept was introduced.
iii. 2000s: In January 2002 Commission for Transformation
of Financial System was constituted in SBP. Task Force
was set up to suggest ways to eliminate interest from
government financial transactions.

13. Theoretical basis of Islamic Banking
 There are many products offered by Islamic banks
similar to conventional banks but some norms which
exclusive to Islam.
 Islamic Banking main Basics principles are derived
from SUNNAH and QURAN.
 Interest( Riba) is firmly prohibited in Islamic
financing.

14. The Principles of economy in islam
 Principle of trust
Principle implies responsibilities of man towards his
wealth and property
 Principle of Liberty
Principle implies activates are freely performed based on
the divine guiding sources .

15. GROWTH OF ISLAMIC BANKS IN
PAKISTAN
1. Some Growth of Islamic Banks: Important Indicators
2. Growth of Islamic Banks Branches
3. Islamic Banking Branches Network-Three Aspects
4. Islamic Banking Branches Network-Seven Aspects
5. Fully Fledged Islamic Banks
6. Islamic Branches of Conventional Banks
7. City wise break-up of Islamic Banking Branches
8. Islamic Banks sub-branches
9. Maximum & minimum braches network of Islamic Banks
10. City wise Islamic Banking Branches network as on
September 30, 2010.

16. The Growth of Islamic Banking
 Growth of Islamic Banking have following outcomes
 Economic growth
 Financial products based on the profit-sharing and
risk-sharing
 Provide acceptable financial returns for investors
 Islamic banks are active in commodity finance and
leasing

17. GROWTH OF ISLAMIC BANKS
Some Important Indicators :
Total AssetsDeposits
Net financing
investment
Year
Total Rs.bShare of IBIs
%
Total Rs.bShare of IBIs
%
Total Rs.bShare of IBIs
%
(December)
131811012003
4423013012004
7125024822005
11938437322006
2064147413842007
2765202518642008
3666283622652009
4246338723352010
(Sept)

18. GROWTH OF ISLAMIC BANKS
BRANCHES
Year (December)NumberBase IndexNumber of Times
2003171001
2004483003
2005704124
20061508829
20072891,70017
20085153,02930
20096513,82938
2010 (Sept)6844,02340

19. ISLAMIC BANKING BRANCHES
NETWORK
Number of
Particulars
Branches%
43764A: Full Fledged Islamic Banks
19729B: Islamic Branches of Conventional
Banks
5007C: Sub-Branches
684100Total

20. ISLAMIC BANKING BRANCHES
NETWORK
%NumberProvinceS. No.
44306Punjab1.
34231Sindh2.
1173Khyber Pakhtoonkhwa3.
0533Baluchistan4.
0533Federal Capital5.
0107*Azad Kashmir6.
-1*Northern Area7.
100684

21. FULL FLEDGED ISLAMIC BANKS
%Number of
Branches
BanksS. No.
41166Meezan Bank Ltd1.
1870Bank islami
Pakistan
2.
1558Emirates Global
Islamic Bank Ltd
3.
1042Dawood Islamic
Bank Ltd
4.
935Dubai Islamic
Bank Pakistan Ltd
5.
729Al Barka Islamic
Bank
6.
100400

22. ISLAMIC BRANCHES OF CONVENTIONAL BANKS %Number of BranchesBanksS. No.
3660Bank Alfalah Ltd1.
1729Askari Bank Ltd2.
1018The Bank of Khyber3.
611MCB Bank Ltd4.
611Standard Chartered Bank5.
75129
58National Bank of Pakistan6.
46Bank Al- Habib Ltd7.
46Faysal Bank Ltd8.
46Soneri Bank Ltd9.
35United Bank Ltd10.
24Habib Metropoltian Ltd11.
23The Royal Bank of Scotland12.
11Habib Bank Ltd13.

23. CITY-WISE BREAK-UP OF ISLAMIC
BANKING BRANCHES
%NumberProvinceS. No.
4738Punjab1.
2117Khyber
Pakhtoonkhwa
2.
1512Sindh3.
1310Baluchistan4.
22Azad Kashmir5.
11Federal Capital6.
11Northern Area7.
10081

24. ISLAMIC BANKS SUB BRANCHES
%Number of
Branches
BanksS. No.
4435Bank Alfalah Ltd1.
4032Bankislami Pakistan
Ltd
2.
8467
108Dawood Islamic3.
22Askari Bank Ltd4.
22Emirates Global
Bank Ltd
5.
11Dubai Islamic Bank
Ltd
6.
11The Bank of Khyber7.
1614

25. MAXIMUM & MINIMUM BRANCHES NET
WORK OF ISLAMIC BANKS
Number
ProvinceS. No.
MinimumMaximum
1180Sindh/Karachi (Five Cities)1.
1109Punjab/Lahore (Twelve Cities)2.
-31Federal Capital/Islamabad3.
128Khyber/Pakhtoonkhwa (Eight Cities)4.
121Baluchistan/Quetta (Eight Cities5.
34Azad Kashmir/Mirpur AK
Muzafarabad
6.
-1Northern Area/Gilgit7.

26. CITY WISE ISLAMIC BANKING
BRANCHES NETOWRK
%NumberCityS. No.
28193Karachi1.
17117Lahore2.
533Rawalpindi3.
529Peshawar4.
428Faisalabad5.
324Multan6.
322Quetta7.
65446
35238Others8.
100684

27. SELECTED PERFORMANCE INDICATORS
IBIs & BANKING INDUSTRY OF PAKISTAN
1. Capital
2. Assets Quality
3. Earnings & Profitability

28. FUTURE PROSPECTS
1. Forecasts
2. Challenges

29. FORECASTS
1. Islamic Banking industry is forecasted as Rs. 1 trillion
in 2012.
2. 1200 branches of Islamic Banks are vitalized in the next
five years.
3. The hope is that it will be 12% of total banking
industry
4. Compulsive efforts required by all of us to promote
forward the process of Islamic Banking in Pakistan

30. CHALLENGES
 We visualize the following future challenges:
a. 15,000 people are essential in the next five years to equip Islamic Banks.
In this respect Universities in Pakistan must respond to this challenge.
Curricula must be changed in management education. High Education
Commission should provide motivation in this respect for Universities to
positively respond.
b. Islamic Banks must demonstrate growth with profitability. The top
management must evolve the process to translate the above challenges.
c. The scope of services for user may be extended to such areas as micro
finance, agriculture and small & medium enterprises. This will widen the
base of socio-economic development in our country and will address to
the two vital issues in our country namely, promotion of employment
opportunities and alleviation of poverty.
d. Sharia compliant financial services be expanded. Logistics be developed
as cushion and awareness be in this way for achieving the above
objective.
e. Differentiated products can be highly developed. Correct initiative have
taken by some Islamic Banks in this respect. This areas require to be
logistically well cushioned with demonstrated results.

31. Major Challenges Faced By Islamic
Banking
 1st Challenge is to building the capacity for manage
increasing uncertainties produced by financial innovation.
 2nd challenge is the effective implementation of Financial
safety nets and to maintain public confidence by effective
coordination of different components and for supporting
continuous financial intermediation.
 3rd Challenge is high and increasingly complex financial
and economic integration associated with globalization.
 4rth Challenge is auditing and accounting standards.

32. Controversies face by Islamic
Banking
 1st Low number of Shariah scholars
 2nd Scholar who are well versed in finance and religion
is in limited numbers
 3rd There have short coming of qualified professionals
scolars

33. Modes of Islamic Banking
 Murabaha (cost plus profit sale)
 Ijarah (leasing)
 Ijarah-wal-iqtina(asset leasing)
 Musawamah (bargain sale)
 Istisnaa (credit sale)
 Mudarabah (trustee profit sharing)
 Musharakah (joint venture profit sharing)
 Bai salam (commodity sale)

34. Importance of Islamic Banking
Now a days banking, based on interest and in favor of
the capitalists, rich and well-to-do, is rejected as
unislamic because our country try to make a banking
system with the basic foundation by Islam.
Islam is not just a religion but also a set of beliefs
,thoughts and aspects of life which create a balance
between worldly and spiritual elements.
Without an Islamic foundation the country will not get
blessing from Allah in the world and Hereafter.

35. THANK’S FOR
ATTENTIVE LISTENING.