KARACHI: The State Bank of Pakistan on Wednesday issued revised instructions to banks to expand Islamic Banking Windows (IBWs), after concluding IBWs help in promoting Shariah-compliant financial services and increase financial inclusion in Pakistan.
IBWs can now offer all types of financing products to their customers including corporates, SMEs, agriculture, housing, and consumers. However, this facility is subject to the condition that the respective IBW branch be converted into full-fledged Islamic banking branch within a period of three years.
Presently, Islamic banking products and services are offered by full-fledged Islamic banks,
Islamic banking subsidiaries and Islamic banking branches of conventional banks, after approval from SBP. Conventional banks can open IBWs, which are dedicated counters in conventional branches, after getting permission from SBP; however, these were not allowed to offer any financing products.
“With 1,400 IBWs of 11 banks currently operating in the country, their potential to improve access to finance will increase 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,” the statement noted.
The new policy measure is expected to contribute towards achieving the targets set under
National Financial Inclusion Strategy for Islamic banking, which envisions a share of 25pc in total assets and deposits of the banking industry, and 30pc share in total branch
the network of the industry by the end of 2023.