Daily Times

State Bank Governor Jameel Ahmad has stated that Islamic banking is expanding both globally and locally, but there are three key challenges in eliminating usury (riba) in the country.

Speaking at an event titled “Islamic Bank of Pakistan” hosted by a private bank, Ahmad shared that the global Islamic banking industry has now reached a size of $3.7 trillion, urging Pakistan to increase its pace in adopting Islamic finance principles.

“Our vision is to fully eliminate riba by 2028, but we face three major challenges in this process,” Ahmad said. He explained that failure to fully comply with Shariah principles could be detrimental, and there are challenges in transitioning government bonds to Islamic bonds.

He stressed the need for Shariah experts to find solutions, warning that without progress in these areas, the growth of Islamic banking could slow down.

Ahmad further discussed the importance of creating an inter-bank market for Islamic banking, ensuring liquidity for Islamic banks, and improving awareness and skill development among staff members. “It is crucial to educate Islamic bank employees about Islamic financial products in detail,” he noted.

He also highlighted the need to develop both the local Islamic financial industry and its global counterpart. The State Bank has established a high-level committee to accelerate the development of Islamic banking in Pakistan.

The steering committee includes government representatives, the State Bank, the Securities and Exchange Commission of Pakistan, and other financial institutions.

The governor praised the role of the Accounting and Auditing Organization for Islamic Financial Institutions in enhancing global Islamic finance standards, and called for a collaborative effort between regulators, academia, and banks to resolve the issues facing Pakistan’s Islamic banking sector.