ISLAMABAD: The State Bank of Pakistan (SBP) has exempted Islamic banks from using the interest-based benchmark, Karachi interbank offered rate (KIBOR), deployed by conventional banks to work out the pricing of their products and instruments. The announcement said it has been decided that the financing provided on the basis of participatory, ‘Musharakah’ and ‘Mudaraba’ and ‘Wakalah’, modes by the Islamic banking institutions, should be exempted from the requirement of using KIBOR as the benchmark rate, reported Khaleej Times. The SBP, in 2004, had advised all commercial banks in Pakistan to deploy KIBOR as the benchmark rate like London interbank offer rate (LIBOR). he Islamic banks would also have to submit details of Mudarbah, Musharkah and Wakalah-based products for de-linking them with KIBOR benchmark and linking them with the SBP’s Islamic banking department. Such decisions and concessions offered by the SBP were helping the Islamic banking sector to grow. The announcement said that the SBP and the government are keen to promote the Islamic banking industry, which is in its evolutionary stage. Islamic banks’ share of banking assets was now as high as 11.4 percent of the overall banking industry. At the same time, its share of the deposits has risen to 13.2 percent, as of June 30, 2016, the SBP reported last week. Moreover, Islamic banking growth was recorded at 7.4 percent in the April-June quarter of the calendar year, 2016. The sector’s assets rose to a whopping Rs1.745 trillion in this period, while its deposits have risen to Rs1.461 trillion. The number of IBIs has risen to 22. It includes six full-fledged Islamic banks, while conventional banks now have standalone bank branches. The branch network was growing fast and has gone up to 2,146 branches located in 98 districts across the country, as of June 30 this year. Pakistan Chambers of Commerce and Industry Senior Vice-President Shaikh Khalid Tawab said that Islamic banking was the need of the hour because it was risk-sharing and asset-backed. It remains unaffected by periodic global financial crises. Tawab applauded the role of the SBP in promoting Islamic banking and launching the Islamic Share Index, and laying down the policy framework for establishment of Islamic banking subsidiaries in Pakistan. He proposed that steps should be taken to improve the returns provided by Islamic banks to depositors. He also mentioned that foreign banks in Pakistan have started operating Islamic windows.