Pakistan’s Finance Minister Ishaq Dar, has established a committee to establish an Islamic Financing system within the economy. Comprising of the country’s leading scholars on Islamic finance, and Shariah-compliant business ventures, the committee will analyze the possibilities of implementing the Islamic Financial system in Pakistan.
The committee will chalk out a path to substitute the present debt-based system with a Shariah-compliant equity system for Pakistan’s economy. They will also explore the possibilities of replacing the current conventional banking system with Shariah-compliant banking in Pakistan. Roadmaps and timelines will be part of the recommendations proposed by the committee to the Finance Ministry.
The present fiscal debt has strained Pakistan’s economic growth in the past; a paradigm shift to Islamic Finance could be the solution to economic prosperity. Despite the increasing presence of Islamic banks and financial institutions in the country, the market share for Shariah-compliant banking still hovers around 10%. The real challenge in establishing an Islamic Financial system in Pakistan would be the amalgamation with the global economic environment. From a consumer perspective, this could result in cheaper financing options in Pakistan, especially if the committee is successful in implementing a system rid of the present KIBOR benchmarks. Similarly, greater investment opportunities for Islamic banks would result in higher profits and returns for Pakistan’s depositor base.