Pakistan unveils ambitious five-year strategic plan for Islamic banking sector

In this December 5, 2018 file photo, a brass plaque of the State Bank of Pakistan is seen outside of its wall in Karachi. (REUTERS)
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Updated 02 August 2021
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Pakistan unveils ambitious five-year strategic plan for Islamic banking sector

  • Central bank sets targets including Islamic banking reaching 30% share in assets and deposits of overall banking industry, 35% share in branch network
  • Islamic banking industry in Pakistan posted 30% and 27.8% growth in assets and deposits respectively in 2020, highest such increase since 2012

ISLAMABAD: The State Bank of Pakistan (SBP) on Monday unveiled its third five-year strategic plan for the Islamic banking industry, setting targets to be achieved by 2025, including reaching 30 percent share in both assets and deposits of the overall banking industry, 35 percent share in the branch network and 10 percent and eight percent share in private sector financing for small and medium sized industries and agriculture respectively.

The Islamic banking industry of Pakistan has posted 30% and 27.8% growth in overall assets and deposits respectively during 2020, the highest such increase since 2012, central bank data shows, driven by increasing access to shariah-compliant financial instruments and growing faith-based demand.

Twenty-two Islamic banking institutions currently operate in Pakistan: five Islamic banks and 17 conventional banks with standalone Islamic banking branches. The State Bank aims to make Islamic banking one third of the overall banking industry in Pakistan by 2025. 

The overall assets of the industry increased to Rs4.3 trillion while deposits reached Rs3.4 trillion by the end of December 2020, accounting for 17% of all assets and 18.3% of all deposits of the country’s entire banking industry, according to the State Bank.

“In order to steer the growth of Islamic banking on sound footings, SBP has been providing proactive guidance through issuance of Strategic Plans for the Islamic banking industry; so far, two five-year Strategic Plans have been issued,” the central bank said in a statement. “This third Strategic Plan for Islamic banking industry (2021-25) aims to set a strategic direction for the industry to strengthen the existing progressive momentum and lead the industry to the next level of growth. The plan has been developed in close coordination and consultation with all key relevant stakeholders.”

The statement added: 

“The strategic plan envisages achieving the aforementioned specified targets by focusing on six strategic pillars namely: (i) strengthening legal landscape, (ii) enhancing conduciveness of regulatory framework, (iii) reinforcing comprehensive Shariah governance framework, (iv) improving liquidity management framework, (v) expanding outreach & market development, and (vi) bolstering human capital & raising awareness.”

Financing for the Islamic banking industry also grew by 16% during 2020, and the non-performing finances (NPFs) to financing (gross) ratio declined from 4.3 %, as of the end of December 2019, to 3.2%, as of the end of December 2020, central bank data shows.

Bankers say the growth in Islamic banking, where under shariah the payment and receipt of interest is strictly prohibited, is driven main due to increasing access.

Sana Tawfik, banking sector analyst at Arif Habib Limited, told Arab News the central bank had been promoting the sector’s development through the introduction of legal, regulatory and shariah-compliant frameworks for instruments such as Naya Pakistan Certificates (NPCs) under the Roshan Digital Account (RDA) initiative, which are available to overseas Pakistanis and those who had declared assets abroad.

“Steps taken by SBP to promote Islamic banking, inflows through RDA in NPCs, Islamic sukuks and the increasing frequency of sukuk auctions are the other couple of reasons driving it,” Tawfik said.

Ahmed Ali Siddiqui, senior executive vice president of Meezan Bank — Pakistan’s first full-fledged Islamic bank — told Arab News there was “stronger public demand” for shariah based or interest free banking.

“It is continuously fueling growth,” he said. “The development of Islamic capital market and availability of financial instruments like Sukuk expedited the growth.”

He added that the COVID-19 pandemic had proven the stability of Islamic banking.

“Surprisingly Islamic banking has shown strongest growth during COVID-19 crisis,” Siddiqui said. “This shows the stability factors of the Islamic economic system based on real economic conditions.”


Pakistan’s army chief flags non-state actors, disinformation as threats to global peace

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Pakistan’s army chief flags non-state actors, disinformation as threats to global peace

  • General Asim Munir says Pakistan expects Kabul not to allow its soil to be used for militancy
  • He says absence of regulation over freedom of expression is deteriorating moral values

ISLAMABAD: Chief of Army Staff General Asim Munir on Friday identified violent non-state actors and the spread of disinformation as significant challenges to global peace while addressing a gathering in the federal capital, where he reaffirmed Pakistan’s commitment to promoting international stability.
The army chief made the remarks during a special session of the Margalla Dialogue, an annual conference that convenes policymakers, scholars and experts to discuss critical national, regional and global issues, where he highlighted Pakistan’s role in fostering global peace.
Organized by the Islamabad Policy Research Institute (IPRI), a local think tank, the conference provided a platform for the army chief to emphasize Pakistan’s contributions and express concerns about the issue of cross-border militancy.
“Terrorism by violent non-state actors and state-sponsored entities remains a significant global challenge,” the state-owned Associated Press of Pakistan (APP) news agency reported him as saying.
“We expect the Afghan interim government to ensure that Afghan soil is not used for terrorism against Pakistan and to take strict measures in this regard,” he added.
The army chief’s statement comes against the backdrop of a surge in militant violence in Pakistan’s western provinces bordering Afghanistan.
Officials in Islamabad have frequently accused Afghan authorities of “facilitating” cross-border attacks by armed factions, such as the banned Tehreek-e-Taliban Pakistan, which target civilians and security personnel— an allegation Kabul denies.
APP reported the army chief stated that Pakistan would not become part of any global conflict and would continue to play its role in promoting international peace and stability.
General Munir acknowledged the role of technology in disseminating information, though he cautioned that it also facilitated the rapid spread of disinformation.
He asserted that without comprehensive laws and regulations, disinformation and hate speech could destabilize political and social structures.
“Absence of proper regulations for freedom of expression is leading to the deterioration of moral values in societies worldwide,” he added.
The army chief expressed optimism about the country’s future, noting that about 63 percent of Pakistan’s population is under the age of 30, adding that the country was endowed with immense natural resources and had emerged as a major global agricultural producer.
He highlighted Pakistan’s significant role in the global freelancing industry and noted that its geographical location and seaports could position it as a vital trade hub for countries around the world.
 


Pakistan suspends mobile Internet in Balochistan, citing ‘public safety’ amid rising violence

Updated 15 November 2024
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Pakistan suspends mobile Internet in Balochistan, citing ‘public safety’ amid rising violence

  • People in Balochistan say mobile Internet has been down for about three days in different areas
  • PTA announcement comes days after a suicide bombing at a crowded railway station in Quetta

QUETTA: The Pakistan Telecommunications Authority (PTA) announced the suspension of mobile Internet services in various parts of the restive southwestern Balochistan province on Friday, saying the decision was taken to “ensure public safety” amid a surge in militant violence over the past several months.
The announcement follows a deadly suicide bombing at a crowded railway station in Quetta, the provincial capital, which killed at least 28 people, including Pakistani soldiers, and injured dozens of others.
The attack was claimed by the Balochistan Liberation Army (BLA), an outlawed separatist group that has targeted Chinese nationals in an effort to undermine the multibillion-dollar Pakistan-China Economic Corridor (CPEC) projects.
The BLA, the largest of several ethnic insurgent groups battling the Pakistani state, alleges that the province’s rich gas and mineral resources are unfairly exploited, a claim the government denies.
“The general public is hereby informed that, under the directives of authorized departments, mobile Internet services have been temporarily suspended in certain areas of Balochistan,” the PTA said in an official statement.
“This measure has been taken to ensure public safety, given the security situation in these areas,” it added.
The PTA statement did not specify the areas where mobile Internet services have been suspended, nor was there any clarification from other departments on whether the government was planning an operation against militants in these regions.
However, mobile Internet has already been down in the province’s Kech, Panjgur, Gwadar, Khuzdar, Loralai, Dukki, Ziarat, Harnai and Zhob districts for the last three days, causing significant hardships for students and the business community in these areas.
“Hundreds of students and businesses have been affected by the mobile Internet suspension,” Abdul Majid Dashti, a lawyer based in Turbat, told Arab News, adding that cellphone Internet had been down for nearly three days in the area.
Sadaqat Baloch, a journalist in Pakistan’s coastal town of Gwadar, which is central to CPEC, said authorities suspended mobile Internet in the area a day after the Quetta railway station bombing.
“People of the Makran region, including Khuzdar, are now deprived of mobile Internet, which has been creating problems for them,” he added.
The provincial government’s spokesperson was unavailable for comment on the recent mobile Internet suspension.
 


Pakistan felicitates Palestinians on 36th independence anniversary, reaffirms support

Updated 15 November 2024
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Pakistan felicitates Palestinians on 36th independence anniversary, reaffirms support

  • Palestinians proclaimed the Declaration of Independence on Nov. 15, 1988, in Algiers
  • Pakistan calls support to the Palestinian cause a ‘consistent facet’ of its foreign policy

ISLAMABAD: Pakistan on Friday felicitated the people of Palestine on the 36th anniversary of the Declaration of Independence, saying its support for the Palestinian cause has been the most consistent feature of the country’s foreign policy.
Proclaimed on November 15, 1988, during a meeting of the Palestine National Council in Algiers, the Declaration of Independence envisioned a sovereign Palestinian state in the West Bank and Gaza Strip, with Jerusalem as its capital.
It marked an important movement in the Palestinian struggle for self-determination and has since been a symbol of their aspirations for statehood.
“On the occasion of Declaration of Independence Day of the State of #Palestine, we extend our heartiest felicitations to its people and the Government,” the foreign office said in a social media post.
“Pakistan’s unflinching support to the Palestinian cause has been a consistent facet of our foreign policy,” it added. “We reaffirm our strong commitment to the Palestinian right to self-determination and our unwavering support for the establishment of an independent, viable, and contiguous state of Palestine, with Al-Quds-Al-Sharif as its Capital.”

The anniversary comes as the death toll in Gaza has surpassed 43,700 since the beginning of Israel’s military campaign more than a year ago, displacing nearly the entire population of the Palestinian territory.
Most of those killed in Israeli airstrikes and ground offensives are reported to be women and children, while the international community fears that the conflict could spread to the rest of the Middle East.
The situation has also exacerbated humanitarian concerns, with the United Nations warning of an impending famine in the besieged territory, where residents face acute shortages of food, water and medical supplies.
 


Muslims in Pakistan’s smog-shrouded Punjab province pray for rain

Updated 15 November 2024
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Muslims in Pakistan’s smog-shrouded Punjab province pray for rain

  • The special prayer was held at over 600 government-run mosques in the province
  • Punjab grapples every winter with smog, but the situation has worsened recently

LAHORE: Pakistan’s Punjab province declared a health emergency due to toxic smog on Friday, banning construction, shutting schools for another week and moving universities online, while hundreds of thousands of Muslims prayed for rain and forgiveness.
The faithful gathered at over 600 government-run mosques in the province for “Namaz-e-Istisqa,” a voluntary prayer for rain often offered in times of calamities, said Talha Mahmood, spokesman for the provincial Religious Affairs department.
“Today, we prayed for rain to decrease smog, though it is caused by humans’ own mistakes,” said Muhammad Ejaz, 48, who led prayers at a mosque in the sprawling provincial capital Lahore, adding the prayer aimed at seeking God’s forgiveness for people’s sins.
The province, Pakistan’s most populous, grapples every winter with smog, but air pollution has worsened in recent years, as a result of cold air trapping dust, low-grade diesel fumes and smoke from illegal stubble burning on fields.
Sajid Bashir, spokesman for the provincial Environment Department, attributed this year’s severe pollution to a lack of rain in September and October.
“Last year, rain spells reduced particulate matter; this year, we’re still waiting,” he said on Friday.
Lahore has topped Swiss group IQAir readings as the world’s most polluted city, for most of the week.
Punjab Senior Minister Marriyum Aurangzeb, announcing smog-reduction measures at a press conference, said the government had ordered the closure of construction, brick kilns, and furnace-based plants in Lahore and the city of Multan.
She said there would be a complete three-day lockdown from next Friday if the situation does not improve.
Last week the province ordered schools to close until Nov. 17, and on Friday the shift to online learning was extended for another week. Colleges and universities will also shut down, moving to virtual classes.
Authorities have already banned entry to parks, zoos, playgrounds and other public spaces.
Other parts of South Asia are also dealing with high levels of pollution and Punjab blames neighboring India for contributing to its hazardous air quality. New Delhi, the world’s most polluted capital, has banned non-essential construction, moved children to virtual classrooms and asked residents to avoid using coal and wood from Friday.
 


Pakistan orders VPN ban over militant use, with religious body calling them ‘un-Islamic’

Updated 15 November 2024
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Pakistan orders VPN ban over militant use, with religious body calling them ‘un-Islamic’

  • Interior ministry says ‘terrorists’ have been exploiting VPN services for violence, financial transactions
  • Government has set up a portal for VPN registration, which can be done by the end of the ongoing month

ISLAMABAD: The Ministry of Interior sent a letter to the Pakistan Telecommunications Authority (PTA) on Friday, asking it to block illegal Virtual Private Networks (VPNs) across the country while citing their use by militant groups for financial transactions and violent activities.
This directive follows international criticism of Pakistan’s Internet restrictions, notably after the February general elections, where allegations of electoral manipulation led to the blocking of social media platform X.
Media reports also suggested the government was setting up a national firewall, which had led to the slowdown of Internet speed across Pakistan, saying the decision was taken to curb “anti-state narratives” by political activists.
More recently, the PTA launched a new portal for VPN registration, saying it wanted to ensure secure and uninterrupted operations for online users and businesses.
“I am directed to refer to the subject cited above [about blockage of illegal VPNs] and to state that VPNs are increasingly being exploited by terrorists to facilitate violent activities and financial transactions in Pakistan,” the ministry’s letter to the PTA chairman noted.
“Of late, an alarming fact has been identified, wherein VPNs are used by terrorists to obscure and conceal their communications,” it added. “VPNs are also being used for discreetly access pornographic and blasphemous contents.”
Earlier this week, the PTA already disclosed that nearly 20 million Pakistanis try to access pornographic websites on a daily basis that were banned by the authorities in 2011.
The letter requested the top PTA official to block illegal VPNs nationwide while pointing out that registration of VPNs with PTA could be made the end of the ongoing month.
VPN users in Pakistan have already reported significant disruptions to services since last weekend, with issues relating to connectivity and restricted access.
Pakistan’s decision to impose online restrictions have been questioned by free speech activists and businesses alike.
PREDA, Pakistan’s first membership-based organization dedicated to promoting and protecting the interests of professionals, also wrote a letter to the government earlier in the day, appealing for the adoption of stable digital policies to support growth and build an eco system for global competitiveness.