Lahore: Lack of investment opportunities are hampering profitability and growth of Islamic banking in Pakistan which needs urgent steps by policymakers, an industry expert said Monday. Lack of investment opportunities is seen as a stumbling block by many as the Islamic banks cannot and should not invest in non-Shariah compliant avenues while investment in Islamic products is not available at satisfactory level, he said.
Islamic finance has become one of the fastest growing sectors of the international banking industry which has also influenced Pakistan where two more banks are in process of entire conversion to Islamic banks, said Mian Shahid, Chairman United International Group while delivering keynote address at a seminar.
He said that demand for Islamic financial products and services have been growing in Pakistan which will have a fifteen per cent share of the entire banking system in the next four to five years. Efforts for an enabling environment by SBP, SECP, FBR and Finance Ministry can help Islamic banks grab more share than expected in a shorter span, he added.
Mian Shahid lauded the resolve of the Government and efforts of the SBP which is serious about promoting Islamic banking and trying to develop Shariah compliant instruments to manage liquidity and investment issues of Islamic banks. He advised Islamic banks to explore energy, agriculture, SMEs and other non-traditional sectors for investment which are ignored by the conventional banks. Smooth functioning of the Islamic financial system requires Islamic Capital Markets for which SBP and SECP should accelerate their efforts, he demanded.
He said that Governments in non-Muslim countries are already issuing sukuk; Britain and Hong Kong made debut issues earlier this year, while South Africa and Luxembourg are next in line which has added to the credibility of this alternative system.