January 8, 2003	Wednesday	Ziqa’ad 4, 1423

KARACHI, Jan 7: State-run National Bank has decided to set up a stand-alone branch for Islamic banking and the branch may start operations next month, NBP President Syed Ali Raza told Dawn.

Last week the State Bank had allowed commercial banks to set up subsidiaries or designate some of their branches to undertake Islamic banking and had also laid down a set of rules for this purpose.

NBP is going to reopen one of those branches closed earlier as part of right-sizing the bank. This very branch located in Cotton Exchange Building on I.I. Chundrigar Road Karachi would be doing Islamic banking. Head of operations of NBP R.A. Kaleemi said once this pilot project succeeds the bank would set up at least one Islamic banking branch each in all of its 30 regions including two in Karachi. He said the bank would start establishing Islamic banking branches after one-and-a-half month’s successful operation of the pilot project. The NBP currently has a network of 1189 domestic branches.

Kaleemi said the Islamic banking branch being set up in Cotton Exchange Building will be offering loans and accepting deposits strictly in line with the injunctions of Islam. He said morabaha, musharika, modaraba and other modes of Islamic financing would be utilized for this purpose.

The bank may have to hire some people well versed with Islamic banking from outside but Kaleemi said those with Islamic banking background from amongst the bank’s own employees would serve in the Islamic banking branch.

He said that his bank will have to keep a separate record of the working of Islamic banking branch as required by the SBP and will also have to develop a system to integrate its operations with that of other branches.

Once this is done and the first Islamic banking branch becomes a success “we will only have to replicate it at other branches.”

Head of Islamic Banking at United Bank Dr Ahsan H. Khan said his bank was also planning to set up a few Islamic banking branches.