November 09, 2006	Thursday	Shawwal 16, 1427

KARACHI, Nov 8: The State Bank has decided to establish a task force for Islamic banking aimed to sustain its long-term growth and increase its market share, said Governor State Bank Dr. Shamshad Akhtar on Wednesday.

She was speaking at the signing ceremony for providing a consortium loan of Rs4 billion, including Rs1 billion through launching of Sukuk bonds, to Sui Southern Gas Company (SSGC) on Wednesday.

Islamic economics, Islamic banking and Islamic financing are the issues being currently discussed all over the country as a 3-day World Islamic Economic Forum conference just ended in Islamabad and an Islamic Banking and Money Market conference ended in Karachi on Wednesday.

Heated debate over the size, growth and influence of Islamic banking to bring a change in the current economic system was discussed in the Karachi conference, while some speakers pointed out that no new Islamic products were coming in the market and this could hurt the growth and viability of the Islamic banking.

The governor, while showing full trust in viability of the Islamic banking, announced that a task force was being formulated in this regard. The task force would help in long-term sustainability of growth of the Islamic banking.

Bankers believe that at the current size of the Islamic banking assets, which is just 2.6 per cent of the total banking assets, no major change could be expected through the Shariah compliant banking.

Dr. Shamshad said the SBP was helping out all the stakeholders to boost Islamic banking in the industry and wanted to give the much-needed impetus.

She said several measures had been taken by the central bank to increase the share of Islamic banking. From the word go, the Islamic banking industry has shown tremendous growth and its advances have increased six fold, which clearly sends a message that the Islamic banking is right on the growth path.

She assured every possible help to the stakeholders in the Islamic banking sector and said the central bank was ready to promote human resource required by the Islamic banking.

Talking about the long-term bonds, she said,” We are in touch with the government and are keen to issue bonds, which are very critical for the government for long-term debt.

The SSGC will launch Sukuk bonds of Rs1 billion, while a consortium of banks will provide Rs3 billion for expansion plan of the company.

The plan was explained by Managing Director SSGC Munawar Baseer.

The Sukuk bonds will be launched in Pakistan while Standard Chartered and Dubai Islamic Bank are the advisers on this issue of the company.

The company has a vast plan to expand its operation and development of infrastructure, including extension of services to win more clients in Karachi and other parts of Sindh.

Sukuk bond, a Shariah compliant product, is gradually getting attraction from the market and the bankers believe that the potential of Sukuk is much more than what is being estimated by the conventional bankers.

The government has also planned to issue Sukuk bonds for its budgetary borrowing, while it has already launched Sukuk bonds in the international market.

National Bank of Pakistan, Bank Al-Falah and ABN Amro, including Standard Chartered Bank and Dubai Islamic Bank, will form a consortium to provide Rs3 billion to the SSGC.

The governor congratulated the SSGC for contributing towards the development of Islamic bond market, which she said was still in its nascent stage in Pakistan. Dr. Akhtar lauded the consortium for realising the all-round gains that could be availed with compliance to the Shariah principles.

The governor said that the hallmark of this issue was besides, promoting healthy competition between the banking institutions, will also bring the much-needed innovation to the bond market.

She said that it was significant that the company was not dependent on the government for its financing needs and has been relying on its own credit worthiness to borrow from commercial banks at the most competitive rates.