KARACHI: The State Bank has evolved a five-year strategic plan for the development of Islamic banking industry through consultations with all key stakeholders and the plan would be issued soon.

Speaking at the opening session of the Islamic Finance News, Pakistan — Road Show on Islamic Banking, held at the State Bank on Tuesday, SBP Governor Yaseen Anwar said this plan lays down the future roadmap of the industry, highlights areas of improvement in legal, regulatory and taxation environments, emphasises diversification of products and markets covering non-traditional, but strategically important sectors of agriculture and SMEs and increasing Islamic banking market share to over 15pc of the country’s banking system during the next five years.

Mr Anwar said Islamic banking in Pakistan has witnessed significant growth during the last decade and now constitutes over 10 per cent of the country’s banking system with an asset base of over Rs900 billion and a network of more than 1100 branches.

“This expansionary trend is likely to continue and the industry is well set to double its market share by 2020,” he said.

The governor said that to further improve the Shariah compliance environment in IBIs, SBP’s Islamic Banking Department has completed industry consultations on the draft Shariah Governance framework and would soon be issuing the same.

The SBP has also played a vital role in raising awareness and building capacity of the industry.

To address the awareness and misconception issues, the SBP launched an awareness campaign that consists of seminars, conferences, targeted programmes and focused discussions for the business community, academia, bankers, and policy makers.

A recent significant milestone is the launch of a mass media campaign where the whole Islamic banking Industry joined hands under the ambit of SBP to target the challenge of misconceptions related to the Islamic banking business model and practices.

Mr Anwar emphasised the critical importance of investment in research and development particularly for the evolving sectors of Islamic finance.

The research and development is also needed to develop solutions for bringing monetary and fiscal policies and practices in conformity with Shariah principles.

The strategic plan for the next five years envisages a number of such initiatives and expressed the hope that the collaborative efforts by the regulator and practitioners would be instrumental in improving investment in R and D and developing better solutions for serving the financing needs of the real economy, he added.

He said the unprecedented growth of the Islamic finance industry can be associated to efforts of dedicated regulatory, Shariah, and academic institutions along with the presence of diversified players in the field, ie, Islamic banks, investment banks, takaful companies, Islamic fund management companies, and Islamic brokerage companies.