KARACHI: Islamic banks accelerated their credit to private sector as it grew by almost three times during 1HFY19 over same period last year.

The State Bank of Pakistan’s (SBP) latest report shows the credit to private sector by Islamic banks rose to Rs77.086 billion during July-December FY19, surging by 190 per cent, as against Rs26.56bn in corresponding half of last year.

Meanwhile, overall credit to private sector by all banks during the period jumped by 65pc to Rs503.7bn.

The higher participation of Islamic banks indicates the rising share of Islamic financing in the country which currently stands at 13pc. The report further reveals that the Islamic banking branches of conventional banks also posted reasonable growth as their lending went up to Rs48.67bn in 1HFY19, from Rs44.57bn.

In FY18, Islamic banks offered credit worth Rs103.86bn. Latest data suggest that the 2018-19 figures would be even higher as the half-yearly amount has already reached 74pc of the last year’s total credit.

Another SBP report shows that Islamic banks have shown deep interest in Agriculture sector as their credit in the sector has been rising.

However, the Islamic face a problem of excess liquidity. In a recent seminar on Islamic financing, bankers complained about limited avenues available for Shariah-compliant investments.

The government last month announced to launch Sukuk bonds worth Rs200bn to meet the liquidity demand for circular debts.

The cumulative credit lending to private sector by Islamic banks and Islamic banking branches of conventional banks clocked in at Rs125.75bn — about 33pc of the total lending by conventional banks at Rs377.75bn.

Published in Dawn, January 13th, 2019