KARACHI, Jan 31: If all goes well — one can walk in any of the five branches of the first-ever Islamic bank in Pakistan by end of February or early March. Sponsors of the banks say they have in store a range of banking products to attract those who want to invest money in Riba-free schemes or make Riba-free borrowings.

“We hope to be in business by end of February or early March,” said chief executive of Al-Meezan Investment Bank, Irfan Siddiqui.

He was talking to Dawn after receiving the licence to set up the first Islamic commercial bank from State Bank Governor Dr. Ishrat Husain on Wednesday.

The investment bank has got the licence for Islamic commercial bank under the name of Meezan Bank Ltd. with major share-holding of Pakistan-Kuwait Investment Company. The SBP chief presented Siddiqui the licence to set up the Islamic bank at a ceremony held at the SBP head office.

Under a Supreme Court verdict Pakistan is bound to transform its financial system into the one conforming to the Islamic law before July this year. The SBP move to allow setting up of first-ever Islamic commercial bank “is a major step in this direction,” to quote an SBP press release.

The central bank had invited applications for the Islamic bank last month. The sponsors of Meezan Bank Ltd. met all conditions laid down by the SBP for this purpose and received the licence.

The sponsors of the first Islamic commercial bank are: (i) Pak-Kuwait Investment Company (30%); Shamil Bank of Bahrain (25%); Islamic Development Bank (9%); Kuwait Auqaf Public Foundation (8%) and Societe Generale of France (10%). Siddiqui told Dawn that 18 per cent shares would be offered for public subscription.

“What we have to do next is to acquire Pakistan operations of Societe Generale,” Siddiqui said when asked what else is to be done to launch the Islamic bank. “We are already at an advanced stage of negotiations with SG and we hope to sign the deal soon.”

He said once the agreement was signed all the four branches of SG in Pakistan would automatically convert into the branches of Meezan (Islamic) Bank Ltd.

“We will initially start with five branches — three in Karachi and one each in Lahore and Islamabad,” Siddiqui said, adding that the first Islamic bank would primarily focus on consumer banking.

But that does not mean that the bank would put off corporate banking. Sponsors of the banks claim they have the expertise to cater to the needs of both household and corporate customers.

“But it is consumer banking where the first Islamic bank can make an immediate impression,” said one of the sponsors, adding the bank would start operating with a range of Shariah-compliant saving and lending schemes.

The first Islamic bank is being set up with a paid-up capital of Rs1bn. Al-Meezan Investment Bank, which is going to convert into the Islamic bank currently, has Rs1.3bn paid- up capital.

An SBP press release said that the management of Meezan Bank Ltd. “comprises highly professional and experienced bankers committed to Islamic finance.” The bank’s Shariah Adviser Dr. Imran Usmani, who is a Ph.D in Islamic Finance, will monitor the activities of the bank on a day-to-day basis. “In addition bank has a high powered Shariah supervisory board chaired by Justice Mohammad Taqi Usmani, who is an eminent Islamic scholar of international repute.” He also supervises the activities of other leading Islamic banks of the world.