THIS refers to the news item ‘Islamic banks investing in govt papers’ (June 9). The government in any country is a massive client from the lending perspective and a key shaper of the economy and needs to be propped by the private sector. If this need is not catered to by Islamic banks, who then is to take the initiative to finance the government on the basis of Islamic Shariah in our economy?

The news item makes an incorrect observation on the operations of Islamic banks. The remark that Islamic banking is following in the footsteps of conventional banks and opting for government papers and avoiding the private sector for the majority of its financing activities is not correct. Islamic banking is banking for everyone – from SME to corporate, individual to government. Hence, meeting all types of financing needs in a Shariah-compliant manner is the vision of Islamic banks in Pakistan. The recent growth of investment in Shariah-compliant Sukuks has provided an Islamic financing avenue to the government for meeting its financing needs and created a new path where the economy can be structured without the support of interest-based lending in Pakistan. This needs to be welcomed.

The latest issue of over Rs182.3 billion (approx $2.14bn) of Ijarah Sukuk based on the Jinnah Terminal is a landmark transaction that has proved the muscle of the growing Islamic finance sectors to cater to larger needs of the public sector and has also given a positive signal to international Islamic investors looking for Shariah-compliant instruments. The issuance of Islamic Sukuks by the government has also provided a new avenue for placing excess liquidity in the Islamic banking system that has witnessed tremendous growth in deposits from the public, as more and more people are shifting toward interest-free banking.

However, it is pertinent to note that, working under the vision of making Islamic banking as banking of first choice, Islamic banks have shown growth in all areas of business – from corporate/SME financing to Islamic consumer financing.

MOHAMMAD ADIL SAMI Karachi