KARACHI, Dec 8: The State Bank will help to establish Islamic microfinance banks to service the low income segments. The SBP has formulated draft guidelines for provision of Islamic microfinance services and products by financial institutions.

“These guidelines are aimed at broadening the coverage of microfinance products and services to low income segments in a Shariah-compliant manner,” said the SBP release issued here on Friday.

The SBP believes that the microfinance is compatible with the Islamic banking system therefore, Islamic microfinance services have a great potential in Pakistan.

These draft guidelines will allow the establishment of full fledged Islamic microfinance banks, microfinance services by Islamic banks, Islamic microfinance services by conventional banks and Islamic microfinance services by conventional microfinance banks.

A number of microfinance banks are presently operational but no Islamic microfinance bank is there to offer financial products based on Islamic teachings. The move can help the banks particularly the Islamic banks to tap the potential of growth in this sector.