KARACHI, March 4: The State Bank governor Dr Ishrat Husain on Thursday said the SBP would only issue banking licences for setting up exclusive Islamic banks.

Addressing a press conference here, he told a questioner that there were already too many of the conventional banks and the central bank was stressing for mergers and consolidation. There is only one Islamic Bank and there was growing need for more of these banks, he said.

He said the SBP had put in place the Shariah Board and soon a level playing field would be provided to the conventional banking and Islamic banking sectors. The worldover 15pc per annum growth of Islamic banking was sufficient to indicate that the trend is growing, he responded to a questioner.

He said the central bank won't offer any incentive and would ensure a level playing field for both sectors of the banking. Riba- free banking was part of peoples' belief, he added.

"It is not the SBP or the government to enforce the Islamic banking but it would only facilitate the creation of an environment for the purpose to fulfil its commitment to eliminate riba from the economy, but it is the individual depositors and finance seekers to opt for Islamic mode or conventional mode," the SBP governor said.

Ishrat said only Meezan Bank was exclusively Islamic bank and was providing valuable assistance in disseminating information and training to other banks for Islamic banking.

The governor said the Muslim Commercial Bank was also setting up exclusive Islamic banking branches. MCB was a big bank and its decision was a good omen for the sector, he remarked.

He also praised the NWFP government for converting one branch of the Bank of Khyber into an Islamic banking unit. He said the provincial Finance Minister Siraj Ul Haq had said that if the experiment proved successful, more branches of the bank would be converted into Islamic banking units.

The governor said there was constant contact with Bahrain and Malaysia to share their experiences and guidance on Islamic banking as they both were operating Islamic banking system. -APP