State Bank Governor Yaseen Anwar has said that the Islamic banking has great opportunity to finance projects in agriculture and small and medium enterprise (SME) sectors which are the avenues missed by conventional financial institutions.
“Reaching out to such sectors will not only be beneficial for the Islamic financial industry but will also guarantee economic welfare of society,” Mr Anwar said while inaugurating the ‘Second International Conference on Islamic Business 2012’, here on Tuesday.
Realising the significance of Shariah-compliant agriculture financing, the State Bank was working rigorously with the industry to develop standardised products, he said.
He emphasised the need for Islamic banks to be more aggressive in increasing their network in rural Pakistan.
The SBP governor said that Islamic microfinance can be effective in serving the under-served and the deprived population. Due to lack of investment avenues and its adverse impact on portfolio of Islamic banks, limited Shariah-compliant instruments and avenues make it difficult for Islamic banks to efficiently place their excess liquidity that negatively affects their deposit mobilisation ability.
He pointed out that refinement of routine business and innovation both remain critical as the industry expands.
The SBP chief said that the second round of impact of the recent financial crisis showed that Islamic financial institutions did not take a hit as severe as others.
He said that sustainability of Islamic banking improved its penetration levels in various parts of the world. The industry has now over $1 trillion assets with presence in over 75 countries.