Banks planning to introduce Shariah-compliant credit cards in Pakistan. Here’s all you need to know
Five Islamic banks and several conventional banks under their Shariah-compliant operations do not offer credit cards as of yet in the country.
Many banks in Pakistan do not issue credit cards. Five Islamic banks and several conventional banks under their Shariah-compliant operations do not offer credit cards yet in the country.
The entire philosophy of Islamic banking revolves around fundamental assets. They do not offer loans to earn an interest on income. However, the banks share the mandatory portion of the equity to buy assets in association with businesses and individuals.
This policy allows the banks to take a share in profit instead of accepting interest income against lending the money, which is the model of conventional banks around the world.
However, all the stakeholders including the State Bank of Pakistan (SBP) are planning to design and introduce Shariah-compliant credit cards in Pakistan.
Speaking to a source, the head of the Bank Alfalah Islamic Group, Dr. Muhammad Imran, said, “Credit cards being offered by Islamic banks in the Middle East are based upon Tawarruq, which means a silver foil (layer).”
Imran said,” Islamic banks are working on a structure of the product in Pakistan that may allow them to launch the credit cards as well.”
Use of Credit card by the Conventional Banks in FY19
|Number of Credit cards increased||9 percent to 1.58 million|
|Total Number of Plastic Cards (ATM, debit and pre-paid)||3.76 percent to 42.23 million|
|Total Amount of Money People paid through Credit Cards||Rs. 217 billion|
|Total Financial Transactions through Plastic Cards||Rs. 6.76 trillion|
The government has recently contacted Islamic banks to provide Rs. 200 billion for the second energy Sukuk (Shariah-compliant bond), which is on hold for the past several months. The Sukuk would partly deal with the circular debt issue in the energy sector.
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