Pakistan’s Islamic banking industry reaches new heights, witnessing 30% growth
The rise in overall investments is mainly due to the investments made by the Islamic banking industry in the government's domestic Ijarah Sukuk.
Pakistan’s Islamic banking industry has witnessed a 30.6% and 28.4% year-on-year (YoY) growth in overall assets and deposits, respectively.
This was revealed by the State Bank of Pakistan (SBP) in its quarterly Islamic Banking Bulletin report released on Friday.
According to the report, the overall assets of the Islamic banking industry (IBI) increased by ₨. 120 billion during the quarter of January to March and were recorded at ₨. 4.39 trillion by the end of March.
Likewise, the deposits of The IBI experienced a quarterly growth of ₨. 68 billion during the period under review, reaching ₨. 3.46 trillion.
According to the SBP, the surge in net investments can be mainly attributed to investments made by IBI in the government’s domestic Ijarah Sukuk.
Ijarah Sukuk is a certificate of equal value issued by the owner of an existing property or asset either independently or via a financial intermediary to leasing it against a rental from the subscription proceeds.
After subscription, the underlying becomes owned by the Sukuk holders.
In terms of sector-wise financing, the sectors of textile and production and transmission of energy were the two leading sectors in acquiring financing.
The two sectors’ shares in overall financing of the Islamic banking industry were 14.8% and 13.8%, respectively, by end-March 2021.
The corporate sector accounted for 69.7% of the overall financing of the Islamic banking industry.
This was followed by commodity financing and consumer financing, with a share of 14.9% and 10.5%, respectively.
The IBI has been seeing continuous growth in Pakistan.
According to experts, the demand is driven by increasing access to shariah-compliant financial instruments and faith-based demand.
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