The State Bank of Pakistan (SBP) in collaboration with Islamic Banking Industry (IBI) is going to launch a mass media campaign to create awareness about Islamic banking to achieve substantial growth. Sources in banking industry told Business Recorder on Saturday that “Awareness Campaign on Islamic Banking” is likely to be launched in the second or third week of the Holy Month of Ramazan and will continue for about one year.

Basically, this is the SBP’s initiative and all stakeholders including five Islamic banks and 18 Islamic windows of condensational banks will participate and contribute in the awareness campaign to move the industry to the next level of growth, they added.

The SBP has already constituted an awareness campaign committee headed by Irfan Siddique President Meezan Bank-the country’s largest Islamic bank. Several others stakeholders of the Islamic Banking Industry are members of this committee. Hasan Bilgrami President Bank Islami and Saleem Baig Head of Islamic Banking division Habib Bank Limited are some prominent names in the committee, sources said.

The SBP and IBIs believed that this campaign will be instrumental in enhancing public awareness and would give further boost to the growth momentum of Islamic Banking Industry in the country.

Under the Awareness Campaign on Islamic Banking, all means including print and electronic media will be used for the promotion and of the Islamic banking. Awareness seminars, forums and a comprehensive documentary on Islamic banking will be part of this mass media campaign.

The SBP has already chalked out five-year action plan for Islamic Banking Industry asking it to increase its market share up to 15 percent of overall banking industry by 2017. Sources said that this campaign will help the industry to achieve this target in next five years.

Presently, market share of IBI in overall banking industry stood at 10 percent and SBP seeking an increase of 50 percent in this share to reach 15 percent end of 2017.

First strategic plan for IBIs was launched for a period of 2007-2012 and SBP set 12 percent market share by 2013. However, the target was missed in the wake of economic slow down and prevailing energy crisis of the country.

Sources said that SBP has also decided to hold an International Islamic Banking and Finance Conference one every two years to promote understanding and awareness amongst stakeholders.

Over the next five-year SBP in collaboration with stakeholders would keep its focus on the different areas/objectives to facilitate and catalyse stable and distinct growth of Islamic banking in Pakistan. This include strengthening co-ordination and collaboration amongst internal and external stakeholders, Shariah compliance framework, regulatory framework, supervisory framework, financial accounting and reporting framework, improve liquidity management framework, enabling legal framework and taxation regime, focused research and development, increasing product diversification, enhancing financial inclusion, enhancing awareness amongst stakeholders and industry and institutional capacity, besides strengthening international linkages, they added.

In addition, under five-year strategic plan with an objective to strengthening co-ordination and collaboration with internal and external stakeholders, formation of Islamic Banking and Finance Consultative Group, headed by Governor/Deputy Governor (Banking) has been suggested.

State Bank already been taking initiatives to strengthen the legal, regulatory and Shariah compliance framework, create awareness amongst the masses and build the Islamic banking industry’s human resource capacity, sources said.

It may be mentioned here that Islamic Banking Industry is gradually increasing and with a substantial growth of 35.5 percent deposits of the IBI have surged to Rs 706 billion end of CY12 compared to Rs 521 billion end of CY11. IBIs barely managed to maintain the Rs 10 billion profit (before tax) level achieved last year due to significantly squeezed margins. Branch network of IBI is also continued to swell and the network of IBI (including sub-branches) has surged to some 1100 end of March 2013.

**This article by Rizwan Bhatti was published by Business Recorder. Read the original article here.