ISLAMABAD: Federal Minister for Finance and Revenue, Shaukat Tarin here on Monday emphasized upon all stakeholders to explore the potential of Islamic finance in promoting infrastructure development in countries like Pakistan.
This could be particularly in Public Private Partnership (PPP) delivery framework, the minister said while addressing (through a video-link) a Round Table Conference (RTC) organized by the Daily Pakistan Observer on “Islamic Banking-The Way Forward” in Karachi.
The Islamic Banking Industry has experienced a healthy progress over the years and the time has come to contemplate upon the ways and means on how to traverse the future path of taking this industry to its next phase of development.
The minister said, the Islamic banking has grown rapidly both in local as well as in international markets and has assumed systematic significance in a number of jurisdictions. Apart from its faith-based appeal, the increasing interest in Islamic finance industry stems from its strong economic and social considerations. Its skewness towards asset backed and equity based transactions help promote entrepreneur friendliness and consideration of project viability, he added.
He said, Islamic finance offers prudent financing options that ensure the transaction is less prone to debt crisis and the funds are employed for their prescribed purpose minimizing defaults.
Therefore, the Islamic finance promotes financial inclusion by bringing that particular segment in financial ambit, which has consciously excluded themselves due to their faith-related sensitivities.
The minister expressed satisfaction over the progress made by the Islamic Banking since its inception adding that the government had played a pivotal role in the promotion and development of Islamic Banking Industry over the period of time.
The provision of a level playing field to the Islamic Banking and finance industry vis-a-vis the conventional financial system has been one of the priority areas of the present government.
The emergence of Sukuk has been a significant development in Islamic Capital Markets due to its ability to raise financing under Shariah permissible modes while maintaining a strong linkage between the real economy and the financial sector, he said.
In case of Pakistan, the Sukuk market has witnessed significant progress as both sovereign and corporate entities have been issuing these instruments.
Tarin also underlined the efforts by the government and the State Bank of Pakistan (SBP) for facilitating the Islamic banking industry through provision of tax neutrality vis-a-vis conventional banking system.
Recognition of SBP’s efforts at the global level by being awarded as the “Best Central Bank to promote Islamic Banking” is another feather in its cap which clearly reflects its better performance in comparison with other regulators around the world in promoting Islamic banking in the country.