KARACHI: Keeping in view the significant potential of Islamic Banking, the State Bank of Pakistan (SBP) has given the green signal for Islamic Banking Windows (IBWs) to offer all types of financing products to their customers.
According to a statement issued by SBP today, the central bank revised instructions for banks to expand the scope of operations of IBWs.
Under the revised instructions, IBWs can now offer all types of financing products to their customers including Corporates, SMEs, Agriculture, Housing, and Consumers, the statement read.
SBP further said that conventional banks can open IBWs, which are dedicated counters in conventional branches, after getting permission from SBP; however, these were not allowed to offer any financing products.
Although, “This facility is subject to the condition that the respective IBW branch shall be converted into a full-fledged Islamic banking branch within a period of three years”, it added.
It added in this perspective, all conventional banks already having IBWs shall submit their duly approved ‘IBWs Policy’ to the Islamic Banking Department, State Bank of Pakistan as per instructions within three months of issuance of this circular.
IBBs operating or desiring to operate IBWs shall develop a Policy (or revise an existing one, if any) containing details on the functioning of IBWs duly approved by their Shariah Board (SB) and BoD before approaching SBP for permission, it said.
Currently, Islamic banking products and services are being offered by full-fledged Islamic banks, Islamic banking subsidiaries and Islamic banking branches of conventional banks after getting approval, license from SBP.
The SBP was of the view that with 1,400 IBWs of 11 banks currently operating in the country, their potential to improve access to finance will increase significantly.
“Further, it will contribute towards an increase in financial inclusion through the provision of Shariah-compliant financing facilities to the vast majority of the population,” the central bank said.
The revised instructions also incorporate different amendments or additions to existing regulations and include policy formulation on IBWs, submission of annual IBWs expansion plan, physical setup & display requirements for IBWs, opening & closure of IBWs, their fee structure, and revisions in reporting requirements.