Govt unable to float Baitulmaal Certificates, says Shamshad

By By our correspondent
2/22/2008
KARACHI: The Governor State Bank of Pakistan (SBP) Dr Shamshad Akhtar has said the government is unable to introduce Baitulmal Certificates (Shariah- compliant government treasury bills) presently, due to complexity and non-availability of assets backing.

She expressed these views after inaugurating the 100th branch of Meezan Bank here on Thursday. She said that there were several formulas under consideration for the liquidity management of Islamic banking, and central bank would hold a meeting with the ministry of finance shortly to consider the viability of the instruments.

Dr Akhtar stressed upon the Islamic Banking Institutions (IBIs) to increase their penetration in rural areas of the country and diversify their network for the benefit of the underserved segments of the society and focus on farm and non-farm based lending.

She said the new licensing policy of SBP was 'very liberal', under which each bank was required to set up at least 20 per cent of total branches in rural areas.

SBP Governor said under the policy, the State Bank allowed microfinance banks to open as many branches as they wanted in the rural areas. "Islamic banks may also be allowed to set up as many branches in rural areas as they want," she directed. She said that there is a unique opportunity for Islamic banks to conduct infrastructure financing and long-term lending. She also said that the rural areas of Pakistan have great potential for growth, and that Islamic banking could play a pivotal role in the development of these areas.

She said that rural prosperity had increased over the years and the capacity to buy and save was higher in rural areas.

Congratulating Meezan Bank's management for accomplishing a network of 100 branches in a span of just five years, Governor State Bank said that Meezan Bank's historic growth was the success story of Islamic banking in Pakistan.

Speaking on the occasion, Irfan Siddiqui, President and CEO of Meezan Bank said that Meezan Bank, the first and largest Islamic Bank in Pakistan was committed to fulfilling its vision of establishing Islamic Banking as the banking of first choice. He went on to notify that Meezan Bank was now spread out over 31 cities of Pakistan, and that branch expansion was bound to continue during 2008, making the bank one of the fastest growing banks in the history of Pakistan.

Siddiqui further communicated that there are currently six dedicated Islamic Banks operating in Pakistan, with a total of 186 branches besides the 102 stand alone Islamic Banking branches of conventional banks. "Meezan Bank's share of branch network is now 55 per cent of the total, making it the largest Islamic Bank operating in Pakistan by a significant margin." He said that Meezan bank would continue to expand its branch network in 2008 with the addition of 50 more branches, thus, establishing a network of 150 branches across Pakistan by the end of 2008.