Thursday, May 17, 2007

Pakistani Islamic finance growing rapidly, Al Salam expanding to Europe & international commodity murabaha

Pakistan's Islamic financial services industry started later than in other countries but has been able to grow rapidly and will continue to grow over the near term. This is the message from Dr. Shamshad Akhtar, the governor of the State Bank of Pakistan and the deputy chairperson of the Islamic Financial Services Board, speaking with the Khaleej Times. Islamic financing currently makes up 3 percent of assets and deposits of the country's banking system and Dr. Akhtar expects that it could grow to 10 or 15 percent in relatively few years if the sector continues to grow at its current rapid pace. Currently there are six stand-alone Islamic banks and ten Islamic 'windows' at conventional banks. Dr. Akhtar also emphasized the ability to bring more people into the financial system who currently abstain because of their religious beliefs and, if microfinancing is used, could play an important role in the empowerment of women who make up the majority of microfinancing loans.

Al Salam Bank, headquartered in Bahrain with licenses to operate in Sudan and Algeria is eying Asia and Europe for expansion. Speaking to Reuters, Yousif Taqi, Al Salam's cheif executive, predicted that the bank would enter the European market, possibly Britain, in the next two years.

Short term funds using palm-oil murabaha will be exchanged between the Saudi Hollandi Bank and Malaysia's central bank, Bank Negara Malaysia.

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