Islamabad: The International banking monitoring firm Moody’s has predicted a 25-28% growth in Sharia compliance banking volume in the next 5 years from 2021 to 2026, news sources reported on May 24.
According to reports, Moody’s Senior Vice President Constantinos Krypreos stated in a media conference that Islamic banking in the country has continued to considerably outstrip conventional banking. Sharia-compliant banking will have a market share of 30% in assets and deposits by the end of 2026, with a net financing market share of roughly 33 %.
He said the firm forecasts average growth of 25–28% in total assets and deposits between 2021 and 2026, and net financings of more than 20%. It was also reported that the sharia banking sector has grown at a consistent pace of 24% per annum since 2011, reaching a total market value of PKR 5,577 billion, or USD 31.2 billion. In absolute terms, the Islamic banking sector is standing at a value of 19%, a substantial increase from 8% in 2011.
Moreover, according to Moody’s statistics, there are currently 22 Islamic financial institutions in Pakistan, including five fully-fledged Islamic banks and 17 conventional banks with Islamic banking offices. In December 2021, there were a total of 3,956 branches operational, with 1,442 more Islamic banking windows (dedicated counters at conventional branches).
Moody’s report has forecasted a comparable number of new branches to be built yearly over the next five years, with 500 branches added in 2021. It is worth noting that, in a landmark ruling issued in May 2022, the Federal Sharia Court gave the federal government a five-year period to replace interest with the Sharia banking system. The judgment calls for such measures to be entirely Islamic in nature.
Nauman Ahmad is an imaginative Pisces whose love for literature and nature is unparalleled. When he's not reading or hiking, he's sleeping and eating, which gives him plenty of energy for his next adventure.
