ISLAMABAD: Federal Finance Minister Ishaq Dar has inaugurated the third round of Financial Innovation Challenge Fund for the promotion of Islamic financing, which is the fastest growing sector of banking industry in Pakistan.
The Financial Innovation Challenge Fund was launched with the help of the United Kingdom under the UKAid-sponsored Pakistan Financial Inclusion Programme being operated by the State Bank of Pakistan (SBP). The earlier two rounds focused on promoting innovative agricultural and rural financing in the country.
Addressing the ceremony, Ishaq Dar said that the Fund would be beneficial for boosting economy through demand-driven innovative financial services for the low-income and unbanked population.
He said the Financial Innovation Challenge Round was designed to encourage competition and introduce a world-class dynamic structure capable of meeting human resource requirements of the industry and act as a research incubator providing innovative products.
The minister pointed out that the Islamic mode of financing was growing at a phenomenal pace across the world and current size of the Islamic finance industry, estimated to be over $1.8 trillion, was almost twice the level a decade earlier.
At present, the Islamic finance industry of Pakistan comprises 19 Islamic banks with a network of 1,200 branches spread across 80 districts, 27 modaraba companies, 15 mutual funds and five takaful companies. The industry now constitutes over 10% of the country’s financial system and keeps a strong growth momentum.
Dar stressed that the Islamic finance industry was working well below its potential. Only one-fifth of farmers have access to the formal financial system while just 5-6% of small and medium-sized enterprises (SMEs) receive bank financing.
Pakistan’s entry into the international Sukuk market after a gap of nine years through dollar-denominated Sukuk was received well by the investors and is a reflection of its seriousness in exploring Shariah-compliant avenues to finance the state’s needs.
