"We also have plans to bring the whole financial system in conformity with Shariah principles in a phased and gradual manner", Ishaq Dar said while addressing a roundtable conference on "Potential of Islamic Banking in Pakistan" in Karachi, said a statement here.
He said that there was a need to give a big push to the process of Islamization of banking and finance in Pakistan.
He said a committee was also constituted in this regard and a fairly broad mandate has been given to the committee for its work.
"We are confident and have very high hopes from the committee and we believe the committee would give us practical recommendations to bring the whole financial system in conformity with Shariah principles in a gradual and phased manner but with God speed", Ishaq Dar remarked.
He said the committee headed by famous experts Saeed Ahmed, besides others will also have the patronage and guidance of Hazarat Moulana Mufti Taqi Usmani Sahib whose role and contribution for promotion Islamic finance is recognized and appreciated globally.
The Federal Government, he said also has plans to finance bulk of its development and infrastructure projects by issuing Islamic product of Sukuk of varying nature and maturity.
"This will enable Islamic banks to deploy their liquidity and longer term funds in strategically important infrastructure projects and improve discipline and transparency in public sector development schemes and programs of the government", he added.
Senator Mohammad Ishaq Dar said the government will also help and facilitate Islamic banks to make investment in big corporate farms, live stock and dairy farms, fruit and vegetable farms etc.
This would improve much needed investment in the agriculture sector, improve agricultural productivity and provide an attractive investment avenue to Islamic banks to deploy their growing deposit base, he added.
The minister said the government would encourage Islamic banks to either individually or jointly make investment in low cost housing projects to enable the low income population to have their own houses at affordable rates.
The government would provide Islamic banks every possible help including changes in legal and regulatory framework, if any needed, to initiate such projects either by themselves or in collaboration with reputed builders and investors, he remarked.
Highlighting the current performance of the country's Islamic finance industry, he said that the Islamic finance industry of Pakistan consists of 19 Islamic banks with a network of 1200 branches spread across 80 districts, 27 Mudaraba companies, 15 mutual funds and 5 Takaful companies.
The industry, he said now constitutes over 10 percent of the country's financial system and maintaining a strong growth momentum. This in my opinion is however, well below the huge potential we have in Pakistan.
"We are a country of over 180 million people predominantly Muslim with a significantly large population excluded from the financial system due to faith sensitivities of the masses, a large agricultural base which meets its financial services needs largely from informal players as only twenty percent of the farmers have access to formal financial system; similarly just 5-6 percent of SMEs have access to banks' financing", he added. The Finance Minister further said that the Islamic banks should tap these largely un-banked markets through their asset based and risk sharing products and contribute in catalyzing growth in real economy.
Similarly the linkages between Islamic banks and Microfinance Institutions could be instrumental in channeling the surplus liquidity of Islamic banks towards meeting the financial services needs of the low income population.
"This would help Islamic banks to improve their perception amongst the masses and facilitate the government in achieving Millennium development goals, which are largely in line with the basic philosophy of Islamic finance", he added.
(APP)
