Growth and prospects of Islamic banking in Pakistan

Description of Research paper:

This research paper explain four question that are follow

What is Islamic banking? Are the Islamic banks growing? What are the prospects of Islamic banking in Pakistan? What are the challenges being faced by Islamic banks?

Purpose of paper:

The purpose of this research paper is generally to explain that whether Islamic banks are growing or not and what are future possibilities of this bank is the present growth shows that the future of Islamic banks are bright or not.

Summary

Islamic banks follow the holy Quran and suunah the basic philosophy of Islamic banks is to give protection to the property of people and finish the injustice in society .the basic are concept by which Islamic banks differentiate from conventional banks as follow (1) prohibition of Riba (2) risk sharing (3) materiality (4) legality (5) avoid of Gharar. The financing modes of Islamic banks are Modaraba, Musharakah, Murabaha, Salam, Ijara and Istisna.

The following are the factors by which the growth can be measured i-e number of Branches, number of institution, total Asset, amount of deposit, net financing and investment. From 2003 to 2010, the following are the results.

In 2003, the total asset by Islamic banks were PRs13 billion and in 2010 it is increased to PRS 477billion

The total deposits also increased from 8billion to 390billion,in 2003 to 2010

In 2003, the net financing and investment were 10billion but in 2010, it is increased to 338billion

The number of institution also increased from 4 to 17 The number of branches also increased from17 to 751

From the above discussion, it is conclude that Islamic banks are going toward success. Pakistan is a Muslim country, so the chances of success here is high in future. The result of number of branches, institution, Assets, Deposits and net financing and investment shows that the future of Islamic Banks is bright.

There are some challenges that are faced by Islamic banks i-e they do not have their centralized Boar of Sharia’h due to different school of thoughts. Secondly Islamic banks should provide more risky management tool. Thirdly small banks cannot compete with globally expanding international banks, so they need to create mutual understanding to cooperate. Fourthly Islamic banks offered up till now 30 kinds of product, so there is need of for further diversification in products i-e should increase their number of products. Lastly Islamic banks should follow reliable accounting procedures and sharia compliant standard.