Excerpt: This post answers the questions “Which is the first Islamic bank in Pakistan? Which was the first Islamic bank established in Pakistan? What is the name of first Islamic bank in Pakistan?”
In today’s world, the development and economic growth of a country without a strong and functional banking system is merely a dream. Banking has become an integral part of the economy and its importance cannot be overstated. Since conventional banking is against Islamic laws and has faced criticism from scholars, many steps have been taken throughout the Muslim world to introduce an Islamic banking system as an alternative.
In Pakistan, numerous steps have been taken to align the banking system with Islamic principles. The Federal Shariat Court (FSC) has issued a pivotal verdict and has given the government a time period of five years to eliminate interest based banking in all its forms before 31st December, 2027.
Steps Taken for the implementation of Islamic Banking in Pakistan
The Federal Shariat Court (FSC), a constitutional Islamic religious court of Pakistan, declared the conventional banking system un-Islamic in 1991. Since then, the government has initiated several measures to promote Islamic banking in the country in a gradual manner. For instance, in the 1980s, the government laid the groundwork for Islamic banking.
A significant push came in the early 2000s, with a program aimed at introducing Islamic banking without disrupting the economy. The objective was to establish a broad-based Islamic financial system accessible to all segments of the population. The State Bank of Pakistan adopted a three-pronged strategy for the promotion of Islamic Banking:
• Permission to establish new full fledged Islamic banks in the private sector,
• Permission to the conventional banks to set up Islamic banking subsidiaries, and
• Permission to the existing conventional banks to open Stand-alone Islamic banking branches.
Under the first part of SBP strategy many banks, old and new starts applying for the license and a competition started among the banks for being the first to be Islamic Bank. Till today, there are 5 full-fledged Islamic banks working in the country having 767 branches.
Though, today Islamic banking has become an essential aspect of Pakistan’s financial landscape. But which was the first Islamic bank to emerge in this landscape?
Which is the first Islamic bank in Pakistan?
Meezan Bank is the first Islamic Bank in Pakistan. It obtained its Islamic commercial banking license in 2002 and became the country’s first Islamic commercial bank. Initially started as an investment bank, Meezan Bank took a significant turn towards Islamic banking after obtaining the license. Today, the bank operates in all major cities with the vision to establish Islamic banking as the banking of first choice.
The rise of Islamic banking in Pakistan, exemplified by Meezan Bank, marks a significant shift towards financial systems that align with Islamic principles. The efforts made by the government and financial institutions highlight a commitment to providing viable alternatives to conventional banking. As the deadline set by the Federal Shariat Court approaches, the future of Islamic banking in Pakistan looks promising. This journey not only reflects the adaptability of Pakistan’s banking sector but also paves the way for a more inclusive financial system that resonates with the values of its population. Your thoughts and reflections on this evolution are invaluable—let’s continue this conversation in the comments below!
Source: The above answer is based on information shared by
- Meezan Bank, About
- TheBanker, The rise and rise of Islamic Banking in Pakistan
- State Bank of Pakistan, History of Islamic Banking
- Dawn Newspaper, Govt to end interest based banking by Dec 2027
