KARACHI: The State Bank of Pakistan (SBP) has, in principle, allowed Bank Alfalah to set up an Islamic bank as a subsidiary. This is the first time in the history of Pakistan that a conventional bank has been given approval to establish an Islamic bank as an auxiliary organisation.
According to an SBP report, the bank is already operating a network of about 60 Islamic banking branches across the country. After the subsidiary is formally launched, Bank Alfalah will become one of the largest three Islamic banks in the country.
According to sources, SBP had planned out a three-step roadmap to encourage Islamic banking in Pakistan. This plan included the establishment of full-fledged Islamic banks, the provision of services through dedicated Islamic branches of conventional banks and the establishment of subsidiary Islamic banks of already existing financial institutions in the country.
After giving bank Alfalah the approval to set up an Islamic subsidiary, the SBP has managed to achieve all three benchmarks set out in the plan.
According to the State Bank report, at present 649 bank branches are offering services in the country, of which 400 branches are operated by full-fledged Islamic banks.