By launching media campaign on Islamic Banking, State Bank has deviated from its two prime responsibilities. i.e. to Regulate Banking Sector without taking any body’s side and secondly to align whole Banking Sector as part of its Monetary Policy.
Islamic Banking now with more than 1300 branches is holding deposits of around 12.5 % of overall Banking Sector with financing at around 8% of overall financing of banking sector. State Bank currently is pursuing line of having parallel Banking Sector i.e. Islamic Banking and Conventional Banking. In phases it plans to move towards absolute Islamic Banking. During this phase State Bank was not supposed to carry on Step Motherly attitude toward one side or another This may be remembered that in Pakistan already less than 10% of its population access Banking Sector. So this requires very cautious moves to look after the whole Banking Sector otherwise it would create lot of confusion. Islam is our religion but to bring it in to reality lot of research is needed. Currently more than 70% of financing by Islamic Banks are being done through Murhabah and Diminishing Musharakah i.e. close to Leasing and not preferable in real terms by some Sharia Advisors. Other areas like Musharakah and Mudarbah financing is required to be developed. However instead of going for research work SBP has now taken the responsibility to side with Islamic Banks. To handle market competition it was the exclusiveresponsibility of Islamic Banks to carry out their Advertisement Campaign and to come up with new products to be examined finally by Sharia Board of SBP. However it is not understandable that why SBP has created a fund in collaboration with Islamic Banks and doing its advertisement on its own by giving Advertisement to a Blue Eyed Agency second time this and in the preceding year. This creates doubts from transparency angle and SBP should have avoided such kind of exercise.
Now coming to another point i.e. to clarify perception of Islamic Banking a Steering Committee was formed by the government who has not yet finalized its report. It is very strange that people who are running Islamic Banks since 2000 are yet not clear about question of perception on Islamic Banking. Delay on this account is raising certain questions. So it would be better that the Steering Committee should come up with its report as soon as possible.
Finally on question of Monetary Policy, State Bank require instruments of 3 to 12 months mimicking MTBs. With hybrid mode (mix of debt and non-debt based) short term Ijarah Sukuk can be issued. However current outright purchase/sale of GIS and on Bai Muajjal basis something has started moving but the amount is very thin during last quarter i.e. not above Rs 40 billion in one instance out of three or four instances. Further moving towards Monetary Policy another question also comes under way, whether SBP believes in time value of money concept or inflation normally not accepted by the Islamic Scholars. SBP should also clarify on this question.
As regards its Media Campaign, SBP should clarifyfirstitself on its road map by keeping itself totally separate from the Market Competition. Even it requires its own members to refresh with new ideas and thereafter as regulator it should come to the media who are altogether ignorant about Islamic Banking like general publictill this date.