Countdown to Islamic Banking 2027

The former governor of the State Bank of Pakistan (SBP), Dr Ishrat Husain, sounded uncharacteristically upset one morning in November 2021. His mood was in contrast with the upbeat feel of the campus at the Institute of Business Management (IBA), where seasoned bankers in sharp suits and flowing beards had gathered to take part in a conference on Islamic banking, a rather mundane affair the promoters of Islamic banking indulge in every few months to pat themselves on the back for doing banking the halal way. In his video link address, Dr Husain told the self-satisfied Islamic bankers that they had become “complacent” over the last two decades. The Sharia-compliant banking industry had fallen “short of the expectations” he had when as governor, he issued the country’s first Islamic banking licence at the turn of the century. Something had gone wrong with Islamic banking, despite all the hype its supporters had built up, partly based on cherry-picked data. Exactly a year later, in November 2022, the Government of Pakistan announced it was targeting a complete transition from conventional to Islamic banking by the end of 2027.