(Refiles to correct bank name in 11th paragraph)
By Bernardo Vizcaino
March 28 Pakistan's central bank has issued new
rules for the operation of Islamic banking windows, aiming to
strengthen their role in the world's second-most populous Muslim
The new requirements come at a time when Pakistan is
stepping up efforts to develop Islamic finance, prompting
several banks to expand their operations in the sector.
Banks will have to obtain written approval from the State
Bank of Pakistan before opening each Islamic window, as well as
providing the regulator with additional details on staffing,
training and marketing arrangements.
Islamic windows allow conventional lenders to offer Islamic
financial services, provided client money is segregated from the
rest of the bank.
As of December, Pakistan's full-fledged Islamic banks had a
combined network of 767 branches while conventional banks had
441 Islamic branches and 96 sub-branches, the central bank said.
Different approaches to the Islamic window format have
emerged over the years: In Oman windows are allowed only through
standalone branches, while in 2011 Qatar banned Islamic windows
The rules could help consumers better distinguish Islamic
financial products from conventional ones, improving the
industry's perception and overall uptake.
Regulators in Pakistan hope to expand the industry's branch
network and bring Islamic banking' s market share to 15 percent
of the system by 2018.
As of December, Islamic banks held assets worth 1 trillion
rupees ($10 billion), a 21.1 percent increase from a year
earlier and representing 11.2 percent of total banking assets.
Some conventional lenders are also opting to convert their
operations into full-fledged Islamic banks.
Last week, the majority shareholder of Karachi-based Faysal
Bank said it would convert the bank into a
full-fledged Islamic unit in the next two to three years.
Last year, Summit Bank said it would convert
itself into a full-fledged Islamic bank over a three- to
five-year period. It opened its first Islamic banking branch
earlier this month.
($1 = 97.8850 Pakistani rupees)
(Editing by Eric Meijer)