State Bank Governor Dr Shamshad Akhtar has advised Islamic banks to grow annually at rate of 40 to 50 per cent to raise its share from 3.5 per cent at present to about 15 per cent in next few years.

“This may appear ambitious, but currently Islamic banking in some countries have achieved these results,’’ she observed on Tuesday while making her presentation at the opening session of two-day Asia Finance conferences — third series on Islamic Financial Services.

She was also confident that banking as a whole had been growing at substantially fast pace and, therefore, the level of efforts required for Islamic banks would have to be steeper to claim this share.

She urged the Islamic bankers to draw up a forward looking strategy to offer an alternate avenue of financial intermediation, which is competitive and promotes efficient allocation of resources in equitable manner.

Stressing on combined efforts of the Islamic banking industry and the State Bank Dr Shamshad outlined some of the key areas, which are aggressive deposit mobilisation to augment domestic savings, diversifications and innovations of financial structures.

These will also enhance understanding and capacities of Islamic banking risk management, promote development of liquidity management instruments to ensure investors’ confidence, promote international standards and best practices, and good corporate governance, she added.

For achieving these objectives the SBP governor’s advice was to launch a joint effort by the Islamic bankers and the State Bank for capacity building.

She informed the audience of top bankers, business professionals and captains of industry that the total assets of Islamic banks were close to Rs159bn accounting for 3.4 per cent of market share. Islamic deposits are 3.1 per cent and financing is 3.3 per cent. Since the launching of a comprehensive Islamic banking policy in December 2001, there were now 6 full-fledged Islamic banks and 13 conventional banks offering a network of 200 branches.

Dr Shamshad said that global interest in Islamic finance industry and Pakistan’s success in laying basic foundation and core infrastructure for industry has lent confidence that the country has good potential and prospects to further exploit this industry.

She, however, pleaded for a cautious, calibrated and coordinated approach and strategy for the development of Islamic finance industry.

“Pakistan will conform to standards being promoted by Islamic Financial Services Board where each member of the Council of governors of central banks with several associate and affiliate members — whose chairpersonship Pakistan will assume from January 2008,’’ she said