Cursory look at Islamic banking

The Pakistani Islamic Banking Industry (IBI) is in a nascent stage compared to the rest of the world, but has shown constant growth in the past years. Islamic Banks (IB) hold a lion-share of 64 percent in the IBIs total assets. In terms of share, IBs contribute only 30 percent to the IBIs total advances, the rest being provided by the Islamic Banking Divisions (IBDs), i.e. conventional banks offering Islamic banking. IBDs are more efficient in recovering their loans with their infection ratio clocking in at just 1 percent of their advances. Conversely, full-fledged Islamic banks have an infection ratio of 8 percent. With the growing competition in the Islamic banking industry, the Islamic banks must rethink their asset deployment strategy, which is currently more inclined towards Investments. SME and agriculture sectors which are untapped thus far could be the potential avenues to hit.