Reservations for non-compliance of Islamic banking system: A case of JS Bank Pakistan

Abstract

Islamic banking is one of the most growing sectors all around the world because of its principles and less involvement in risk taking activities. This is the reason that Islamic banks performed tremendously well in the financial crisis of 2007 – 08. Islamic banking caught the attention of the world after this financial crisis and not only Islamic countries but the western countries as well started establishing their banking system in accordance with the Islamic banking principles. The main rationale of this project report is to emphasize on the reservations of JS Bank against their non-compliance of Islamic banking principles even after the rapid growth of Islamic banking industry in Pakistan which is shown by the empirical data as well. This project will discuss the major issues and challenges that are being faced by JS Bank for not offering Islamic financial products within their conventional banking system. The second major goal of this project is to discuss an implementation plan. This project report will provide a future enhancement and implementation plan for the JS Bank if they consider opening Shariah compliance window. The project report will provide with the necessary steps and elements that must be taken by the supervisory authority of JS Bank for establishing a supportive Islamic banking infrastructure. This project report concludes that there exist an excellent opportunity for the implementation of Islamic banking system keeping in mind the growth and development of Islamic banking as shown by the empirical data. So, JS Bank must consider opening Shariah compliance window to cater this developing portion of banking sector.