ISLAMIC BANKING AS A VIABLE ALTERNATIVE TO CONVENTIONAL BANKING

Abstract

The debate oil the credibility of Islamic banking has been going on for many decades but the main thing for the researcher is to find out that whether an Islamic banking can serve as an alternative to the established conventional banking or not. Conventional banking has been operating in the Pakistani financial segment for the very long time, almost immediately after independence conventional banking made a mark in Pakistan. In the 1980s an attempt to introduce Islamic banking was made by Zia ul Haq but that was without a proper homework due to which the Islamic banking soon rolled back after its introduction. It was relaunched in 2001 when A1 Meezan investments got the license to operate as a bank. After that Islamic banking restarted in Pakistan. Over the years Islamic banking has developed proper alternative products to conventional banking products. Due to these flexible products Islamic banking has been able to attract clients like Lucky cement to work with. Presently, Pakistan has 5 full fledge Islamic banks and more importantly conventional banks are also entering into the Islamic banking by opening separate Islamic banking windows. Renowed conventional banks who have entered into the Islamic banking industry are UBL, HBL, MCB Bank Limited, Bank A1 Habib Limited, Faysal Bank Limited, Bank A1 Falah Limited, Standard Chartered Bank (Pakistan) Limited &Habib Metropolitan Bank Limited. The flexibility and shariah compliant investment strategy of Islamic banks has made themselves as a strong competitor to conventional banks in Pakistan. State Bank of Pakistan has a complete support to Islamic banks in Pakistan that has made it possible for them to grow and made rapid progress.