Now, United Bank Limited (PSX: UBL) has completed its transformation to Islamic banking for all its conventional branches across Khyber Pakhtunkhwa and Balochistan towards the impending shift of Pakistan into a completely Shariah-compliant financial model by the year 2027.
This happened as a result of a law passed by the National Assembly in December 2024, which compels the total transformation of all conventional banks to Islamic banking due to the directive of the Federal Shariat Court to root out riba (interest) from the economy.
As mid-2023 dawned, 21% of the entire banking industry in Pakistan was attributed to Islamic finance. According to the State Bank of Pakistan (SBP), assets for Islamic banking reached Rs. 7.2 trillion, indicating a year-on-year growth of 24%, while deposits grew to Rs. 5.8 trillion, constituting 23% of the country’s total banking deposits.
Five out of 42 commercial banks in Pakistan are purely Islamic. This shift will require extensive restructuring that includes repricing loan portfolios, staff retraining, and Sharia-compliant products. To support this sector in transformation, the SBP has developed a long-term Transformation Plan (2023-2027) supported by technical assistance and incentives to facilitate the transition.
This proactive move on UBL’s part surely goes a long way in endowing the organization with an Islamic character besides adding momentum to the demand for Shariah-compliant financial services in the country.
