By Bernardo Vizcaino - Pakistan's central bank is launching a second phase of a mass media campaign designed to raise awareness and acceptance of Islamic finance among consumers in the world's second most populous Muslim country.
The campaign is part of the central bank's five-year plan for the industry. The new phase, announced at the end of December, will shift from building the overall visibility of the industry to educating consumers on the value proposition of Islamic finance.
"There is desire among consumers to know more about Islamic banking and address some crucial questions," central bank deputy governor Saeed Ahmad said.
In October, the central bank released a country-wide study showing latent demand for sharia-compliant finance; it highlighted consumer outreach, rural banking and the need for stand-alone Islamic banks as issues to be addressed.
The campaign aims to help the industry reach ambitious targets including a 20 per cent share of Pakistan's banking system by 2020. As of September, the industry held an 9.9 per cent share of banking assets and 10.7 per cent of deposits, central bank data shows.
Last week, the central bank launched a financial innovation competition which will extend grants to develop new Islamic finance products.
Regulators want to encourage more profit-sharing modes of sharia-compliant finance such as musharaka, whose share of overall Islamic financing in Pakistan reached double digits for the first time in September at 10.1 per cent, compared to 4.2 per cent a year earlier.
Musharaka is a partnership in which two or more parties agree to provide capital, share profits according to a stipulated ratio, and share losses on the basis of equity participation.