KARACHI: The State Bank of Pakistan (SBP) has revised the Sharia Governance Framework to develop the Islamic banking industry and play a more significant role in Sharia-led banking.

The State Bank issued a circular on this subject on Friday and asked Islamic Banking Institutions (IBIs) to be prepared to implement the revised SFG from the beginning of the calendar year 2025.

`With a view to further strengthen the SGF and to align it with international best practices, market developments and considering the feedbacl< received from stakeholders, the SGF has been revised and issued for compliance by IBIs,` said the SBP circular.

The share of Islamic banking has been increasing fast, while the target is to convert entire banl(ing riba-free by 2027.

Assets of the Islamic banking industry surged Rs241 billion and reached Rs9.235 trillion by the end of the March 2024 quarter. Likewise, depositsmaintained an upward trajectory, increasing by Rs126bn to Rs6.875tr during the period.

The year-on-year (YoY) growth of assets and deposits of IBI was registered at 22.6pc and 28.5pc, respectively. The net financing showed yearly growth of 1pc to Rs3.259tr whereas net investments rose 41.3pc to Rs4.405tr.

Regarding market share, assets and deposits of IBI in the banking industry stood at 19.9pc and 23.2pc, respectively. The market share of net financing and investment in the overall banking industry stood at28pe and16.3pc,respectively, by the end of March 2024.

The number of IBI branches increased to 5,101, with a promising growth of 15.2pc.

`The revised SGF shall be effective from Jan 1, 2025. The IBIs are advised to make necessary arrangements to comply with the requirements of the revised SGF and submit compliance status to the State Bank of Pakistan by March 31, 2025, said the SBP circular.

The growth in assets was mainly driven by investments (net), which observed a quarterly (end March 2024) increase of Rs170bn (4pc).

The breakdown of Islamic banking assets reveals that the share of financing stood at 35.3pc, whereas investments were recorded at 47.7pc.