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Banking in Pakistan formally began during the period of colonialism in
South Asia South Asia is the southern subregion of Asia, which is defined in both geographical and ethno-cultural terms. The region consists of the countries of Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.;;;;;;; ...
, during which much of
Pakistan Pakistan ( ur, ), officially the Islamic Republic of Pakistan ( ur, , label=none), is a country in South Asia. It is the world's fifth-most populous country, with a population of almost 243 million people, and has the world's second-lar ...
was controlled by the
British Empire The British Empire was composed of the dominions, colonies, protectorates, mandates, and other territories ruled or administered by the United Kingdom and its predecessor states. It began with the overseas possessions and trading posts esta ...
. In 1947, Pakistan gained
independence Independence is a condition of a person, nation, country, or state in which residents and population, or some portion thereof, exercise self-government, and usually sovereignty, over its territory. The opposite of independence is the st ...
from the
British Raj The British Raj (; from Hindi ''rāj'': kingdom, realm, state, or empire) was the rule of the British Crown on the Indian subcontinent; * * it is also called Crown rule in India, * * * * or Direct rule in India, * Quote: "Mill, who was himsel ...
. After independence, the
State Bank of Pakistan The State Bank of Pakistan (SBP) ( ur, ) is the Central Bank of Pakistan. Its Constitution, as originally laid down in the State Bank of Pakistan Order 1948, remained basically unchanged until 1 January 1974, when the bank was Nationalized and ...
was established as the central bank of the country, with its headquarters in
Karachi Karachi (; ur, ; ; ) is the most populous city in Pakistan and 12th most populous city in the world, with a population of over 20 million. It is situated at the southern tip of the country along the Arabian Sea coast. It is the former ...
. Prior to independence, the
Reserve Bank of India The Reserve Bank of India, chiefly known as RBI, is India's central bank and regulatory body responsible for regulation of the Indian banking system. It is under the ownership of Ministry of Finance, Government of India. It is responsible for ...
acted as the central bank for what became Pakistan. In 2018, there were 50.565 million bank accounts in Pakistan for its population of 207.77 million, resulting in a penetration rate of 24.34%. There were 15,053 bank branches, 14,148 ATMs, and 53,269
POS POS, Pos or PoS may refer to: Linguistics * Part of speech, the role that a word or phrase plays in a sentence * Poverty of the stimulus, a linguistic term used in language acquisition and development * Sayula Popoluca (ISO 639-3), an indigenous ...
machines active in the country. On 28 April 2022, the
Federal Shariat Court The Federal Shariat Court (FSC) is a constitutional court of the Islamic Republic of Pakistan, which has the power to examine and determine whether the laws of the country comply with Sharia law. The court was established in 1980 during the gove ...
(FSC) announced a verdict in a case on
Riba The Royal Institute of British Architects (RIBA) is a professional body for architects primarily in the United Kingdom, but also internationally, founded for the advancement of architecture under its royal charter granted in 1837, three suppl ...
, declaring all the provisions of the Interest Act 1839, which facilitate interest, as unlawful. The FSC also declared the prevailing
interest In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distin ...
-based
banking A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...
system as against the
Shariah Sharia (; ar, شريعة, sharīʿa ) is a body of religious law that forms a part of the Islamic tradition. It is derived from the religious precepts of Islam and is based on the sacred scriptures of Islam, particularly the Quran and the H ...
. The FSC ruled that the
federal government A federation (also known as a federal state) is a political entity characterized by a union of partially self-governing provinces, states, or other regions under a central federal government (federalism). In a federation, the self-governing ...
and provincial governments must amend relevant laws and issued directives that Pakistan's banking system should be free of interest by December 2027.


Islamic Banking

As of Sep, 2020, Islamic banking industry (IBI) assets and deposits of overall banking industry stood at stands at 16.0 percent and 17.3 percent, respectively. As of Sep, 2020, infrastructure of IBI in Pakistan consist of 22 Islamic banking institutions (IBIs); 5 full-fledged Islamic banks (IBs) and 17 conventional banks having standalone Islamic banking branches (IBBs).


See also

*
State Bank of Pakistan The State Bank of Pakistan (SBP) ( ur, ) is the Central Bank of Pakistan. Its Constitution, as originally laid down in the State Bank of Pakistan Order 1948, remained basically unchanged until 1 January 1974, when the bank was Nationalized and ...
*
List of banks in Pakistan The following is the list of notable banks in Pakistan. State Bank of Pakistan is the Central Bank of Pakistan. Systemically Important Banks Domestically Systemically Important Banks * Habib Bank Limited (HBL) * National Bank of Pakistan (N ...


References

{{Asia topic, Banking in