to small businesses. 4 see board of governors of the federal reserve system, federal deposit insurance corporation, office of the comptroller of the currency, and office of thrift supervision ( 2008 ), “ interagency statement on meeting the needs of creditworthy borrowers ”, joint press release, november 12 ; board of governors of the federal reserve system, federal deposit insurance corporation, national credit union administration, office of the comptroller of the currency, office of thrift supervision, and conference of state bank supervisors ( 2010 ), “ regulators issue statement on lending to creditworthy small businesses ”, joint press release, february 5 ; board of governors of the federal reserve system, division of banking supervision and regulation ( 2009 ), “ prudent commercial real estate loan workouts ”, supervision and regulation letter sr 09 - 7 ( october 30 ) ; and office of the comptroller of the currency, federal deposit insurance corporation, federal reserve board, federal financial institutions examination council and office of thrift supervision ( 2009 ), “ policy statement on prudent commercial real estate loan workouts ”, joint policy statement, october 30. see william j. dennis ( 2010 ), “ small business credit in a deep recession ”, national federation of small business research foundation ( washington : nfib, february ). see board of governors of the federal reserve system, “ senior loan officer opinion survey on bank lending practices ”. fiscal policy in addition to the near - term challenge of fostering improved economic performance and stronger labor markets, we as a nation face the difficult but essential task of achieving longer - term sustainability of the nation ’ s fiscal position. the federal budget deficit is on track this year to be nearly as wide as the $ 1. 4 trillion gap recorded in fiscal year 2009. to an important extent, these extremely large deficits are the result of the effects of the weak economy on revenues and outlays, along with the necessary actions that were taken to counter the recession and restore financial stability. but an important part of the deficit appears to be structural ; that is, it is expected to remain even after economic and financial conditions have returned to normal. in particular, the administration and the congressional budget office ( cbo ) project that the deficit will recede somewhat over the next two years as the temporary stimulus measures wind down and as economic recovery leads to higher revenues. thereafter, however, the annual deficit is expected to remain high through 2020, in the neighborhood of 4 to 5

by the commercial banks. this board has been functional for almost three years now. the feedback from the industry and sbp experience with the shariah board has been excellent. in fact the shariah board has played a key role in ensuring an issueless promotion of islamic banking in the country. all three elements are interactive, and together form the comprehensive shariah compliance supervision mechanism. each element has been performing its role very effectively. we have been able to make sure that the whole is far greater than the sum of the parts. as such we are very confident that our shariah compliance supervision is second to none and the mechanism we have put in place has worked very well and will continue to do so. this can serve as a model for any other central bank that may want to institute shariah compliant supervision in its jurisdiction. to facilitate the growth of islamic banking across borders, i would like to emphasize the need for increasing international cooperation between supervisors in different areas including corporate governance. we need more dialogue between supervisors across regions for mutual learning and evolution of international best practices. our shariah board has five members. the chairman is a shariah scholar of outstanding repute, dr. mahmood ghazi. we have one more shariah scholar as a member. it is dr. imran usmani, son of the most respectable maulana taqi usmani. we have a lawyer member on our board, very well versed in laws pertaining to islamic financial transactions. we have the country ’ s most eminent chartered accountant as the fourth member of the board. this gentleman also leads the committee of institute of chartered accountants of pakistan that is adapting the aaofi accounting standards in the country. the fifth member of the board is sbp ’ s director of islamic banking department, who represents the interests of both the islamic commercial banks and the state bank of pakistan on the board. annexure - growth of islamic banking in pakistan description dec. - 03 dec. - 04 dec. - 05 jun - 06 oct - 06 total assets ( rs. in bn ) % age of banking industry 0. 5 % 1. 4 % 2. 1 % 2. 3 % 2. 6 % 0. 4 % 1. 2 % 1. 9 % 2. 1 % 2. 5 % % age of banking industry 0. 5 % 1. 3 % 1. 8 % 2. 0 % 2. 1 % full fledge islamic banks conventional banks with islamic banking