governor : mr. tariq bajwa title : islamic banking & finance awareness drive - 2017 date : august 03, 2017 event : opening ceremony at mega event islamic banking & finance awareness drive - 2017 venue : movenpick hotel, karachi dr. ishrat hussain, chairman iba centre of excellence in islamic finance education, dr. imran usmani, shariah scholar, mr. irfan siddiqui, chairman steering committee on islamic finance media campaign, members of the dunya media group, presidents / ceos of banks and financial institutions, distinguished guests, ladies & gentlemen ; assalam - o - alaikum i am pleased to be here today at the opening ceremony of the mega event of islamic banking & finance awareness drive - 2017 by dunya media group which was aimed at creating awareness and removing misconceptions about islamic banking and finance in the country. dunya media group deserves appreciation on successful completion of this awareness raising venture. i am hopeful that results of this campaign will be long lasting due to effective collaboration among various stakeholders and arranging multiple programs for public and targeted groups like students and business communities all across the country. ladies & gentlemen ; growth of islamic banking industry particularly over the last decade is reflective of increasing acceptability of its merits ; the total global size of the islamic financial assets by end 2016 has reached to us $ 2. 29 trillion and is expected to go beyond us $ 3 trillion by 20201. however, practitioners of islamic finance cannot be complacent with this growth especially in the backdrop of changing global infrastructure for the financial sector. today there is more than ever a compelling environment for islamic finance industry to capitalise on its inherent strengths like asset backed nature of financial global islamic finance report 2017 page 1 of 4 transactions, being devoid of interest and prohibition against gambling, uncertainty and speculation to move away from the traditional business models and explore new opportunities. talking about domestic industry, the fast growth of islamic banking in pakistan would not have been possible without sound regulatory, supervisory and shariah foundations laid down by the state bank of pakistan under my illustrious predecessors. promoting islamic finance has remained an important component of strategic goals of the central bank. overwhelming demand coupled with the support of the regulator and other stakeholders has contributed towards significant progress of the industry ; islamic banking industry by now constitutes 11. 6 percent share in assets while 13. 7 percent in deposits of the total banking industry with 21 banking institutions and more than 2, 300 branches across the country. it

supply side that constrain the sme ’ s access to finance and other banking products and services. on the demand side, these issues can be tackled through a more systematic documentation and disclosure of information by smes and better business planning. on the supply side, bankers ’ reluctance to lend to smes can be addressed through innovative credit assessment tools and techniques like credit scoring and better capacity building efforts for the financial service providers. among various stakeholders that have to play their role for sme development, i think, state bank of pakistan and commercial banks both need to play a proactive role in improving access to finance for smes. as far as sbp is concerned, it has taken a number of important initiatives for improving access to credit for sme sector. these measures include a provision of specialized prudential regulations ( prs ) for smes, refinance schemes for smes, credit guarantee scheme for small and rural enterprises and cluster development surveys. further, sbp has been assisting banks through a holistic ifc technical assistance and capacity building initiative encompassing areas of strategy formulation, product bis central bankers ’ speeches development, risk management and hr development etc. for sme lending. presently, bank alfalah ltd. is being supported for capacity building to boost sme banking, while many other mid - tier banks are being considered for similar ifc technical assistance. ifc is in direct dialogue with a number of banks. we hope that this project will revitalize sme lending by participating financial institutions and will be a prototype for other financial institutions which could see financing to smes as profitable business ventures. aside from the boost sme provides to employment and overall growth to the economy, it also provides diversification to a bank ’ s balance sheet and in turn a stable revenue stream to support long term shareholder value. given the huge potential for this sector, i encourage all the commercial banks to review their sme strategies and assume a greater role in sme lending. ultimately it has to be the private sector which has to take the lead role in lending to the sme sector given their critical positioning and greater capacity in terms of their outreach and availability of funds. as i earlier mentioned, the actual statistics for lending to smes have not been encouraging in recent years. banks ’ credit to smes has declined over the last 4 years from rs 437 billion in 2007 to rs 248 billion in june, 2012. although, this decline can be partly attributed to adverse economic conditions during the period and