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In a public email released on Tuesday, United Bank Limited (PSX: UBL) announced that it has successfully converted all its branches in Balochistan and Khyber Pakhtunkhwa to Islamic banking branches.
The new law mandates that all financial institutions must adhere to Shariah law by the year 2027, and United Bank Limited (UBL) has already made the switch to Islamic banking.
The shift comes after the National Assembly passed a law in December 2024 requiring all conventional banks to convert to Islamic banking. This is a result of the Federal Shariat Court’s order to remove riba (interest) from the financial system.
In 2023, some 21% of Pakistan’s banks were involved in Islamic finance. By mid-2023, Islamic banking assets had increased to Rs. 7.2 trillion, according to the State Bank of Pakistan (SBP), a 24 percent year-on-year growth.
Additionally, deposits increased to 5.8 trillion rupees or around 23% of the total deposits in the country’s banks.
Right now, only 5 out of 42 private banks in Pakistan are fully Islamic banks. Converting regular banks requires major changes, like adjusting their loans, training employees, and creating goods that follow Islamic law.
In order to facilitate this change, SBP has put a Transformation Plan in place (2023–2027) that includes incentives and technical assistance to help all banks make the move to Islamic banking seamlessly.
