UBL Transitions Branches in KP and Balochistan to Islamic Banking

United Bank Limited (UBL) has successfully converted all its conventional branches in Khyber Pakhtunkhwa (KP) and Balochistan to Islamic banking operations. This strategic move aligns with Pakistan’s legislative push towards a fully Shariah-compliant banking system by 2027.

Legislative Background

In December 2024, Pakistan’s National Assembly passed a law mandating the elimination of riba (interest) from the financial system, requiring all conventional banks to transition to Islamic banking. This initiative follows directives from the Federal Shariat Court aimed at fostering an interest-free economy.

UBL’s Strategic Implementation

By focusing on KP and Balochistan, UBL has taken a significant step in complying with the national mandate. The conversion process involves comprehensive restructuring, including adjustments to loan portfolios, staff training, and the development of Shariah-compliant financial products.

Growth of Islamic Banking in Pakistan

As of 2023, Islamic banking assets in Pakistan reached Rs. 7.2 trillion, accounting for 21% of the total banking industry. Deposits in Islamic banks rose to Rs. 5.8 trillion, representing nearly 23% of the country’s total banking deposits. Currently, only 5 out of 42 commercial banks in Pakistan operate as fully Islamic institutions.

State Bank’s Role in the Transition

The State Bank of Pakistan (SBP) has introduced a Transformation Plan (2023-2027) to facilitate this sector-wide shift. The plan offers technical guidance and incentives to ensure a smooth transition for all banks towards Islamic banking practices.