The Bank of Punjab (BOP), a leading financial institution in Pakistan, has engaged the services of KPMG Taseer Hadi & Co. to conduct an extensive study on the feasibility and conversion dynamics of transforming its conventional banking operations into Islamic banking. The agreement was formalized at a ceremony held at BOP’s Head Office, attended by senior management from both organizations.
This move is part of BOP’s strategic plan to align with the changing financial landscape, particularly following the recent Federal Shariat Court ruling advocating for a shift from interest-based systems to Islamic financial systems. The study aims to thoroughly evaluate the potential implications, challenges, and operational complexities that such a transformation may entail.
BOP, which holds PACRA Ratings of AA+ for the Long Term and A1+ for the Short Term, currently operates a network of 780 branches across Pakistan. This includes 640 conventional branches, accounting for 82% of its network, and 140 Islamic Banking branches, making up the remaining 18%.
Over the past three years, under the guidance of its Board of Directors, BOP has been strengthening its Islamic Banking Group, Taqwa. This has involved the introduction of innovative Shariah-compliant products and services, as well as exceptional customer care delivered through dedicated Islamic banking branches and over 50 Islamic banking windows integrated into its conventional branches nationwide.
Islamic banking has gained significant traction among faith-based customers due to its cost-effectiveness and substantial potential for expanding market presence. As such, BOP views it as a strategic growth area. The bank is committed to extending the reach of Islamic banking throughout Pakistan, with a particular focus on regions such as Khyber Pakhtunkhwa and merged areas, Gilgit-Baltistan, Sindh, and Balochistan. This expansion will be achieved through the establishment of fully-fledged Islamic banking branches and the integration of Islamic banking windows.
The engagement with KPMG marks a significant step in BOP’s comprehensive process to determine the future direction of its banking operations. The results of the study will play a crucial role in shaping the bank’s transition towards becoming a fully-fledged Islamic Bank.