By Abdul Ghani

Pakistan has launched a comprehensive capacity-building and awareness programme to prepare financial institutions, regulators, academia, government officials and the public for the country's transition to a Riba-free financial system after 2027.

According to the Post-2027 Financial System in Pakistan strategy paper, available with Wealth Pakistan, institutional readiness has been identified as a key requirement for ensuring a smooth transition to a Shariah-compliant financial system. The strategy envisages a dual-track approach combining nationwide awareness campaigns with extensive professional training to equip stakeholders with the knowledge and skills needed for the new financial framework.

The document states that the existing awareness strategy adopted by the State Bank of Pakistan (SBP) integrates digital outreach with traditional communication channels, including local roadshows and seasonal mass media campaigns. These initiatives are intended to increase public understanding of Shariah-compliant financial products and operational requirements while addressing misconceptions about Islamic finance.

According to the strategy, awareness campaigns will target a broad spectrum of society, including businesses, government officials, students, members of the legal fraternity, media professionals and the general public. The objective is to improve understanding of Islamic financial products and strengthen public confidence in the post-2027 financial system.

Alongside public awareness efforts, the SBP has rolled out a comprehensive Capacity Building Strategy (CBS) to address the training needs of institutions that will play a role in achieving the transition. The strategy comprises multiple action plans aimed at strengthening technical knowledge and operational capabilities across the financial sector and related institutions.

The document states that the training programme will cover members of banks' boards of directors, senior management, branch staff and employees working in Islamic banking operations. It also extends to faculty members and students of schools, colleges, universities and religious seminaries, reflecting the government's intention to build long-term human capital for the Islamic finance industry.

In addition, specialised training will be provided to Shariah scholars, parliamentarians, government officials, company directors, external auditors, professional institutions and journalists. The strategy notes that developing expertise among these groups is essential for ensuring consistent implementation of the new financial framework and strengthening public understanding of the transition.

The strategy also envisages stronger collaboration between the banking and finance industry and academia to promote research and development in Islamic finance. Such partnerships are expected to encourage innovation, strengthen technical expertise and support the long-term growth of Pakistan's Islamic financial sector.

The document identifies information technology as another critical area requiring preparedness. It notes that the transformation of conventional banking operations into Islamic banking will require IT systems and related infrastructure to be aligned with the functional requirements of Shariah-compliant banking products and services. To facilitate this process, a dedicated Working Group on Information Technology Ecosystem has been established to define system requirements and conduct gap analyses of existing banking systems.

According to the strategy, feedback from conventional banks indicates that information technology is unlikely to become a major obstacle during the transition because most banks already operate Islamic banking windows using the necessary technological infrastructure. Banks generally consider a full transition to Islamic banking to be achievable from an IT perspective, including systems for pool management, profit calculation and other operational requirements.

The strategy further notes that the government's broader implementation plan also addresses risks associated with human resource capacity and institutional preparedness. Numerous initiatives have already been launched to strengthen the expertise of employees in conventional banks through specialised Islamic finance training programmes, while additional efforts will continue to bridge knowledge gaps and improve operational readiness across the financial system.

According to the strategy paper, increasing public awareness, strengthening institutional capacity and ensuring technological readiness are expected to play a vital role in supporting Pakistan's transition to a Shariah-compliant financial system while minimising operational risks and facilitating the long-term development of the Islamic finance industry.

Credit: INP-WealthPk