Qudsia Bano

In a move to further strengthen Pakistan’s Islamic finance ecosystem, the Central Directorate of National Savings (CDNS) has set an ambitious target of Rs40 billion in Islamic finance investments for the fiscal year 2024-25. This follows the successful mobilisation of Rs22 billion in the first eight months of the current fiscal year, reflecting a steady rise in demand for Shariah-compliant savings instruments.

According to senior officials at CDNS, the initiative is part of a broader strategy to deepen the Islamic financial sector and offer ethical investment avenues for the growing base of faith-based investors. Last year, CDNS achieved a record Rs75 billion from Islamic bonds, demonstrating a solid appetite for these instruments.

“The Islamic finance sector in Pakistan is maturing rapidly, and the National Savings platform is perfectly positioned to serve as a catalyst for growth,” said Dr Amjad Hussain, a former Islamic finance expert at the Ministry of Finance. “By targeting Rs40 billion this year, CDNS is not only encouraging savings but also aligning with the values of millions of investors who seek Shariah-compliant options.”

CDNS officials stated that the issuance of Islamic bonds is aimed at supporting the Islamic economy and providing alternative savings instruments that adhere to principles of risk-sharing and ethical investment. These instruments are expected to attract a broader investor base, particularly from regions with limited access to conventional banking or where demand for Islamic finance is underserved.

“We see Islamic finance not only as a financial product but also as a tool for inclusive economic development,” said Naeem Qureshi, Director of Strategic Initiatives at CDNS. “The growing popularity of Islamic bonds proves there is a substantial market of savers who prefer transparency and compliance with their faith.”In parallel, CDNS has also launched reforms to digitise and automate its processes, aiming to improve customer experience and operational efficiency.

The total target for CDNS across all instruments for FY25 stands at Rs1,650 billion, underscoring the institution’s critical role in promoting a savings culture in Pakistan. CDNS exceeded its targets in the previous fiscal years, collecting Rs1.742 trillion in FY24 and Rs1.6 trillion in FY23. Analysts view this upward trend as a sign of growing trust in national savings instruments amid macroeconomic uncertainties.

“In a high-inflation environment where traditional investments may seem volatile, Islamic savings instruments offer a secure, principled alternative,” said Mariam Rizwan, Senior Economist at Alfalah Securities. “This can promote financial inclusion, especially among rural and middle-income groups.” The CDNS’s focus on Islamic finance also aligns with global trends.

According to the Islamic Financial Services Board (IFSB), the global Islamic finance industry reached $4.5 trillion in assets by the end of 2023, with strong growth projected in markets like Pakistan, Indonesia, and Saudi Arabia. As the country works towards economic stabilisation and sustainable financial practices, CDNS’s renewed focus on Islamic finance is expected to contribute positively to national savings, investment flows, and the formalisation of the economy.

Credit: INP-WealthPk