SBP unveils ‘Vision 2028′ to attain Shariah-compliant banking system

KARACHI: The State Bank of Pakistan (SBP) formally unveiled “SBP Vision 2028″, which highlights the central bank’s vision, mission and key goals to be pursued over the next five years.

This is the first plan after revision in the SBP Act last year and thus takes into account the significantly enhanced mandate, autonomy and accountability introduced through the changes in the Act.

The evolving risks and challenges to the economy and financial stability, including volatile global economic environment, rising risks associated with climate change, rapid digital innovations and disruptions, and growing cyber security threats, have also been kept in perspective in developing the plan.

It builds on the achievements of the last plan and covers five cross-cutting themes, including: strategic communication, climate change, technological innovation, diversity and inclusion, and productivity and competitiveness.

The SBP Vision 2028 envisions to make SBP a people centric institution, working for the wellbeing of the people of Pakistan.

In his message, SBP Governor Jameel Ahmed said: “In line with this vision, our first and foremost focus will be on achieving and maintaining the price stability.”

“This entails bringing down and maintaining inflation within its medium-term target range of 5 to 7 per cent, which we believe is essential to achieve sustainable economic growth, alleviate poverty and enhance economic wellbeing of our people,” he said.

The SBP governor said that the strategic plan includes several initiatives to enhance the effectiveness of monetary policy, particularly through improvement in monetary policy transmission mechanism.

SBP reports slight increase in forex reserves

Further, he said, the SBP will continue to highlight the structural issues as well as emerging risks and opportunities to Pakistan’s economy through its quality publications to improve awareness about the issues and possible solutions thereof amongst the general public and other stakeholders.

“A strong and resilient financial system is pivotal for macroeconomic stability and sustainable economic growth, thus ensuring the financial system stability remains a key priority area of the SBP Vision 2028. Our banking system has shown great resilience against several shocks in the past,” Ahmed said.

However, he said, the shocks are getting increasingly complex, with climate change, technological advancement, cybersecurity threats, and financial innovations adding new dimensions in the risks to the financial stability.

“The SBP Vision 2028 envisages to enhance the banks’ capacity to better manage all such shocks. At the same time, it also aims at improving SBP’s regulatory and supervisory capacity to proactively identify and assess the individual institutions, as well as the industry wide risks and take timely measures to ensure financial stability.”

He said: “The improvement in banks’ conduct, particularly towards their customers, and enhancement in consumer protection will also be amongst our key focus areas during the next five years.”

“The SBP Vision 2028, in line with the Shariat Court decision, envisions transformation of the conventional banking system into Shariah-compliant banking system. It has also laid out a detailed plan for the transformation developed in consultation with all stakeholders,” Ahmed said.

He said that the key challenges to the transformation include: conversion of government debt into Shariah compliant financing, simplification of Shariah compliant financing products, and training and capacity building of the industry. The SBP is collaborating with the industry, the Shariah scholars and the federal government to resolve these issues and challenges.