ISLAMABAD: The governor of the Pakistani central bank said on Tuesday Islamic banking assets had for the first time reached Rs11.5 trillion ($40.7 billion) by the end of March this year, as the country actively moves toward implementing a fully Shariah-compliant financial system.

Pakistan’s Federal Shariat Court (FSC) directed the government in April 2022 to eliminate interest and align the country’s entire banking system with Islamic principles by 2027. Following the order, the government and the State Bank have taken several measures ranging from changing laws to issuing sukuk Islamic bonds to replace interest-based treasury bills and investment bonds.

“For the first time in the history of Islamic finance in Pakistan, by the end of March 2025, Islamic banking assets have reached Rs. 11.5 trillion, that’s 21.1 percent of the total banking sector assets,” central bank governor Jameel Ahmad said at a ceremony in Karachi. 

“While there’s still a long way to go, this share is gradually increasing.”

On deposits, Islamic banks currently hold Rs. 8.4 trillion, about 25.4 percent of the total deposits in the banking industry. 

“That means nearly one-fourth of all bank deposits are now mobilized under Islamic principles. So, the share of Islamic banking is steadily rising, and the number of Islamic banking branches has surpassed 8,000,” Ahmad added. “As a result of these achievements, we can see that access to Islamic banking services has significantly improved.”

He said to support the transformation of Islamic banking, the government of Pakistan had formed a steering committee in 2022 and launched a strategic five-year plan known as SBP Vision 2028.

Ahmad said the non-issuance of sukuk Islamic bonds was a “big hurdle” hindering the promotion of Islamic banking. He called on the banking industry, regulators and the government to play their “required role” to address underlying issues and issue more sukuk bonds and offer investors Shariah-compliant products.

“This would increase the share of Islamic banking investments in the overall industry. We all should play our respective role in this respect,” the governor added. 

PESHAWAR: A suspected drone strike killed four children and wounded five others in northwest Pakistan, prompting thousands of residents to stage a protest by placing the children’s bodies on a main road to demand justice, local elders said on Tuesday.

It wasn’t immediately clear who was behind Monday’s attack in Mir Ali, which has been a stronghold of the Pakistani Taliban, and there was no comment from the army.

“We are not blaming anyone, but we want justice, and the government should tell us who killed our children,” local tribal elder Mufti Baitullah said.

He warned that the protest, currently staged at one regional roadblock, could expand if authorities fail to answer.

“We will not bury the bodies until we are told who is responsible for killing our innocent children,” he said, as people chanted “we want justice.”

There have been civilian casualties in military strikes in some parts of the country in recent years. In March, 11 people, including women and children, were killed when a drone attack targeted a house in the northwestern city of Mardan.

A statement by the provincial government at the time had only said that there was “collateral damage” in an operation that was conducted to target militants in a remote village. Residents in March also rallied until the government agreed to compensate the victims’ families.

Abdullah Khan, the managing director of the Pakistan Institute for Conflict and Security Studies think tank, said Tuesday that militants also have been using quadcopters to target troops, but it still was unclear who was responsible for the drone attack in Mir Ali.

The latest civilian casualties came amid ongoing military operations against the Pakistani Taliban, which have a strong presence in Mir Ali, a city in the Khyber Pakhtunkhwa province. The Pakistani Taliban, known as Tehreek-e-Taliban Pakistan, are a separate insurgent group from the Afghan Taliban, and they often target troops in the region.

Nayak Muhammad Dawar, a provincial minister, condemned the attack in a statement Tuesday. He said that investigations were ongoing.

Mir Ali and nearby districts located near Afghanistan were long a base for the Pakistani Taliban and other militant groups. The TTP have stepped up attacks in the region in recent months.