The global market perceives Islamic Finance as an advantageous opportunity to diversify that will not affect their existing business adversely. Interestingly, Islam at times is related to conservatism but Islamic finance has proven a radical and choice enhancing avenue. The ethically oriented financial solutions are closely tied with overall social benefit. Islamic financial institutions (IFIs), while not directly impacted by the repercussions of the recent global financial crisis, did experience the knock-on risks transmitted through indirect channels like downturns in real estate and equity markets coupled with a rise in Non-performing financing emanating from slow-down in economy. The emergence of these risks as a consequence of the financial crisis has brought forth the realization that IFIs, while resilient to adverse developments, are not risk immune. The defining features of Islamic Finance are its close links with the real economy and inbuilt prohibitions against interest, excessive uncertainty and speculation. Looking at the Islamic financial intermediation model, we will see that it is based on: Involvement of real economic activity for generation of income and wealth, Ethical and social responsibility, Avoidance of over leveraging and excessive speculative activities, and Inclusive financial services growth such that all segments of the Islamic Banking in Pakistan at crossroads Deputy Governor’s Speech
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