Abstract

This study analyzes the development and growth of Islamic banking in Pakistan. State banks of Pakistan are playing very important role in the development of Islamic banking and make Islamic banking as the first priority in the banking system. Islamic banking is providing a wide variety of the products which are competitive to the conventional banking system. Islamic banking generally shows an increasing trend in the total assets, total deposits, total financing, total investments, total number of branches, profits, earnings per shares, share holder equity and other financial indicators which shows the financial growth and development of the Islamic financial institutions. The study will help the higher management to make policies for the Islamic banking to grow and develop in low income or developing countries such as Pakistan.

Key words: Islamic banking, profit and loss sharing, development, growth, interest.