KARACHI – Interest rates of all banks in Pakistan are record high amid stern monetary policy decisions by the central bank. 

Senate Standing Committee on Finance lately raised concerns about high interest rates charged by Islamic banks, which range up to 30pc on loans, compared to 20pc by conventional banks.

Chairman Committee Senator Saleem Mandviwala alleged that these banks are deceiving customers by presenting their services as religiously motivated.

The committee received an update on the Deposit Protection Corporation Amendment Bill 2024. Deputy Governor of the State Bank clarified that while the bill aims to enhance consumer protection, it will not extend to microfinance banks. The decision on whether to include such banks in the protection scheme will be made by the board.

Mandviwala pointed out that many individuals choose Islamic banking for its financial advantages rather than out of religious conviction, and he reported receiving several complaints about higher interest rates.

The committee has requested a comprehensive briefing from the State Bank on Islamic banking practices and how they compare to international standards.

Conventional banks dominate market share, while Islamic banks hold mere 25pc.