The Islamic finance industry has become entrenched and sophisticated everywhere from Malaysia to Saudi Arabia and even in London, but until recently, its development has lagged in Pakistan. Despite a plan to convert the entire banking system to Shariah (Islamic) principles, development was impeded by lack of clear regulation. That changed in 2002 when a new licensing regime was established and new regulations came into effect. Mezzan Bank received the first such license in January of that year, and by September 2006, Pakistan had 14 licensed standalone Islamic banks with 103 branches between them, according to the State Bank of Pakistan, and many more institutions now offer Islamic financial services through designated windows within conventional bank branches.
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