Islamic Banking: Critiques, Challenges, and Possible Solutions for Promotion

Abstract

Islamic banking has prominently emerged over the past few decades worldwide and is being promoted in many Muslim countries, including Pakistan, as an alternative to conventional banking. Although this system has gained public trust and acceptance, it has also faced various critiques at both scholarly and practical levels. Critics argue that Islamic banking suffers from a lack of standardized regulations, issues of transparency and accountability, and complexities in risk management. Due to these shortcomings, some experts label Islamic banking as merely the “Islamic version” of conventional banking.This study presents a scholarly and analytical review of the major critiques against Islamic banking and proposes possible solutions in light of the opinions of economists and Islamic jurists. It also includes a comparative analysis of successful global models of Islamic banking, such as those in Malaysia and the Gulf countries, to contextualize the Pakistani experience more clearly.The article concludes that Islamic banking must be realigned with its genuine Maqāṣid al-Sharīʿah (objectives of Shari‘ah), namely transparency, justice, partnership, and public welfare. Achieving this goal requires joint efforts by experts in Shari‘ah and finance, strong policymaking by the State Bank, and initiatives to restore public awareness and confidence.