Customers’ Financing Needs Vis-À-Vis Financial Products Offered by Islamic Banks in Pakistan: A Case Study of Khyber Pakhtoonkhwa Province

Shams Ud Din


The profit and loss sharing and mark- up financing products are the two parent principles of Islamic financing. Profit and loss sharing products are equity based products while mark-up (Murabaha) and lease (Ijara) are debt based financing products.  Ironically, the theory of Islamic finance entirely relies on the profit and loss sharing products, while the practice is dominated by the mark-up or deferred sale. This paper analyses the products (either equity based or debt based) offered by Islamic banks in Khyber Pakhtoonkhwa (KPK) province Pakistan. It was found that there is a dichotomy between the theory of Islamic banking and what is actually practiced by Islamic banks.  An analysis of this dichotomy, with special reference to investors and customers (being the main stakeholders of Islamic banks) is important for understanding the basis of Islamic financing, the future of Islamic financial institutions and the contribution which these institutions may make to individual Muslim economies as well as to the global economic scene.


Equity-based and debt-based financing products; Islamic banking; Islamic banks in Pakistan.

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