KARACHI (Kashmir English): To improve consistency and strengthen Shariah compliance in the Islamic banking sector in Pakistan, the State Bank of Pakistan (SBP) has decided to implement Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Shariah Standard No. 30 on Monetization.
The standard shall be applicable immediately as per an SBP notice with the clarifications and amendments mentioned in Appendix A. The transfer is meant to be closer to the existing Islamic banking practices in accordance with the Islamic Shariah.
Central bank has also provided guidelines to apply the principle of Ḥajah (need) to Tawarruq-based transactions. These guidelines are contained in Annexure I and are in addition to the existing SBP guidelines and instructions/directives.
The SBP has indicated that Banks which do not comply with the new instructions could be penalised under the provisions of the Banking Companies Ordinance, 1962.
The requirements aim to strengthen the regulatory framework and confirm that Islamic banking transactions are carried out in accordance with the Shariah rules provided.
