ISLAMABAD: After the decision of the Federal Sharia court in April 2022. Pakistan’s banking industry is going leaps and bounds to convert its existing banking infrastructure to an Islamic one.
However, the implementation of said systems is revealed to have been in doldrums as Pakistan is ranked 145 out of 150 in terms of implementation of Islamic financial system.
This was disclosed by Tariq Naseem, Head of Islamic Finance Department at Securities and Exchange Commission of Pakistan (SECP) during an interactive session/workshop on the Islamic Finance sector and SECP’s Regulatory Sandbox held here on Thursday at the SECP Headquarters.
He said that not a single Muslim country in the world ranks in the top 30 in terms of implementation of the Islamic financial system.
Malaysia is at number 33 and Pakistan is at number 145, he added.
Non-Muslim countries, especially Scandinavian countries are at the top in terms of implementation of Islamic financial system, he informed the participants.
Tariq Naseem added that Islamic finance was gaining public acceptance in the PSX. He informed that the target to accelerate the growth of Islamic finance in regulated sectors includes implementing the proposal of Islamic stock trading, re-activate commodity Murabaha facility at PMEX, and ensuring availability of retail Sukuk.
Whereas, the government Ijarah Sukuk rules have to be amended to allow Asset Light Sukuk structures, develop Shariah-compliant digital lending products and platforms, allow Islamic social finance through the institution of Waqf, allow Islamic crowd funding for resource mobilisation.
He also informed that the asset size of 28 Modaraba companies in Pakistan is Rs 62 billion and there is no full-fledged primary law for the Islamic financial industry except Modaraba Ordinance in Pakistan, reflecting a big challenge for the SECP in implementation of Islamic finance in SECP’s regulated sectors.
In this regard, the SECP is drafting a dedicated Islamic finance law.
The commission has initiated working on developing a dedicated and full-fledged primary law (Financial Services Islamic Act) for the Islamic financial industry within the non-bank financial sector in Pakistan.
The proposed law, which may be called Islamic Financial Services Act, may consolidate all the relevant provisions in one piece of legislation while serving as a reference point for the development of case laws in the judicial system.
The exercise’s goal was to comply with the Federal Shariat Court’s ruling while also standardizing and improving the quality of Islamic goods and services.
He informed that the SECP is organizing an international Islamic conference on May 29 in Islamabad to share the global experience of different Islamic countries.
Responding to a query, he said that all banks are providing financial services except one international bank and trading through banknotes is not against Islam.
The SECP also registers Shariah advisors who extend their services to various companies and products, he concluded.