The State Bank of Pakistan (SBP) has announced the adoption of Shariah Standard No. 59 issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). This standard, focusing on the Sale of Debt, has been implemented with immediate effect and comes with specific clarifications and amendments from the SBP.
The standard provides comprehensive guidelines to ensure that transactions involving the sale or transfer of debt adhere to Islamic principles.
Islamic finance prohibits the sale of debt at a discount or premium as it resembles usury (Riba), which is explicitly forbidden in Islamic law. The standard ensures that any dealings with debt remain Shariah-compliant.
The decision is part of the SBP’s ongoing efforts to enhance Shariah compliance and harmonize practices across the Islamic banking industry while ensuring adherence to the central bank’s existing regulations and directives.
Islamic banks, Islamic banking subsidiaries, and conventional banks with Islamic branches have been instructed to align their operations with this new standard. The SBP has emphasized that non-compliance could lead to penalties under the Banking Companies Ordinance, 1962.
