In a significant move to bolster Shariah compliance within Pakistan’s Islamic banking sector, the State Bank of Pakistan (SBP) has officially adopted the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Shariah Standard No. 47. The decision aligns with SBP’s broader efforts to enhance regulatory oversight and standardization in the country’s growing Islamic finance industry.
The AAOIFI, headquartered in Bahrain, is a globally recognized body that sets standards for Islamic financial institutions, ensuring their operations comply with Shariah principles. Standard No. 47 specifically provides guidelines on the settlement of contracts in Islamic finance, aiming to bring greater consistency and transparency to transactions.
In a circular issued to all Islamic banks, Islamic banking subsidiaries, and conventional banks operating Islamic banking windows, SBP mandated immediate enforcement of the new standard. However, certain amendments and clarifications outlined by the central bank will also be applicable.
Non-compliance with these directives could result in penal action under the Banking Companies Ordinance 1962, reinforcing SBP’s commitment to ensuring a robust and standardized regulatory framework for the Islamic banking sector. The move is expected to enhance investor confidence and further strengthen Pakistan’s position as a key player in global Islamic finance.
