ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Friday granted approval to its Islamic Finance Department for the adoption and notification of three more international standards for Sharia-compliant investments.
The notified standards are from Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).
AAOIFI Shariah standard was initially issued in 2003 Madina, Saudi Arabia and has been adopted in Pakistan by the SECP through public consultation process.
The commission on Friday notified three Shariah standards including No. 17 (Investment Sukuk), No. 18 (Possession/Qabz) and No. 23 (Agency and the Act of an un-commissioned agent/Fodooli).
As a step further towards harmonisation and standardisation in the business practices of Islamic financial institutions, the SECP has been adopting the accounting and Sharia standards from time to time.
For effective regulation and governance of the Islamic financial sector, the SECP has been working in close collaboration with the leading global standard-setting bodies in Islamic finance.
The aim of this standard is to elaborate the Sharia rules for the issuance and trading of investment Sukuk (certificates) as well as the elaboration of and trading of investment Sukuk (certificates) as well as the elaboration of their types, characteristics, Shari’ah regulations and the conditions for the their types, characteristics, Sharia regulations and the conditions for the issuance of Sukuk and dealings in them for trading by Islamic financial institutions -issuance of Sukuk and dealings in them for trading by Islamic financial institutions including Islamic Banks.
This standard covers investment sukuk include sukuk of ownership of leased assets, ownership of usufructs, ownership of services, Murabahah, Salam, Istisna’a, Modaraba, Musharakah, investment agency and sharecropping (Muzara’ah), irrigation (Musaqat) and agricultural (Mugharasah) partnerships.
The standard does not cover shares of joint stock companies, certificates of funds and investment portfolios.
As Islamic financing continues to grow globally the SECP is responsible to provide an enabling legal and regulatory environment for the growth of Islamic finance in the country, and it has been replicating the best international practices as laid down by Islamic Financial Services Board (IFSB).
In 2005, 2007 and 2013, the SECP notified three Islamic Financial Accounting Standards including the IFAS 1-Morabahah, IFAS 2 (Ijarah), and IFAS 3 (Profit and Loss Sharing on Deposits), respectively.
Besides the Shariah Standards of AAOIFI were notified in 2016 including Shariah Standard No. 3 (Default in Payment by a Debtor), No. 8 (Murabahah to the Purchase Orderer), No. 9 (Ijarah and Ijarah Muntahia Bittamleek) and No.13 (Modaraba).
Published in Dawn, February 17th, 2018