KARACHI: The State Bank of Pakistan on Monday amended its earlier instructions with regard to obtaining invoices in the name of banks in Murabaha transactions. According to the SBP, it requires Islamic banking institutions (IBIs) to obtain invoices in the name of banks in Murabaha transactions.

However, considering practical difficulties in obtaining invoices, particularly in transactions, like purchase of phutti, raw hides, milk, sugarcane, etc., instructions on obtaining invoices have been reviewed and amended, said the SBP.

Now an invoice issued by a supplier would be in the name of bank- account client (1st Islamic Bank – ABC Company).

If an invoice in the name of IBI is not possible, invoice in the name of client may also be acceptable subject to specific approval by the Shariah Advisor for all such transactions, it said.

In transactions where formal invoice either in the name of bank or client is not possible, the document or combination of documents, like truck receipts, delivery notes, goods received notes, physical inspection reports, Kachchi Parchi, inward gate pass, etc., having particulars (names of buyer and seller, date of purchase/delivery, description of goods, quantity and purchase amount etc) may be accepted in lieu of invoice with the approval of Shariah advisor.

The Shariah advisor while approving any transaction as mentioned above, would document reasons and industry norms, etc., due to which obtaining an invoice and making payment directly to the supplier is not possible.

He will also review and approve the process flows, etc., to be adopted by the client or IBI to execute such transactions.

The payment for Murabaha transactions would either be made directly to supplier or credited in an escrow account by IBIs.

However, in cases where direct payment to supplier is not possible due to genuine reasons, payment to supplier may be made through an agent subject to explicitly recording reasons and approval of process flow, etc., of all such transactions by the Shariah advisor, said the SBP.