Pakistan regulator unveils new measures to strengthen Shariah-compliant market intermediaries
Pakistan's Federal Shariat Court (FSC) directed the government in April 2022 to eliminate interest and align the country's entire banking system with Islamic principles by 2027. Following the order, the government and the State Bank have taken several measures ranging from changing laws to issuing sukuk bonds to replace interest-based treasury bills and investment bonds.
However, documents seen by Arab News earlier this year showed Pakistan's government had failed to achieve a target set by the central bank to increase the share of Islamic banking deposits in the country by 50 percent by January this year.
'The paper proposes a phase-wise approach for Shariah-compliant institutional investors to route their business through Shariah-compliant brokers based on a plan to be prepared by their respective boards of directors,' the SECP said about the latest proposal.
'The paper encourages Islamic financial institutions, including providers of Islamic window services, to utilize Shariah-compliant intermediaries for takaful and investment purposes in situations where they are not obligated to do so.'
Other proposed measures include creating a specific category for Shariah-compliant intermediaries for greater visibility on the Centralized Gateway Portal and a dedicated list of Shariah-compliant asset management companies on EMLAAK Financials, Pakistan's first digital mutual fund aggregator. The platform brings together multiple Asset Management Companies (AMCs) and their mutual funds under one roof. It is a venture of ITMinds Limited, a wholly owned subsidiary of the Central Depository Company of Pakistan (CDC).
In order to facilitate Roshan Digital Account (RDA) clients, creating a separate category of Shariah-compliant intermediaries on the websites and mobile apps of Islamic banks would also be explored in coordination with relevant stakeholders, the SECP said.
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