The Securities and Exchange Commission of Pakistan (SECP) has directed all its operational divisions that any Shariah-related matter, including approval for an entity, activity, or product, or any regulatory change/proposal, eg, circular, guidelines, amendments, should be introduced after consultation and advice of the Islamic Finance Department (IFD) SECP.
According to the SECP annual report (2014-15), there is a vast market for Islamic financial products not only in Pakistan, but all over the world. Islamic finance has grown impressively over the years, and now its assets are estimated at about $1.5 trillion in sectors such as banking, capital markets, and Takaful. Realising the importance of Islamic finance, the SECP had approved the establishment of a full-fledged Islamic Finance Department (IFD) at the SECP. Earlier, various departments were working on Islamic products separately.
The SECP has approved a four-member Shariah Advisory Board (SAB) to give its opinions on the Islamic capital market matters. The SAB comprises of three Shariah scholars, Justice Khalil ur Rehman (Chairman), Mufti Muneeb ur Rehman (Shariah Member) and Professor Dr Tahir Mansoori (Shariah Member) and one technical member, Bilal Rasul (HOD, IFD). The Shariah Advisory Board has been entrusted with providing Shariah opinions on the laws, rules, regulations, agreements, and documents.
The Shariah scholars would also advise the SECP on a range of issues, including the operation, auditing and reporting of Islamic mutual funds, pensions and insurance operators etc. The guidance and advice of the Shariah Board will enhance the credibility of Islamic financial institutions and products, the SECP added.
The SECP stated that a roadmap of IFD has been prepared and it is decided that in the next three years the IFD would keep its focus on key areas for the facilitation and development of the Islamic capital markets and Islamic finance industry in the country including enabling regulatory environment; diverting the existing powers to issue Shariah related rules and regulations to the HOD, Islamic Finance Department (IFD); reviewing the existing Shariah compliance regulatory framework of the SECP to bring about uniformity; evaluate, assess and issue the Islamic Financial Accounting Standards, in consultation with the stakeholders; prepare Shariah compliance (capital market) regulations for the Shariah-compliant companies.