Pakistan’s Islamic finance industry poised for further growth (By IFN)

Monday 8^th October 2012

PAKISTAN: The Securities and Exchange Commission of Pakistan has released its draft regulations on Sukuk, as regulatory backing for Islamic finance in the country gains rapid pace. The draft rules, which cover the eligibility of issuers, conditions for issuances, the appointment of Shariah advisors and trustees, underwriting, disclosure and reporting requirements, disciplinary proceedings and financial reporting and accounting treatment, are open for public comment until the 15th October this year. Local Sukuk issuances are expected to see a boost as a result of the proposed legislation; in a market where corporate offerings have been slow to take off, although the government has issued Sukuk regularly in the last few years. Since 2010, the government has issued around PKR369 billion (US$3.86 billion)-worth of Sukuk. Pakistan’s central bank also recently prepared an investor guide for the government’s issuances of Sukuk Ijarah, outlining procedures for investing in the papers and highlighting the benefits of investing in the notes. “These securities provide higher returns to the investor, as compared to most bank deposits,” it noted. The latest developments in Islamic finance in Pakistan come on the back of authorities’ recent push to encourage the progress of the industry in the country. During our IFN Roadshow in Pakistan last month, Kazi Abdul Muktadir, the deputy governor of the central bank, revealed that the authority is in the process of developing a five-year strategic plan for the Islamic banking industry from 2013 onwards. The central bank is also working on a comprehensive framework for Shariah governance in the country’s Islamic financial institutions. With strong support from the authorities and new legislation for Sukuk, Pakistan’s Islamic banking industry looks poised for further growth ahead.