The Securities and Exchange Commission of Pakistan (SECP) is in the process of drafting a strategic action plan for the development of Islamic finance within its regulated sector, as well as implementing the diagnostic review’s recommendations.
According to the SECP’s annual report (2022-23), work is underway to develop and implement a strategy for global Islamic finance standards. As well as to adopt the staggered approach in AAOIFI standard adoption, in order to achieve greater standardization in the Islamic financial industry.
SECP is undertaking reforms for a robust legal and regulatory framework for Islamic finance, including amendments to the Modaraba Ordinance, 1980, amendments to the subsidiary legislation for Modarabas.
This includes the revision of Modaraba Rules, Modaraba Regulations, and various circulars. Furthermore, it also includes the drafting the Islamic Financial Services Act, revamping Shariah Governance Regulations, and introducing Shariah governance.
Furthermore, the SECP thinks that the work streams outlined above, coupled with milestones established by the Islamic Finance Strategic Plan 2023-25. It will prepare the way for the structured development of Islamic finance within the regulatory domain of the SECP.
SECP has released rules for supplying Islamic financial services across all of its regulated sectors. Moreover, this is a watershed moment for the growth of Islamic finance in the non-bank financial sector.
The rules are designed to promote the development of Shariah-compliant financial products in the SECP-regulated financial services market. These rules includes Islamic capital markets, Takaful, Modarabas, NBFCs, pension and private funds, REITs, and so on.
The issuance of these guidelines is part of commitment from SECP to promote and build an Islamic financial system in accordance with the constitutional goal of economic Islamization and in light of the recent Federal Shariah Court decision.
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