The Securities and Exchange Commission of Pakistan (SECP) is planning to work with stakeholders for increasing the volume of Takaful in Pakistan by launching Taktech (Takaful technology) to revolutionize the sector.
According to an SECP report on Islamic Finance, the SECP in collaboration with all the stakeholders will pursue infusing Shariah principles in disruptive Fintech innovations (Smart contracts, Big Data, and Blockchain technology), which will help in the financial inclusion and further enhance the customer experience for the Shariah sensitive investors.
The department will also review RegTech solutions available for the supervision of the Islamic financial industry, specifically in the areas of Shariah compliance and Shariah Audit. The SECP also plans to work with stakeholders for increasing the volume of Takaful in Pakistan, by launching Taktech (Takaful technology) to revolutionize the takaful sector, by complementing existing initiatives to enhance takaful coverage to the unserved segments of the population. SECP will also explore the Asset Light Sukuk framework for the issuance of Asset Light Sukuks.
For Green Sukuks, IDF is already conducting research for creating a regulatory framework, enabling the issuance of green Sukuks in Pakistan. In consultation with the Institute of Chartered Accountants of Pakistan (ICAP), IFD is also in the process of introducing a Shariah audit qualification for external Shariah auditors, under Shariah Governance Regulations, 2018. This step shall help in streamlining the external Shariah audit profession in Pakistan.
Under Shariah Governance Regulations, the SECP has issued certificates of Shariah compliance to seven companies in terms of the Shariah Governance Regulations, 2018, for the development of the Islamic financial capital market. In addition, SECP has issued certificates of Shariah compliance for Sukuk issuances worth Rs. 280 billion, including the “Power Energy Sukuk-II” by the Government of Pakistan worth Rs. 200 billion and “Pakistan International Airlines Corporations Limited-Sukuk” worth Rs. 20 billion.
Under the Shariah Advisors Regulations, 2017, one new Shariah Advisor was registered with the SECP from 2020 to 2021. It is pertinent to mention that so far, 105 Shariah advisors have been registered with the SECP, including six private limited companies for providing Shariah advisory services.
The SECP has been gradually adopting Accounting and Shariah Standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) to achieve a high degree of standardization in the operational and business practices of Islamic financial institutions. In this regard, SECP has issued a draft notification for the adoption of seven (7) additional AAOIFI Shariah Standards, while reviewing additional Shariah standards are being reviewed for inclusion in the draft.
The SECP is providing its regulatory support to spur the growth of the Islamic finance industry through scaling up Islamic finance regulations to provide an enabling regulatory environment for the stakeholders falling under the purview of the SECP. In order to create ease of doing business, amendments in the Shariah Governance Regulations are in process, the SECP report added.