There is no full-fledged primary law for the Islamic financial industry except Modaraba Ordinance in Pakistan, reflecting a big challenge for the Securities and Exchange Commission of Pakistan (SECP) in implementation of Islamic finance in SECP’s regulated sectors.
This was revealed by Tariq Naseem, Head of Islamic Finance Department at SECP, during an interactive session/workshop on the Islamic Finance sector and SECP’s Regulatory Sandbox held here on Thursday at the SECP Headquarters.
Naseem explained in detail the local and international challenges being faced by the SECP in the implementation of Islamic laws in the country. Among others, he highlighted debt management, the banking system, national saving schemes, and other issues during the implementation of Islamic laws in the county.
The court has given a time period of five years (2022-27) to the SECP for full-fledged implementation of the Islamic financial system in the country. However, the matter is still sub judice in the court, he said.
He informed that the asset size of 28 Modaraba companies in Pakistan is Rs. 62 billion. Except for Modaraba Ordinance, there is no primary law on Islamic financial services in the country.
In this regard, the SECP is drafting a dedicated Islamic finance law. The commission has initiated working on developing a dedicated and full-fledged primary law (Financial Services Islamic Act) for the Islamic financial industry within the non-bank financial sector in Pakistan.
The proposed law, which may be called Islamic Financial Services Act, may consolidate all the relevant provisions in one piece of legislation while serving as a reference point for the development of case laws in the judicial system.
The exercise’s goal was to comply with the Federal Shariat Court’s ruling while also standardizing and improving the quality of Islamic goods and services. He emphasized that the suggested actions are specifically intended to speed up the growth of Islamic finance in SECP’s regulated sectors.
He informed that all banks are providing financial services except one international bank. He added that the SECP is organizing an international Islamic conference on May 29 in Islamabad to share the global experience of different Islamic countries. Responding to a query, he said that trading through banknotes is not against Islam.
