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HomeEquityNBFI Shariah complaint assets touch Rs340 bln in FY19

NBFI Shariah complaint assets touch Rs340 bln in FY19

Mar 03, 2020: The Shariah compliant assets of Non-Banking Financial Institutions (NBFI) rose to Rs340.03 billion, representing 29.9 percent of the total NBFI sector assets up the the end of last fiscal year.

According to the latest report released by the Security and Exchange Commission of Pakistan (SECP), total asset size of mutual funds stood at Rs577.64 billion, out of which the share of Shariah compliant mutual funds is was 39 percent.

Since 2010, growth of Shariah compliant mutual funds is 892.59% as compared to 64.11% for conventional mutual funds.

Asset size of pension funds is Rs26.498 billion of which the share of Shariah compliant pension funds is 64%.

Takaful’s share in the overall insurance market is also increasing each year. In 2016, share of takaful in terms of gross premium was 6.9% of the total industry premium, compared to 10.22% in the year 2018.

Out of total 542 companies listed on PSX, around 250 are Shariah compliant companies, which is 46% of the PSX listed companies.

As of December 31, 2018, in corporate debt market, the total value of outstanding sukuk is Rs498 billion which represents 77% of the total corporate debt.

In compliance with the requirements stipulated in Article 38(f) of the Constitution of Pakistan for elimination of riba and Islamization of economy, SECP has been taking a number of measures and initiatives for the promotion and development of Islamic finance.

A specific provision for regulating and facilitating the growth of Shariah compliant financial products and services has been incorporated in SECP Act, 1997. Furthermore, provisions for certification of Shariah compliant companies, Shariah compliant securities, requirement of Shariah compliance, Shariah audit and Shariah advisory have been added in the Companies Act, 2017. These enabling provisions allowed SECP to issue Shariah Advisors Regulations, 2017 and Shariah Governance Regulations, 2018.

The SECP has also approved Regulations for governing Shariah compliant trading platform at PMEX for commodity Murabahah transactions. Shariah Advisory Board (SAB) has granted its approval for Murabahah share financing and launching of Shariah compliant trading counter at Pakistan Stock Exchange.

Shariah Governance Regulations, 2018 are holistic and comprehensive regulations catering for almost all areas relevant to Islamic based business operations/transactions of entities/companies within the regulatory ambit of SECP. These include Shariah advisory function, Shariah compliance, internal and external Shariah audit, Shariah screening of corporate entities and non-Shariah compliant investments.

Implementation and compliance with these regulations will contribute towards soundness and stability of the companies and Islamic financial system of the country.

The inclusion of additional disclosure requirements to Schedule-IV of Companies Act, 2017 for listed companies is the fundamental source for assessing Shariah compliance of companies through application of Shariah screening criteria stipulated in the Shariah Governance Regulations, 2018.

The certification mechanism for the Shariah compliant companies and securities embedded in these regulations will contribute towards development of public confidence in Islamic products and services and increased financial inclusiveness. During the fiscal year 2018-2019, two listed companies have been certified as Shariah compliant under Shariah Governance Regulations, 2018.

The fit and proper criteria and basic qualifications and experience for Shariah Advisors have been specified in Shariah Advisors Regulations, 2017. Until June 30, 2019, ninety-seven Shariah advisors had been registered with SECP including four private limited companies for providing Shariah advisory services. The SECP maintains a list of registered Shariah advisors on its website to facilitate Shariah compliant companies and other entities to appoint registered Shariah advisors.

SECP has signed memorandum of understanding (MOU) with the three Centers for Excellence in Islamic Finance (LUMS, IBA & IM Sciences) to join hands for the noble cause of promoting Islamic finance education, training, research and development. A MoU was also signed with Islamic Research and Training Institute (IRTI) which is a research wing of Islamic Development Bank. The MOU covers areas of mutual collaboration in developing programs for training and education in Islamic finance, facilitating the use and exchange of resources, relevant academic information, events calendar, materials and technical expertise necessary for the development of training and education in Islamic finance.


Posted on: 2020-03-03T14:55:00+05:00


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