May 29, 2023 (MLN): Collaboration among regulators, financial institutions, industry players, and Shariah scholars is essential for bringing standardization of Islamic financial contracts and simplifying the processes, as stated by Governor State Bank of Pakistan (SBP) Mr. Jameel Ahmad.
He was addressing the Inaugural International Conference on Islamic Capital Markets (ICM) jointly organized by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Securities and Exchange Commission of Pakistan (SECP).
The theme of the conference this year was ‘ICM Development with Ecosystem Completion: Innovation, Growth, and Transformation’.
Mr. Ahmad spoke at length on key issues and challenges in the development of the Islamic capital market.
However, he was convinced that the solutions are well within reach and hoped that the insights and knowledge exchanges during this conference will help in developing a roadmap for a sustainable, diversified, and inclusive Islamic Capital Market in Pakistan.
The Governor noted that Islamic finance as a global industry has crossed the $3 trillion mark and the Islamic capital markets account for around 31% share of this growing pie.
He added that Islamic capital markets are in the nascent stages of development in most jurisdictions.
And attributed this to gaps in institutional, legal, and regulatory frameworks, inefficient price discovery, and lack of diversity in instruments and investors.
The Governor showed satisfaction that Islamic banking has grown into a systemically important sector in the country both in terms of assets base and current market share.
Highlighting the challenges pertaining to the development of Islamic capital markets, particularly of Islamic Debt Market, the Governor reminded that the conversion of public debt into Shariah-compliant instruments remains the biggest challenge.
The lack of adequate sovereign assets has remained a significant impediment to the regular issuance of asset-based Sukuk until recently.
He enlightened the audience that the SBP has constituted a high-level working group to develop practical solutions for alternate Sharia-compliant structures, especially Asset Light Sukuk Structures.
For building a robust Islamic corporate debt market, Governor SBP emphasized the need for developing coordinated and sustained efforts on multiple fronts to provide an enabling tax, regulatory, and policy environment.
Noting the importance of retail investors, he stressed the need for investor education programs to complement the efforts for strengthening the market infrastructure.
Mr. Jameel Ahmad emphasized the need to embrace Islamic Fintech, digital finance, climate finance, and innovation.
Adding Pakistan’s Islamic Capital market to be a fair, modern, efficient, and globally competitive market, responsive to the needs of its stakeholders, and based on sound regulatory principles, which should provide the impetus for sustainable economic growth.
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Posted on: 2023-05-29T17:33:16+05:00