Hi Everyone! I hope you are all doing well. Welcome back to another blog. Today we will talk about the topic of the Challenges of Islamic Financial Services for SECP. Islamic financial services have gained popularity recently as an alternative to conventional banking and investing. The Securities and Exchange Commission of Pakistan (SECP) regulates and promotes these services. However, there are obstacles to the growth of this sector. In this article, we will discuss these challenges and their implications.
Islamic financial services follow Shariah law principles. These principles forbid interest (riba) and promote ethical and socially responsible financial transactions. The SECP is the regulatory body in Pakistan. It ensures compliance with these principles and establishes a framework for Islamic financial institutions.
The Securities and Exchange Commission of Pakistan (SECP) faces a significant challenge in implementing Islamic finance in its regulated sectors because there is no comprehensive primary law specifically designed for the Islamic financial industry, apart from the Modaraba Ordinance in Pakistan.
Tariq Naseem, the Head of the Islamic Finance Department at SECP, disclosed this information during a workshop at the SECP Headquarters. The workshop focused on the Islamic Finance sector and SECP’s Regulatory Sandbox, where participants engaged in interactive discussions.
Naseem provided a thorough explanation of the difficulties SECP is encountering while implementing Islamic laws in the country. He emphasized various challenges, including managing debt, the banking system, national savings schemes, and other issues that arise during the implementation of Islamic laws in the county.
The SECP has been given a deadline of five years (2022-2027) by the court to fully implement the Islamic financial system in the country. However, the issue is still being considered by the court, he mentioned. He also shared that the total value of assets held by 28 Modaraba companies in Pakistan is Rs. 62 billion. Besides the Modaraba Ordinance, there is currently no main law on Islamic financial services in the country.
The SECP is currently preparing a specific Islamic finance law. They have started working on creating a comprehensive law called the Financial Services Islamic Act for the Islamic financial industry in Pakistan, which falls under the non-bank financial sector.
The suggested law, possibly named the Islamic Financial Services Act, aims to bring together all the applicable rules in a single legal document. It will serve as a guide for the creation of court decisions in the legal system. The exercise aimed to follow the ruling of the Federal Shariat Court and also enhance the quality of Islamic goods and services.
He stated that all banks offer financial services, except for one international bank. Additionally, he mentioned that the SECP is arranging an international Islamic conference in Islamabad on May 29. The aim of this conference is to exchange knowledge and experiences from various Islamic nations. When asked, he clarified that conducting trade using banknotes is not in violation of Islamic principles.
FOR MORE VISIT OUR OFFICIAL WEBSITE.