SECP expands Sharia Advisory Board
Sunday, April 07, 2013
By Abrar Hamza
KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has decided to include two more members in its Sharia Advisory Board (SAB), as the modaraba sector has positioned itself as a stable form of Islamic financial institution despite ongoing economic recession.
SECPs Securities Market Division Commissioner Imtiaz Haider while talking to Daily Times said, in order to broaden the scope of Islamic financial products and to control anomalies they have decided to increase the number of SAB members from seven to nine. It will be operational soon. Currently, some legal matters and scholars salaries options are under consideration and awaiting approval from higher authorities of the commission, he added.
Haider further elaborated that two members of the board are taken from SECP to deal with the technical side and assist Islamic scholars, while one member would manage the assessment procedures. Other six members are renowned Islamic scholars who will scrutinise the services and products as per teachings of Islam and also minimise the differences among all the sects regarding Islamic banking and investment market, he added.
He said the boards Islamic scholars have authority to scrutinise the features and services of modarabas and other Islamic financial products under the light of Islamic instructions because the SABs aim is to regulate the range of Islamic financial products and services under the principles of the Shariah. The members of SAB will have power to terminate any product if it is found against the Islamic banking laws, he added.
It is worth adding that according to SAB rules and regulations, no modaraba shall be in business if it is not in conformity with the injunctions of Islam and the registrar shall not permit the floatation of a modaraba unless the religious board has certified in writing that the modaraba is not a business opposed to the injunctions of Islam.
Islamic capital market has been witnessing significant growth for the last five years, so keeping in view this rising acceptance of Islamic financial products among the investors and general public the SECP had decided to set up SAB to minimise probable differences regarding Sharia-related financial products for the sake of the consumers religious beliefs, he reasoned.
However, he added, overall situation of capital investment is not very promising, and there is a need for creating awareness among masses about the importance of retail investments because the consumer can get more benefits by investing in capital market instead of saving their money in banks. This is the reason SECP is working to expand the size of capital market through multi-point strategy, he said.
It is pertinent to mention that modarabas are pioneering Islamic financial institutions in Pakistan and are operating to implement the financial aspects of Shariah. It allows a wide range of Islamic financial products and services under the principles of Shariah. Currently, most of the modarabas are providing financial services while a few are engaged in the industrial and trading activities.
Moreover, according to Islamic Banking Bulletin (IBB), issued by State Bank of Pakistan (SBP) in September 2012, the Islamic banking industry continued its growth momentum during the third quarter of CY12. Both assets and deposits registered positive quarterly growth as asset base of the industry reached Rs 742 billion while deposits reached Rs 628 billion by end of September 2012. In terms of market share, assets constitute 8.1 percent whereas deposits constitute 9.3 percent in overall banking industry.
IBB further stated that rising trend in profitability of the Islamic banking industry continued and reached above Rs 7.7 billion by end of September 2012 from Rs 6 billion by end of June CY12. On the other hand return on assets (RoA) and return on equity (RoE) witnessed decline during the quarter under review. Rising non-performing finances (NPFs) to financing ratio, concentration of financing in few sectors and limited expansion of concentration of financing in few sectors and limited expansion of Islamic banking network to second and third-tier cities remained among major challenges faced by the industry.
IBB further said that investments of Islamic banking industry registered quarterly growth of more than 8.0 percent reaching Rs 374 billion by end September 2012. This rise in investment was mainly driven by increased investment in federal government securities as government of Pakistan Ijara Sukuk of more than Rs 47 billion was issued during the quarter.
In terms of Islamic branch expansion an addition of 29 new branches were witnessed during the quarter under review. These additional branches were established in Punjab, Sindh, Khyber Pakhtunkhwa, Gilgit Baltistan, FATA and Islamabad.
Encouragingly Islamic banking services increased its outreach by opening branches in three new cities including Batagram, Lower Dir and Diamir, according to IBB.
Daily Times - Leading News Resource of Pakistan
Sunday, April 07, 2013
By Abrar Hamza
KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has decided to include two more members in its Sharia Advisory Board (SAB), as the modaraba sector has positioned itself as a stable form of Islamic financial institution despite ongoing economic recession.
SECPs Securities Market Division Commissioner Imtiaz Haider while talking to Daily Times said, in order to broaden the scope of Islamic financial products and to control anomalies they have decided to increase the number of SAB members from seven to nine. It will be operational soon. Currently, some legal matters and scholars salaries options are under consideration and awaiting approval from higher authorities of the commission, he added.
Haider further elaborated that two members of the board are taken from SECP to deal with the technical side and assist Islamic scholars, while one member would manage the assessment procedures. Other six members are renowned Islamic scholars who will scrutinise the services and products as per teachings of Islam and also minimise the differences among all the sects regarding Islamic banking and investment market, he added.
He said the boards Islamic scholars have authority to scrutinise the features and services of modarabas and other Islamic financial products under the light of Islamic instructions because the SABs aim is to regulate the range of Islamic financial products and services under the principles of the Shariah. The members of SAB will have power to terminate any product if it is found against the Islamic banking laws, he added.
It is worth adding that according to SAB rules and regulations, no modaraba shall be in business if it is not in conformity with the injunctions of Islam and the registrar shall not permit the floatation of a modaraba unless the religious board has certified in writing that the modaraba is not a business opposed to the injunctions of Islam.
Islamic capital market has been witnessing significant growth for the last five years, so keeping in view this rising acceptance of Islamic financial products among the investors and general public the SECP had decided to set up SAB to minimise probable differences regarding Sharia-related financial products for the sake of the consumers religious beliefs, he reasoned.
However, he added, overall situation of capital investment is not very promising, and there is a need for creating awareness among masses about the importance of retail investments because the consumer can get more benefits by investing in capital market instead of saving their money in banks. This is the reason SECP is working to expand the size of capital market through multi-point strategy, he said.
It is pertinent to mention that modarabas are pioneering Islamic financial institutions in Pakistan and are operating to implement the financial aspects of Shariah. It allows a wide range of Islamic financial products and services under the principles of Shariah. Currently, most of the modarabas are providing financial services while a few are engaged in the industrial and trading activities.
Moreover, according to Islamic Banking Bulletin (IBB), issued by State Bank of Pakistan (SBP) in September 2012, the Islamic banking industry continued its growth momentum during the third quarter of CY12. Both assets and deposits registered positive quarterly growth as asset base of the industry reached Rs 742 billion while deposits reached Rs 628 billion by end of September 2012. In terms of market share, assets constitute 8.1 percent whereas deposits constitute 9.3 percent in overall banking industry.
IBB further stated that rising trend in profitability of the Islamic banking industry continued and reached above Rs 7.7 billion by end of September 2012 from Rs 6 billion by end of June CY12. On the other hand return on assets (RoA) and return on equity (RoE) witnessed decline during the quarter under review. Rising non-performing finances (NPFs) to financing ratio, concentration of financing in few sectors and limited expansion of concentration of financing in few sectors and limited expansion of Islamic banking network to second and third-tier cities remained among major challenges faced by the industry.
IBB further said that investments of Islamic banking industry registered quarterly growth of more than 8.0 percent reaching Rs 374 billion by end September 2012. This rise in investment was mainly driven by increased investment in federal government securities as government of Pakistan Ijara Sukuk of more than Rs 47 billion was issued during the quarter.
In terms of Islamic branch expansion an addition of 29 new branches were witnessed during the quarter under review. These additional branches were established in Punjab, Sindh, Khyber Pakhtunkhwa, Gilgit Baltistan, FATA and Islamabad.
Encouragingly Islamic banking services increased its outreach by opening branches in three new cities including Batagram, Lower Dir and Diamir, according to IBB.
Daily Times - Leading News Resource of Pakistan
