SECP Adopts Seven New Shariah Standards for Islamic Financial Services

SECP’s move to adopt seven more Shariah Standards from AAOIFI is a significant step towards enhancing the Islamic financial services sector in Pakistan. The notification of these standards on a “comply and explain” basis reflects the regulator’s commitment to promoting ethical business practices and governance within the industry.

By aligning with international best practices, SECP aims to ensure harmonization and standardization in Islamic financial services, ultimately leading to a more transparent and compliant business environment. The gradual adoption of AAOIFI standards is a strategic approach towards achieving an interest-free economy by 2027, in line with the Federal Shariat Court’s judgment on the elimination of Riba.

The consultative process undertaken by SECP in adopting these new standards demonstrates a commitment to stakeholder engagement and consideration of industry maturity levels. The implementation of these standards is expected to improve the quality of Islamic financial services, enhance transparency in transactions, and increase stakeholder confidence in the regulated sectors.

Furthermore, the establishment of a committee to oversee the adoption of Islamic financial accounting and auditing standards highlights SECP’s proactive approach in ensuring compliance and accountability within the industry. This initiative is a positive step towards strengthening the regulatory framework and promoting sustainable growth in the Islamic financial services sector.