Pakistan has joined the ranks of many Islamic Finance focused nations to adopt the Accounting and Auditing Organisation for Islamic Financial Institution (AAOIFI).
The Bahrain-based guidelines will be accepted as the global standard for sukuk which will be useful in tackling issues of standardized Islamic Finance practices and implementation.
The adoption of the rules will prove an easier dealing in business tied to the Gulf regions as well as other Islamic states/.
In managing the risk sukuk issuance, the issuers will have to comply with the “investment sukuk” guidelines of the new guideline or else will be imposed a certain penalty, the central bank said in a statement.
AAOIFI, which obeys the religious laws such as ban on usury and speculations on origins of funds, is one of the main standard-setting bodies for Islamic finance around the world.
According to the Express Tribune, Bahrain is one of a handful of countries which enforces them fully, while countries such as Oman refer to a portion of them.
Pakistan’s regulators are rolling out new rules in an effort to increase Islamic banks’ share of the total banking sector to 15% by 2017. Islamic banks held Rs847 billion ($8.44 billion) or 8.7% of total banking assets in March this year, central bank data shows.
Despite double-digit growth, the industry has missed growth targets set by regulators: forecasts set out in 2007 expected the industry to reach Rs907 billion by the end of 2012.
In May, the Securities and Exchange Commission of Pakistan established a Sharia advisory board to oversee Islamic financial instruments, while last year it announced rules for sukuk, takaful and Islamic deposits.
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