ISLAMABAD: Considering the fact that Islamic finance is growing in the country with total assets of Islamic finance institutions hovering near a trillion rupees, the Securities and Exchange Commission of Pakistan (SECP) established a central advisory board to guide their transactions in accordance with the principles of Shariah.
In a press statement issued on Wednesday, the SECP said that considering the need for Islamic Financial Institutions and Islamic Capital Markets to innovate and operate within the purview of Shariah principles and to ensure aforesaid organisation’s business dealing were in line with Islamic principles, the equity market watchdog deemed it necessary to have a Shariah Advisory Board.
Accordingly, the commission has given its formal assent on formation of the Shariah Advisory Board pursuant to Section 9 of the SECP Act, 1997.
The nine members of the board will include prominent Shariah Ulema, a jurist, an accountant and representatives of the commission itself. Each member of the central advisory board will be a qualified individual with in-depth knowledge and experience of Islamic accounting, finance, economics and Shariah law.
Apart from acting as a reference body and adviser to the SECP on Shariah matters, the board will be entrusted with the ascertainment of Islamic law for the purpose of development and promotion of Islamic financial institutions including Shariah-compliant mutual funds, pension funds, Takaful operators among other financial institutions supervised and regulated by the SECP.
Some of the key functions to be performed by board are to validate the products of the institutions and to ensure their compatibility with the Shariah principles, recommend guidelines on the criteria for investment by Islamic capital institutions, advise on reporting and auditing standards, undertake educational activities for understanding of Shariah principles and introduction and implementation of new models and products based on international research.
It is envisaged that the Shariah Advisory Board will play a crucial role in bringing an effective and efficient Shariah governance system, thereby enhancing the credibility of Islamic financial institutions and Islamic capital markets which will ultimately contribute to achievement of the SECP’s fundamental objective i.e. protection of the investors/policyholders’ interests.
The board will also endeavour to foster the growth and development of the Islamic financial market and provide guidelines for devising new products and services.
Published in The Express Tribune, May 9th, 2013.