State Bank sets rules for Islamic banking
The State Bank of Pakistan (SBP) has developed criteria for the conversion of conventional branches into Islamic banking.
The State Bank of Pakistan (SBP) has developed criteria for the conversion of conventional branches into Islamic banking branches.
According to an SBP press release, only those commercial banks allowed to operate Islamic banking divisions and having received Camels-S rating of ‘fair’ or better in their most recent on-site inspections will be allowed to convert.
Such branches will be allowed to start offering Islamic banking products and services after they secure a Shariah adviser’s certificate and Islamic banking licence from the State Bank.
Banks will also be required to submit a rationale for the conversion, a three-year business plan and an employee training strategy along with an official request for conversion. Additionally, banks have to obtain customers’ consent and inform the public about the conversion at least four weeks before the switch.
Commercial banks have been instructed to contact the Banking Policy and Regulations Department of the central bank with requests for conversions. Institutions will be allowed to implement necessary changes after the central bank’s approval.
The SBP previously issued its branch licensing policy, which covers opening of new Islamic banking branches, counters and windows.
However, it did not cover guidelines for the conversion of conventional branches to Islamic branches.
Published in The Express Tribune , June 26th, 2010.
According to an SBP press release, only those commercial banks allowed to operate Islamic banking divisions and having received Camels-S rating of ‘fair’ or better in their most recent on-site inspections will be allowed to convert.
Such branches will be allowed to start offering Islamic banking products and services after they secure a Shariah adviser’s certificate and Islamic banking licence from the State Bank.
Banks will also be required to submit a rationale for the conversion, a three-year business plan and an employee training strategy along with an official request for conversion. Additionally, banks have to obtain customers’ consent and inform the public about the conversion at least four weeks before the switch.
Commercial banks have been instructed to contact the Banking Policy and Regulations Department of the central bank with requests for conversions. Institutions will be allowed to implement necessary changes after the central bank’s approval.
The SBP previously issued its branch licensing policy, which covers opening of new Islamic banking branches, counters and windows.
However, it did not cover guidelines for the conversion of conventional branches to Islamic branches.
Published in The Express Tribune , June 26th, 2010.