Islamabad: The Securities and Exchange Commission of Pakistan (SECP) has officially adopted additional Shariah Standards from the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). These standards are aimed at improving governance and ethical practices within the country’s Islamic financial sector.
According to Securities and Exchange Commission of Pakistan, the newly adopted standards, specifically numbers 21, 27, 30, 44, 45, 46, and 53, are part of a broader initiative to align local Islamic financial practices with global benchmarks. These standards, introduced through SRO 729 (I)/2024, are to be implemented on a “comply and explain” basis by Islamic financial institutions under SECP’s oversight.
This move follows SECP’s earlier enforcement of mandatory compliance with seven other AAOIFI standards and its adoption of numerous Shariah, Governance, and Ethics Standards as non-binding guidelines. The phased adoption of these standards supports Pakistan’s objective to transition to an interest-free economy by 2027, following directives from the Federal Shariat Court regarding the elimination of Riba (interest).
The process of adopting these standards included a thorough consultative phase with stakeholders to assess the readiness and feedback of the Islamic financial sector. This initiative is expected to bolster the quality and transparency of financial services, ensuring better compliance and enhancing stakeholder confidence in the regulated sectors.
Additionally, the SECP has established a committee under Section 11 of the SECP Act, 1997, tasked with preparing further recommendations for the adoption of Islamic financial accounting and auditing standards, in continuation of its efforts to refine the regulatory framework for Islamic finance.