Islamic Banking Implements AAOIFI Shariah Standards for Enhanced Compliance
Karobar
In a significant move aimed at bolstering the Shariah compliance framework within the Islamic banking sector, several Shariah Standards from the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) have been officially adopted, effective immediately.
The State Bank of Pakistan's (SBP) Islamic Finance Policy department conveyed this development through a circular released today, underlining the commitment to harmonize Shariah practices across the industry.
The adopted AAOIFI Shariah Standards, detailed with immediate effect, encompass a range of critical areas:
| 1 | Standard No. 04 | Settlement of Debts by Set-Off |
| 2 | Standard No. 07 | Hawalah |
| 3 | Standard No. 16 | Commercial Papers |
| 4 | Standard No. 22 | Concession Contracts |
| 5 | Standard No. 48 | Options to Terminate Due to Breach of Trust (Trust-Based Options) |
| 6 | Standard No. 51 | Options to Revoke Contracts Due to Incomplete Performance |
| 7 | Standard No. 52 |
Options to Reconsider (Cooling-Off options, Either-Or Options, and Options to Revoke Due to Non-Payment)
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It's crucial to note that these standards are subject to clarifications and amendments outlined in 'Appendix – A'. Moreover, their implementation is in addition to existing regulations, instructions, and directives periodically issued by the SBP.
The circular explicitly warns that failure to adhere to these instructions may lead to penal action under the relevant provisions of the Banking Companies Ordinance 1962.
