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PSE delays Rs200bn #sukuk

The Pakistan Energy Sukuk-II (PES-II) has been delayed by 7-10 days. The Power Holding Limited (PHL) is issuing the second issue of the Energy Sukuk to address the liquidity constraints being faced by the country’s power sector. Sources said the delay occurred as the government had to notify certain rules and regulations which could be completed in a couple of days.

First Rs200bn #sukuk issue launched via stock market

Pakistan's state-owned Power Holding announced the 10-year Sharia-compliant sukuk up to Rs200 billion through the Pakistan Stock Exchange. The amount generated from the Pakistan Energy Sukuk-II will also be used for the settlement of partial circular debt related to the power sector. For the first time, ordinary investors have been allowed to participate in buying a government security. The value of each sukuk unit is placed at Rs5,000. The minimum bid size would be 20 units or Rs100,000. In another development, the SECP has relaxed the time for maturity requirement of government Ijara Sukuk for Sharia-complaint money market sub funds of Pension Fund. The SECP has allowed the Sharia-compliant pension funds to invest in government sukuk from three to five years.

Sharia #standards notified

The Securities and Exchange Commission of Pakistan (SECP) has notified seven more Sharia standards of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The general public is kindly asked to give their feedback for the adoption of these standards and bring harmonisation and standardisation in the business practices of Islamic financial institutions.

Spearheading innovation in Islamic banking

In this interview, Zahid Parekh, General Manager of Habib Bank Limited (HBL), speaks about the evolution and future of Islamic banking. In his view, Islamic banking has evolved as a natural phenomenon in Pakistan. HBL's initial focus was to bring in the faith-based customers and as a second step, to target the sceptics through personalised awareness campaigns. These initiatives have made a difference in changing mindsets and expanding the customer base. HBL has a wide banking portfolio and is looking to introduce a new Shariah-compliant mortgage solution in the forthcoming months. HBL has been a frontrunner in FinTech, it established the Innovation and Financial Inclusion Department almost two years ago, with the sole purpose of digitising banking processes. The concept of FinTech is still new in Pakistan, but Parekh believes it will be a game-changer not only for the Islamic banking sector, but for the overall banking sector as well.

Draft Sharia rules for companies notified

The Securi­ties and Exchange Commission of Pakistan (SECP) has notified draft Sharia Governance Regulations 2018. The regulations concern Sharia-compliant companies and entities including the Sharia-compliant securities and Islamic financial institutions. The regulations are the first-ever holistic Sharia governance framework introduced by the corporate sector regulator. Considering the need for an extensive framework, IFD conducted consultation sessions with Sharia advisors, State Bank, Pakistan Stock Exchange, Institute of Chartered Accountants Pakistan, takaful companies, modaraba and NBFI Association. The regulations are now open to public consultation and stakeholders have the opportunity to share their comments and suggestions within two weeks.

Long-term Islamic financing facility launched

The State Bank of Pakistan (SBP) launched the Islamic Long- Term Financing Facility (ILTFF) based on Modaraba for exporters with a maximum limit of Rs1.5 billion. The central bank currently provides the Long Term Financing Facility (LTFF) through conventional banks. The ILTFF will allow exporters an opportunity to avail long-term refinance facility of SBP for purchase of new machinery from eligible Islamic banks. The period of financing under the ILTFF will not exceed more than ten years including a grace period of maximum two years. Islamic banks and Islamic banking branches of conventional banks may also apply to SBP. The allocation is subject to a maximum of 20pc of the limit under LTFF for utilisation under ILTFF. The State Bank’s move would support both the Islamic banking as well as exporters who achieved a positive growth after five years.

Deposits of Islamic banks grow 10pc

The State Bank of #Pakistan (SBP) issued the Islamic Banking Bulletin for April-June. It reveals that deposits of the Islamic banking industry increased by Rs156 billion or 10% quarter-on-quarter to Rs1,720bn. Deposits of the overall banking industry grew 6.5% over the same period. The share of Islamic banks’ deposits in overall banking industry’s deposits increased to 13.7% at the end of June from 13.2% a quarter ago. This growth helped Islamic banks improve their asset base. The share of Islamic banks’ assets in overall banking assets was 11.6pc at the end of June. Investments also improved thanks to sukuk worth Rs71bn that the government issued in June. Net investments of the Islamic banking industry increased Rs48bn or 9.9% in April-June to Rs537bn. SME financing increased to 3.2% and the share of agricultural financing stood at 0.4% at the end of June.

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