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Pakistan's government seeks the International Monetary Fund's (IMF's) nod for issuance of fresh Sukuks worth Rs 200 billion. IMF's Review Mission is expected to reach Islamabad on November 28, 2019 to evaluate implementation on targets agreed by the Government of Pakistan for $ 6 billion facility. Minister for Power and Petroleum, Omar Ayub Khan last month stated that expensive power sector loans are being replaced with Sukuk which will lessen the financial impact on the economy. Pakistan's circular debt is about Rs 1.6 trillion and the new sukuk is meant to reduce the stock of this historic circular debt. The issue of sovereign guarantee for fresh Sukuks of Rs 200 billion has been raised with the State Bank of Pakistan. Meezan Bank, Faysal Bank, Bank Islami Pakistan, Dubai Islamic Bank Pakistan, MCD Islamic Bank and Al Baraka Bank Pakistan are the mandated lead arrangers.

Pakistan's central bank has updated guidance on sharia governance for Islamic finance institutions. The goal is to expand the scope of external audits to help mitigate conflicts of interest and increase transparency. Those religious scholars who are members of an Islamic bank's sharia board are now barred from serving in any external audit firm. From now on, external sharia audits will have to cover pool-management practices and technology systems. This includes the way Islamic banks calculate distribution of profit and loss to depositors, the tracking of assets, and the allocation of income and expenses. The move is designed to separate the verification of profit and loss distribution between the banks and the external auditors, in contrast to the joint verification that was allowed under earlier guidance.

Islamic banking is growing fast in predominantly Muslim Pakistan, thanks to the growing popularity of its Sharia compliant structure and a helping hand from the government of Prime Minister Nawaz Sharif. According to the State Bank of Pakistan most of Pakistan's conventional banks have now opened Sharia-compliant branches and many are working on full conversion to Islamic banking, which is growing at an annual rate double that of the country's Western-style banking sector. Pakistan's 250 million people are served by 22 local and foreign banks, five of which are Islamic. With a few exceptions almost all local and foreign conventional banks also offer Islamic financing services.

The State Bank of Pakistan (SBP) has introduced three-year Fixed Rental Rate Government of Pakistan (GOP) Ijara Sukuk (FRR-GIS). Presently, Variable Rental Rate GOP Ijara Sukuk (VRR-GIS) is being auctioned and its rental rate is being fixed every three months on the basis of Market Treasury Bills' cut-off yield. However, on the request of Islamic Banking Industry, SBP has decided to launch Fixed Rental Rate GOP Ijara Sukuk for market development. The rental rate decided in the auction will be applicable to the entire tenor of FRR-GIS and will be paid to FRR-GIS holders on semi-annual basis. Minimum bid size will be Rs 100,000 and in multiples thereof. Rental rate (% p.a.) has to be specified up to a maximum of two decimals points.

The State Bank of Pakistan (SBP) rejected request of Jehangir Siddiqui and Company Limited (JSCL) to review its decision to disallow Dubai Bank to sell out its shares to its sponsor shareholders of BankIslami. JSCL approached the central bank in September 2015 to submit an application to the central bank with suggestions in order to getting additional shares in BankIslami. However, the central bank retained its decision and disallowed the management of BankIslami to sell its stakes of Dubai Bank to JSCL in pursuant to Founding Shareholding Agreement under which sponsor shareholders are not allowed to increase its shareholding. Earlier in August 2015, a consortium led by Ali Hussain of JSCL and Alkaram Group offered Dubai Bank to purchase its 144.200 million in the BankIslami.

The deputy governor of the State Bank of Pakistan has announced that the bank is setting up a Shariah-compliant open market to manage liquidity of the Islamic banking sector. Deputy Governor, Saeed Ahmed's announcement came on Wednesday as he addressed the global forum on Islamic economics, banking and finance arranged by the University of Management and Technology's Institute of Islamic Banking and Finance. In his speech, he reiterated his bank's commitment to promoting and developing the Islamic banking in Pakistan. The existing banking laws are being amended and soon this process will be finalised, he said. Those who too addressed the forum were Islamic finance scholars Mufti Muhammad Taqi Usmani, Justice Khalil-ur-Rehma, among others.

More than 1200 distinguished guests from more than 45 countries and 300 organizations participating this December, Bahrain

Key players from the global Islamic finance industry will be participating with the 22nd annual World Islamic Banking Conference (WIBC) 2015, taking place on the 1st, 2nd and 3rd of December at the Gulf Hotel, Bahrain. Focusing on 'New Realities, New Opportunities', WIBC will play host to more than 1200 leaders including Central bank governors, regulators, C-suite bankers & asset managers, policy makers, Fintech entrepreneurs and contemporary thought leaders.
WIBC 2015 will host 5 central bank Governors and deputy governors and feature speeches and discussions by the Governor of the Central Bank of Bahrain, H.E. Rasheed Al Maraj, the Executive President of the Central Bank of Oman, H.E. Hamood Sangour Al Zadjali, Deputy Governor of the State Bank of Pakistan, Riaz Riazuddin and the Deputy Governor of the National Bank of Kazakhstan, Nurlan Kussainov.

In order to remove any ambiguity and doubt among the general public, the State Bank of Pakistan (SBP) has reiterated its commitment for promotion and development of Islamic banking in Pakistan.
Due to persistent efforts of SBP and the federal government, the share of Islamic banking in total deposits of the banking industry has surged to 12.8% as of June 30, 2015 and is consistently growing with a cumulative average growth rate of over 50% during the past 12 years. To-date, 5 full fledge Islamic banks, one Islamic banking subsidiary and 17 banks with dedicated Islamic banking branches are operating in the country with over 1,700 branches spread all over the country.

The International Monetary Fund (IMF) has welcomed the progress made by the State Bank of Pakistan (SBP) with respect to the capitalisation of the banking sector. In the eighth review of Pakistan’s economic performance under a 36-month loan programme of about $6.6 billion, the IMF said the SBP should continue its efforts to bring a number of small banks into compliance with statutory requirements. After the recapitalisation through a rights issue in the only capital adequacy ratio (CAR)-non-compliant bank in July, it noted with satisfaction that all Pakistani banks have now become CAR-compliant. However, five small banks are still operating below the Rs10 billion minimum paid-up capital requirement (MCR).

The State Bank of Pakistan (SBP) has issued ‘Certificate of commencement of banking business’ to MCB Islamic Bank Limited, a wholly-owned subsidiary of MCB Bank. As of June 30, Islamic banking business of MCB was operating with a network of 34 branches having an asset base of Rs21.015 billion. The MCB’s Islamic banking business posted a net profit of Rs408.228 million for the half-year ended June 30, 2015. To augment the existing growth momentum, SBP has prepared the “Strategic Plan for the Islamic Banking Industry of Pakistan 2014–2018”. The plan focuses on initiatives necessary to raise awareness and knowledge about Islamic banking.

The State Bank of Pakistan (SBP) held a signing ceremony for Financial Innovation Challenge Fund (FICF) on promoting excellence in Islamic finance in Pakistan under its financial inclusion programme funded by the UK’s Department for International Development (DFID). The signing ceremony marks the beginning of the implementation phase of the FICF innovative Islamic finance education and research projects in partnership with higher education institutions which was earlier launched by Finance Minister Ishaq Dar on January 9, 2015. At the ceremony, three projects were signed with Institute of Business Administration (IBA), Lahore University of Management Sciences (LUMS) and Institute of Management Sciences (IM Sciences).

The State Bank of Pakistan has given a Rs20-billion concessionary loan, including Rs5 billion at an incredibly low rate of 0.01%, to BankIslami to meet capital requirements following the amalgamation of KASB Bank into it. It has highlighted transparency issues pertaining to the BankIslami and KASB Bank amalgamation, as the central bank did not extend the facility through competitive bidding.In protest against the move, a minority shareholder of KASB Bank has lodged a complaint with the National Accountability Bureau (NAB). The complainant, Shaheena Wajid Mirza, requested the anti-corruption watchdog to investigate the SBP governor and other officials of the central bank and Ministry of Finance for alleged corrupt practices and misuse of authority.

The Lahore High Court (LHC) on Thursday issued notices to the Ministry of Finance, State Bank of Pakistan (SBP), the Securities and Exchange Commission of Pakistan (SECP) and others on the petition of a shareholder against amalgamation of KASB Bank with BankIslami. The petitioner, First Capital Equities Limited, who owned approximately 94,000,000 shares worth approximately Rs 210 million in the KASB Bank, moved the court against SBP’s moratorium and amalgamation of the bank with BankIslami. The petitioner maintained that its fully paid-up shares in the bank were unlawfully cancelled and extinguished due to the merger without its consent and opportunity of hearing.

The Security and Exchange Commission of Pakistan (SECP) has asked the State Bank of Pakistan (SBP) to review the deal to merge KASB Bank and BankIslami, which cost millions of rupees to the equity investors. Sources said that SECP Chairman Zafar Hijazi wrote a letter to SBP Governor Ashraf Mehmood Wathra, urging him give compensation to equity traders who faced losses as a result of the amalgamation of BankIslami with KASB Bank. The value of KASB Bank’s shares became zero after the amalgamation process – as the shares now stand cancelled and retired – and there was no protection to investors’ money, mainly that of shareholders.

In an opening ceremony Finance Minister Ishaq Dar expressed his pleasure to the State Bank of Pakistan which has been supportive to such initiatives like the Centre of Excellence in Islamic Finance Education (CEIFE) which strengthens the efforts to increase Islamic banking and finance.
The Islamic finance industry had reached US$ 1.8 trillion in the last 40 years according to SBP Governor Ashraf Mahmood Wathra. According to experts, the Shariah compliant assets globally are expected to grow up to 20% annually and financial assets will probably reach US$5 trillion by 2020. Pakistan, by the end of 2018, would have reached an overall share of Islamic Banking of 15%, currently 10%.

The State Bank of Pakistan has added to its Islamic finance push with the hire of a well known market specialist. Yavar Moini, the former head of Islamic finance at Morgan Stanley, has joined SBP as a director in Islamic banking.

State Bank of Pakistan’s (SBP) five-year strategic plan will drive strong asset growth in the Islamic finance sector, given the high domestic demand for Islamic banking. SBP’s plan targets a 15 per cent share of banking system assets for the sector by 2018, up from around 10 per cent as of December 2013. The National Bank of Pakistan will convert around 6 per cent of conventional branches into Islamic-banking branches over the next two years. Although the sector is expanding rapidly, the Islamic operations of the top five banks — National Bank of Pakistan, Habib Bank, MCB Bank, Allied Bank, and United Bank are small and currently account for less than 2 per cent of their assets on average. Moreover, rapid growth in the sector is likely to weaken asset quality.

Deputy Governor, State Bank of Pakistan, Saeed Ahmed has said that the SBP has evolved a comprehensive five-year strategy to promote Islamic mode of banking in the country. The SBP would strive to get 20 percent market share during this period which is 10 percent at the moment, he added. Moreover, the SBP is in regular contact with the Institution of Business Administration (IBA) in Karachi for the establishment of Centre of Excellence on Islamic Banking. He said as soon as the first centre will be established, three more such centres would also be established in Lahore, Islamabad and Karachi respectively. Besides, a lot of attention is focused on solutions, which are not far from the Islamic financing where system allows fairness of return, sharing of risk and reducing income inequalities.

The State Bank of Pakistan (SBP) has allowed MCB Bank to commence due diligence of Burj Bank Limited for proposed acquisition of its 55 percent share. The management of MCB Bank disclosed to its shareholders that the central bank has given an approval to the bank for conducting a detailed due diligence of the bank to invest in new and existing shares along with additional investment by Islamic Corporation for Development of Private Sector. MCB Bank is conducting due diligence of Burj Bank Limited from March 18, 2014. Burj Bank is operating with 75 branches countrywide, but it is facing some financial complications and failed to meet SBP's minimum capital requirement of Rs 10 billion by end-2013.

Islamic banking industry in Pakistan has been growing at a fast pace ever since its re-launch in 2002 and now represents over 12 percent of overall banking industry with 19 Islamic banking institutions offering Islamic banking products and services through a network of over 1300 branches across the country. The State Bank pf Pakistan (SBP) has announced a five-year strategic plan for the Islamic Banking Industry (IBI) aimed to provide a roadmap to the industry for the next level of development. Moreover, SBP has decided to strictly monitor the performance of the Islamic Banking industry in order to ensure that they are operating according to Sharia. Besides, SBP is working on its major role to ensure the participation of every citizen in the financial system, through its Financial Inclusion Policy.