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The State Bank of Pakistan (SBP) has issued the auction calendar for issuance of Rs225 billion sovereign Sukuk based on Ijarah. Pre-auction target is set at Rs75 billion for April, while similar amounts are set for May and June 2020. The latest issuance is the part of Rs700 billion worth Ijara Sukuk. The federal cabinet approved the launching of this bond early this month. The bond would help mobilise excessive funds available with Islamic banks and help the government to diversify its debt. Last week, the World Bank said the economic output was expected to contract sharply in Q4FY20, bringing overall FY20 growth to negative 1.3%.

The State Bank of Pakistan (SBP) announced the auction for three-year Ijara Sukuk to raise some Rs 225 billion for the federal government. Recently, the federal cabinet approved the issuance of a five-year Ijara Sukuk to generate some Rs700 billion to meet the rising financial requirements for combating COVID-19. Three tenders will be conducted for the sale of the Rs 225 billion sukuk. The first auction will be held on April 16, 2020 for Rs 75 billion, the second on May 16 for Rs 75 billion and the third is scheduled for June 18, 2020 for Rs 75 billion. Pakistan has been issuing Sukuk since 2008 to provide liquidity to the domestic Islamic industry; however, demand for such instruments far surpasses their supply.

The federal government of Pakistan has decided to initiate a comprehensive plan for the promotion of Islamic banking in the country. The National Assembly Standing Committee on Finance chaired by Asad Umar announced that the State Bank of Pakistan was in the process of formulating a seven-year plan and a comprehensive framework in this regard will be introduced within two months. The SBP officials gave a briefing to the committee about the Eradication of Riba Act, 2019. The chairman advised the standing committee on finance to expedite the work on the bill and constituted a sub-committee, headed by MNA Raza Nasrullah.

The State Bank of #Pakistan issued an updated Islamic financing facility for the renewable energy projects. The financing under Islamic Financing Facility for Renewable Energy (IFRE) is now available to the customers under three categories. Under the first category, the prospective sponsors are setting up power projects with a capacity ranging from more than 1MW and up to 50MW for their own use, or sell electricity to the national grid or combination of both. The State Bank of Pakistan will make Mudarabah investment in general pool of Participating Islamic Financial Institutions (PIFIs) under IFRE. IFRE shall be effective immediately and financing shall be available for projects up-to June 30, 2022.

The Pakistani government is mulling a dedicated division at the finance ministry to deal with Islamic finance. The Prime Minister's Finance adviser, Miftah Ismail said the committee would be set up for the promotion of Islamic banking in Pakistan. He also said that the country is set to achieve a six percent economic growth in the current fiscal year. Deputy Governor Jameel Ahmad at State Bank of Pakistan (SBP) said Islamic finance industry needs to expand its product menu with special focus to reach out to the unserved sectors and regions. Ahmad said development of all components of Islamic finance industry is imperative to achieve inclusive economic development.

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.

State Bank of Pakistan has been voted as the Best Central Bank in Promoting Islamic Finance by a poll conducted by International Finance News (IFN). The central bank has also won this award in 2015. In 2016, Pakistan was awarded Global Islamic Finance Award (Advocacy Award) by Edbiz Consulting Limited, UK. This recognizes the dedication and commitment of State Bank of Pakistan for laying the foundations for the sustainable growth of Islamic finance. In September 2017, the share of Islamic banking stood at 11.9% in terms of assets, while in terms of deposits its share is 13.7% with a network of 2,368 branches across the country.

#Pakistan's National Accountability Bureau (NAB) initiated an inquiry into the alleged misuse of authority by SBP officials at the amalgamation of KASB Bank into BankIslami. According to the State Bank of Pakistan (SBP), a smear campaign was run in the media against them. SBP added that the onesided views presented in the media led to misjudgment about the authority of SBP as a guardian of the financial sector. All stakeholders of the defunct KASB Bank were well aware of the poor financial conditions of the bank. The State Bank gave ample time to the sponsors of KASB Bank to inject further capital into the bank. Besides capital shortfall, the bank and its sponsors engaged in fraudulent practices and were siphoning off more than Rs 3 billion from the bank. SBP stated that none of its officials misused authority nor were involved in any kind of corrupt practices.

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.

The International Monetary Fund (IMF) has released its guidelines for the Islamic finance sector. The guidelines noted the need to develop a policy framework in the countries where Islamic banking has become systemically important. While accounting for a small share of global financial assets, Islamic banking has established a presence in more than 60 countries and has become systemically important in 14 jurisdictions.
Although Pakistan finished the IMF loan programme last year, there are still numerous reforms that need to be undertaken. In recent years, the State Bank of Pakistan (SBP) has made efforts for the promotion of Islamic banking, but no real effort has been made by the private sector and the government. The growth of Islamic banking poses new challenges and risks for regulatory and supervisory authorities. The IMF has proposed support for developing and providing policy advice on Islamic banking-related issues in the context of fund surveillance, programme design, and capacity development activities.

The State Bank of #Pakistan (SBP) has announced a reduction in Statutory Liquidity Requirement (SLR) for Islamic banks and Islamic banking branches by 5% to fix at 14%. Presently, some Rs 570 billion of Islamic banking industry has been placed under the SLR with SBP. This amount includes some Rs 308 billion of Sukuk and Rs 225 billion of Bai-Muajjal. With the maturity of Rs 255 billion Bai-Muajjal, the amount will reach Rs 345 billion, therefore SBP has decided to cut the SLR and fix it at 14%. Time Liabilities, including Time Deposits with a tenor of 1 year and above, will not require any SLR. According to Islamic banking representatives, with the maturity of Rs 225 billion Bai-Muajjal, surplus liquidity of Islamic banking industry will surge to some Rs 400 billion, while there are no more investment opportunities for the Islamic banks in Pakistan.

The State Bank of #Pakistan (SBP) is pursuing a three-pronged strategy to achieve the goal of 50% financial inclusion by the year 2020. According to Saeed Ahmed, deputy governor of the central bank, twenty million households need microfinance in Pakistan. The forum, organised by Shamrock Conferences International was held to strive for the expansion of financial services. Dr Mohammad Amjad Saqib, chairman of Akhuwat Foundation, delivered the keynote address and stressed the importance of microfinance. Speakers agreed that the microfinance specialists must create a sustainable model by offering competitive microfinance products, reducing costs and expanding their outreach.

Senior Vice President of State bank of Pakistan (SBP) was gunned down in the area of Gulistan –e- Johar, within the jurisdiction of Shariah Faisal police. Superintendent Police (SP) Gulshan Doctor Fahad Ahmad said that Muhammad Sadiq Siddiqui was going to a bakery when two alleged dacoits attempted to snatch his vehicle. On resistance, dacoits opened fire on him. As a result, he sustained serious injuries and died, while dacoits managed to escape from the scene with car.

The State Bank of Pakistan (SBP) announced exemption from KIBOR as benchmark rate for Participatory (Musharika & Modaraba) and Wakalah-based products. For this exemption Islamic Banking Institutions (IBIs) will be required to ensure some conditions. IBIs will take adequate measures to mitigate equity investment risk in participatory mode based products. In addition, for Modaraba and Musharika based products, IBIs will ensure compliance with minimum Shariah requirements and AAOIFI Shariah Standard No 12 and No 13 as adopted by the SBP. For Wakalah-based products, IBIs will be required to use Arabic version of AAOIFI Shariah Standard No 23 on Agency as guideline in consultation with their Shariah Board.

State Bank of Pakistan Deputy Governor Saeed Ahmed said that there is a dire need to create awareness to promote Islamic banking. According to the Global Islamic Finance Report (GIFR) 2016, Pakistan ranks ninth in terms of development of Islamic financial services industry. However, there is still a capacity of 40 million more people in the banking market that the Islamic finance sector can explore. In June the State Bank of Pakistan (SBP) noted that the Islamic banking industry had witnessed a growth of 7.4% in April to June quarter. Its assets reached Rs 1,745 billion while its deposits also increased by 9.3%. This shows a market capitalisation of 13.2%. There is still room to grow and the Islamic financing institutions can increase their operations and market shares.

Al Baraka Bank has finished due diligence for the proposed merger of Burj Bank. Abid Qamar, chief spokesman at the State Bank of Pakistan (SBP), said Al Baraka was given permission for due diligence of Burj Bank and they have completed the process. Summit Bank and Bank of Khyber were also interested in Burj Bank, but they did not carry out any due diligence process. The deal is expected to be completed within next three months, but the complete integration of both entities would take six to eight months. The potential deal would be a part of the significant efforts, currently being made by the SBP, to fix the problem of the small banks that fell below the minimum capital adequacy ratio requirement and minimum paid-up capital requirement.

A 2% tax cut announced for all Shariah-compliant companies is bound to give a big boost to Islamic Banking in Pakistan. The government has introduced the 2% rebate for Shariah-compliant companies through the Finance Act 2016. The Finance Act also covers the entire national budget for the fiscal year 2017. The latest decision to expand the programme followed a report by the State Bank of Pakistan (SBP), which confirmed a continuing spread of the Islamic banking system in the country. Islamic banks currently have a 13% share of the conventional banking in Pakistan.

Until now, rules and procedures Islamic Banking Institutions (IBIs) in Pakistan have been following were too general and occasionally not sufficiently specific. In fact, they were not much different from the conventional banking in terms of rate of return on deposits. However, on 19th November a landmark was set by the issuance of detailed instructions by the State Bank.

The instructions will serve to improve transparency and disclosures and bring standardisation in the IBIs' profit and loss distribution policies and practices. As the instructions determine, each pool of deposits established by IBIs would play the role of a virtual enterprise. It will have explicitly demarcated sources of funds, ownership of specific assets and income and expenses.

Turkey is well on its way to become the next hub for Islamic banking and finance. It only needs its government to show its commitment to Islamic finance so that other participants in the industry join Turkey in building a vibrant Islamic banking and finance industry. The recent successful $1.5 billion sovereign Sukuk issue denominated in dollar as well as the lira-denominated $900 million sovereign Sukuk have lead the county's way to the global platform of Islamic banking and finance. Since Pakistan has the most Shariah authentic model of Islamic banking, a Turkey-Pakistan alliance will contribute to the promotion of Islamic banking in Turkey, and, furthermore, it is expected to bring a new juristic approach to product development and structuring.

Read more on: http://tribune.com.pk/story/451643/rising-partner-a-turkey-pakistan-alli...

The Deputy Governor of State Bank of Pakistan (SBP) - Kazi Abdul Muktadir - announced that the bank is working on a new five-year (2013-17) strategic plan for Islamic banking industry. This plan shall define an overall direction for the Islamic banking industry. According to Mr. Muktadir, an increase in Islamic finance's share in the banking system is very likely and can reach up to 15% in the five years to follow.