The board, which comprises three religious scholars and a technical member, would advise the Securities and Exchange Commission of Pakistan (SECP) on a range of issues including the operation, auditing and reporting of Islamic mutual funds, pensions and insurance operators.
“It is expected that the new board will be instrumental in harmonizing the sharia-related business, operations and structure of the instruments of the Islamic capital market,” the regulator said in a statement.
A centralized approach to Islamic finance is increasingly being adopted around the globe by regulators, moving away from a self-regulatory approach practiced by Islamic banks to rule on the religious permissibility of their products.
The move also adds to a gradual shift of focus for the industry, from developing bespoke products to facilitating volume transactions which are more cost- and time-effective.
“The guidance and advice of the board will enhance the credibility of Islamic financial institutions and products,” the Securities and Exchange Commission of Pakistan (SECP) said in a statement.
The SECP first announced it would set up a nine-member supervisory board back in 2013, but since then the government has overhauled its efforts to promote the industry.
Oman’s central bank set up a sharia supervisory board last October, with Bahrain and the United Arab Emirates also developing a similar country-level approach to the industry.
In February, the SECP published long-awaited rules for the issuance of sukuk (Islamic bonds) as part of efforts to strengthen governance and broaden their appeal to investors. -Reuters