SBP issues guidelines to development financial institutions for Shariah compliant business

SBP issues guidelines to development financial institutions for Shariah compliant business:

The SBP has taken another important step towards expanding the scope of Shariah compliant financial services in the country and has issued guidelines for Development Financial Institutions (DFIs) to start Shariah compliant businesses and operations. Furthermore, in the wake of various developments, such as changes in regulatory and licensing procedures for banks, the SBP has also updated the guidelines for the establishment of Islamic banking institutions introduced in 2004.

The guidelines relate to the establishment of a complete Islamic bank, Islamic banking subsidiaries and Islamic branches of traditional banks. At the same time, they cover a variety of issues, including minimum capital adequacy, conditions for sponsor directors, business plans, Shariah governance, application fees and prerequisites for starting a business.

Details for: https://www.sbp.org.pk/ibd/2020/C4.htm Eligibility Criteria for Principle Approval in Requirements for Traditional Banks and DFIs to Start Shariah Compliant Business and Operations Terms, Shariah Governance, Minimum Capital Terms and Regulations are also covered. At the same time, the responsibilities and requirements of the Head of the Islamic Banking / Finance Division for the separation of the Islamic Banking / Finance Division and its various components and the commencement of operations are also part of these guidelines.

The guidelines are expected to facilitate new entrants to the Islamic banking sector to establish a fully Islamic bank, traditional banking subsidiaries of traditional banks and allow traditional banks and DFIs to start Shariah compliant businesses and operations.