KARACHI: The State Bank of Pakistan (SBP) is introducing a new Sharia-compliant money market product, to be called Ijara Sukuk, in a bid to tap excess liquidity of commercial banks and money market.
Earlier at the beginning of this month, the finance ministry had announced the launch of Islamic bonds in foreign exchange called Sukuk.
Pervez Said, Advisor to Governor State Bank of Pakistan and Director Islamic Banking Department of SBP, while offering concluding remarks at a seminar on Islamic Banking, organised by the Institute of Cost and Management Accountants of Pakistan (ICMAP), said this would be liquidity management product.
The details and modalities of this new product are being worked out with the consultation of stakeholders.
Mainly this new product would be a mix of leasing-bond business, thus giving more investment opportunities to investors, banks, leasing companies and modarabas, he said.
He disclosed the SBP has granted a licence of Islamic banking to CitiBank while NBP, UBL, ABN AMRO, Metropolitan Bank, Soneri Bank, Prime Bank, Bank of Punjab and Askari Bank are among others at the pre-application stage.
He said five groups including three foreign investor groups were establishing a full-fledged Islamic bank.
He disclosed Muslim Commercial Bank (MCB) and Meezan Bank have requested for four additional Islamic branches each. Khyber Bank has asked for six additional branches while Bank Alfalah has sought permission for a record 10 additional Islamic branches.
He said risk management and corporate governance standards for Islamic banks were being worked out.
Besides, he said, specially designed prudential regulations for Islamic banks were in the pipeline and capital adequacy requirements would be re-determined.
He said the SBP has developed Sharia audit for Islamic banks. He, however, cautioned that no sudden change was possible as the entire system was based on interest-related economic activities and the only way was to make a strategy and move step by step.
Earlier, noted Islamic scholar Dr Imran Usmani delivered a philosophical explanation of Islamic banking based on Quran and Sunnah.
Zia Farooqi, young professional speaking on the occasion, raised several questions about gradual move for Islamisation of economy. He was of the view that complete change was required to get rid of the un-Islamic economy.