KARACHI: The State Bank of Pakistan (SBP) on Monday organised a seminar on ‘Murabaha and Ijara Accounting Standards’ to develop an understanding of accounting treatment of such modes of Islamic transactions.
The participants discussed practical problems faced by them in the implementation of these standards. It was agreed that a committee of the Institute of Chartered Accountants of Pakistan (ICAP) and the SBP would look into respective areas and issue clarifications in due course of time to make the implementation of Islamic Financial Accounting Standards (IFAS-2) possible. It may be mentioned here that the Accounting and Auditing Organisation for Islamic Financial Institution (AAOIFI), a Bahrain-based international body, is developing shariah and accounting standards for Islamic Financial Institutions (IFIs) to harmonise IFI practices throughout the world.
In this regard, the Securities and Exchange Commission of Pakistan (SECP) has notified Islamic Financial Accounting Standards IFAS-1 for Murabaha and IFAS-2 for Ijara, which have been prepared by the ICAP Committee in line with AAOIFI accounting standards, and tailored according to Pakistan’s needs. Murabaha and Ijara financing constitutes almost 45 per cent and 26 per cent respectively of the total financing by Islamic banks in Pakistan as of the quarter ended December 2007.
Speaking on the occasion, Pervez said, SBP Director Islamic Banking Department said that Islamic banking showed a tremendous growth globally and Pakistan is no exception to this phenomenon. The SBP played a pivotal role in developing the Islamic banking in the country, and continues to focus on doing so with very encouraging results, he added.
Ebrahim Sidat, Country Manager, Ford Rhodes Sidat Hyder & Co, who chaired the seminar, said that with the ‘will and determination’ of all stake-holders, Islamic banking would grow further in Pakistan. He was optimistic about the future prospects of the industry.
Other professional bankers and leading professional accountants also delivered lectures on transaction flow and accounting treatment of Murabaha and Ijara during the course of the seminar, which was attended by senior executives/representatives from SECP, Islamic banking industry and SBP.