Banks and DFIs asked to ensure returns payable to investors and depositors based on Shariah

KARACHI (June 26 2003) : The State Bank has authorised banks and development financial institutions (DFIs) to determine, on their own, the returns payable to investors and other depositors of funds with them.

The SBP also said that banks and DFIs should ensure that returns are paid strictly in accordance with the principles of Shariah (profit and loss accounts) and after they have fully met and provided for all actual and accrued expenses of the related period.

Banks and DFIs will obtain a certificate from their external auditors within five months of the close of their accounting year, for the half year ending June/December each year, and keep it in their record to be inspected by SBP's inspection teams.

Earlier, banks and DFIs had to send their auditor's report to the SBP and now SBP Inspection team will itself visit to check the record.

Islamic banks and Islamic bank branches of existing banks will obtain a certificate from their external auditors on annual basis that the profit distributed among the depositors has been calculated in accordance with the policy approved by their Shariah Board or Shariah Advisor or Committee.

The banks and DFIs will ensure that returns on investment or deposits are declared and paid within 20 days of closing of the half year to which they relate.

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