Pakistan Regulator Sets Up Sharia Advisory Board

May 9 (Reuters) - Pakistan's securities commission has established a nine-member sharia advisory board to oversee Islamic finance instruments in the world's second most populous Muslim nation, a centralised approach increasingly being adopted elsewhere around the globe.

A country-level approach to regulating Islamic products was pioneered by Malaysia, and in recent months other economies have introduced central sharia boards of their own including Dubai, Oman and Nigeria.


Previously, many countries left sharia boards in individual Islamic banks and financial firms to decide whether their products and activities obeyed religious principles. This approach has been criticised for inviting potential conflicts of interest, and for producing conflicting rulings that confused investors.

Pakistan's regulators are rolling out new rules in an effort to grow Islamic banks' share of the total banking sector to 15 percent by 2017. Islamic banks held 837 billion rupees ($8.50 billion) or 8.6 percent of total banking assets in December last year, central bank data shows.


In September Pakistan's central bank, which already has a sharia board, said it would develop rules to define the roles and responsibilities of sharia scholars.

The sharia board of the securities commission will oversee the application of Islamic finance rules to instruments including mutual funds, pension funds and takaful (Islamic insurance).

The board's membership will include not only experienced scholars but also a jurist, an accountant and a representative from the regulator.

Among the board's duties will be recommending accounting and investment guidelines, as well as undertaking educational activities, the regulator said in a statement on Wednesday.

Last year, the securities commission announced rules for sukuk (Islamic bonds), takaful and Islamic deposits.