Tech Desk 
Nov 25, 2024
The State Bank of Pakistan (SBP) updated the terms and conditions of its Shariah Governance Framework (SGF) to facilitate the transformation of the banking system into Islamic banking by 2028.
According to the updated Shariah Guidance Framework (SGF) for Islamic Banking Institutions (IBIs), Shariah board members, including chairpersons and resident scholars, will no longer be permitted to serve on multiple IBIs. This rule will come into effect on January 1, 2028.
SBP revised terms and conditions of SGF
Here are all the revised SGF for IBIs:
Term limitations
Shariah scholars may serve two consecutive three-year terms. A third term will only be possible with SBP’s approval and contingent upon particular conditions.
Board composition
Each IBI must have at least three Shariah board members, including one resident scholar.
Engage qualified scholars
IBIs are directed to appoint famous and highly qualified Shariah scholars with substantial experience at both local and international levels to serve.
Application
It's worth noting that the updated SGF applies to all IBIs, including established Islamic banks, subsidiaries, and Islamic banking divisions of conventional banks.
Defined responsibilities
The framework highlighted the responsibilities of various IBI functions, including the board of directors, executive management, Shariah board, product development teams, and auditors.
Currently, Pakistan comprises six full-fledged Islamic banks and 16 Islamic banking divisions within conventional banks. A few conventional banks are in the process of converting to Islamic banking, following the Federal Shariah court’s directives.
The revised SGF aims to reinforce Shariah compliance practices across the Islamic banking industry in Pakistan and align with international standards. SBP had previously revised the framework in 2015 and 2018.
