KARACHI: The State Bank of Pakistan has developed guidelines to assist banks in creating their conversion strategy from conventional to Islamic, a circular said on Friday.
“In pursuance of the SBP’s Vision 2028 and to facilitate banks in their conversion from conventional to Islamic, the SBP has developed broad guiding parameters which will help banks
to devise their own conversion plans,” the central bank said in the circular.
As a result, when creating their conversion plans, banks may take into account the following general factors: vision and strategy; governance structure; internal milestones for the conversion of assets, deposits, financing, investments, syndicated transactions, and non-funded portfolio and branches, etc.
The SBP has also mandated parameters for the banks’ conversion plans, including gap analysis on policies, products and services, infrastructure requirements, human resources, identification of issues/challenges, prospective areas to work on to achieve aim of conversion, etc.
The SBP’s Vision 2028, in line with the Federal Shariat Court’s decision, envisions transforming the conventional banking system into a Sharia-compliant banking system.It has also laid out a detailed plan for the transformation, developed in consultation with all stakeholders.
The key challenges to the transformation include: conversion of government debt into Sharia-compliant financing; simplification of Sharia-compliant financing products; and training and capacity building of the industry. The SBP is collaborating with the industry, Sharia scholars and the federal government to resolve these issues and challenges.
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