Central bank revises criteria for conversion of conventional banking branches into Islamic

KARACHI: The State Bank of Pakistan amended its requirements on Wednesday for converting conventional banking branches into Islamic banking branches in light of the needs of the sector and recurring problems.

“All conventional banks having Islamic operations or those who intend to start Islamic banking operations shall be eligible to apply for conversion of its existing conventional branches into Islamic,” the SBP said in a circular.

“No licensing fee shall be applicable on the conversion of conventional branches into Islamic,” it added.The updated requirements cover disclosures for account conversions, using digital channels and methods to get customers’ approval for conversions, converting current accounts from conventional to Islamic after using every possible way to get customers’ consent, and more.

The bank will take some steps including the provision of mandatory information and disclosures to the customers. The bank shall inform the general public and account holders about the conversion of its respective conventional branches into Islamic at least three and a half months before the conversion, said the circular.The bank may use a deemed acceptance approach for conversion of current accounts of individuals with the approval of its Sharia board and clearance from the bank’s legal counsel, it said.