The State Bank of Pakistan (SBP) has adopted Shariah Standard No. 30 on Monetization (Tawarruq), issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), to strengthen Shariah compliance and improve consistency across Pakistan’s Islamic banking sector.
According to an SBP notice, the standard takes immediate effect, subject to the clarifications and amendments specified in Appendix A. The move aims to bring Islamic banking practices into closer alignment with established Shariah standards.
The central bank has also issued guidelines on applying the principle of Ḥajah (need) to Tawarruq-based transactions. These guidelines are included in Annexure I and supplement existing SBP regulations, instructions and directives.
The SBP has warned that banks failing to comply with the new instructions may face penalties under the relevant provisions of the Banking Companies Ordinance, 1962. The requirements are intended to reinforce regulatory oversight and ensure that Islamic banking transactions follow the prescribed Shariah framework.
