Pakistan is on track to become a global leader in Shariah-compliant financing, according to the Securities and Exchange Commission of Pakistan (SECP) Chairman, Akif Saeed. The country’s regulatory framework in capital markets is aligning with global standards, creating an environment ripe for the growth of Islamic finance. Speaking at a press conference ahead of the second international Islamic Capital Market conference in Karachi on December 12, 2024, Saeed highlighted that Pakistan’s compliance rate with global benchmarks has significantly improved.
An internal assessment by the SECP revealed that Pakistan’s capital markets, including the Pakistan Stock Exchange (PSX), now maintain a 90 percent compliance rate with global regulations. This marks a notable increase from previous assessments in 2015 and 2018, when the compliance rate stood at 86 percent. This progress underscores Pakistan’s commitment to enhancing its Islamic finance sector and positioning itself as a key player in the global Islamic finance industry.
Tariq Naseem, Head of Islamic Finance at the SECP, also shared that the commission plans to evaluate the country’s compliance with the Islamic Financial Services Board (IFSB) principles, which govern Islamic capital markets. According to Naseem, this additional step will help further elevate Pakistan’s profile in the global Islamic finance landscape.
One of the most significant milestones in Pakistan’s Islamic finance sector is the growing share of Shariah-compliant assets across various financial markets. Currently, 55 percent of PSX’s market capitalization, 48 percent of mutual fund assets, 65 percent of voluntary pension fund assets, and 95 percent of real estate investment trusts (REITs) are Shariah-compliant. This highlights the widespread adoption of Islamic finance principles within Pakistan’s financial system.
Moreover, the demand for Shariah-compliant financing has been substantial, with unlisted firms raising Rs 500 billion through Sukuk (Islamic bonds) since 2022. The government has also raised Rs 1.5 trillion through sovereign Sukuks listed on the PSX over the past year. To address challenges in the Shariah-compliant secondary bond market, the SECP is collaborating with the State Bank of Pakistan (SBP) and the Pakistan Banks’ Association (PBA) to introduce measures that will improve market transparency, protect confidentiality, and encourage greater participation from retail investors.
The agriculture, small and medium enterprises (SMEs), and housing sectors are identified as major drivers for the growing demand for Shariah-compliant financing. The Pakistani government is working toward fully transforming its economy to align with Islamic financial principles by 2028. Faisal Bank has already completed its transition to Islamic banking, and other banks and asset management companies are on track to follow suit.
In an effort to position Pakistan as a leader in Islamic finance, the SECP is hosting the second international Islamic Capital Market conference in collaboration with the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the Islamic Development Bank Institute (IsDBI). The event, scheduled for December 12, 2024, will feature over 20 international experts and policymakers from key countries, including Bahrain, Saudi Arabia, Nigeria, Malaysia, Türkiye, Oman, Iran, and the United Kingdom.
As Pakistan continues to advance its Islamic finance sector, it is well-positioned to lead the global shift toward Shariah-compliant financial systems. With strong regulatory support and an increasingly robust Islamic finance market, Pakistan is set to foster inclusive and ethical economic growth, ensuring a positive impact on both local and global financial landscapes.