KARACHI: The Islamic Financial Services Board (IFSB), the supreme body of Islamic countries to deal with Sharia-compliant banking and financial issues, has started collecting ‘fatwas’ - religious decrees - issued by the Islamic financial institutions of Pakistan and the world.

Conflicting and varied religious decrees issued by the Sharia advisers of Islamic financial institutions are one of the causes of slow growth of Sharia-compliant financial sector.

Harmonisation of fatwas and removal of conflicting issues, raised in different decrees, will help in structuring new financial and banking products, based on Islamic principles, thus generating new business opportunities for the Islamic banking industry.

The different views on particular products hinder or almost stop the launch of new banking products, limiting the business of Islamic banking industry.

The second cause of slow growth is non-compliance of disclosure and auditing requirements of Basel-II.

The non-implementation of the Basel-II by Islamic financial institutions is the main reason of non-recognition of Islamic banks and financial institutions by the financial and corporate regulatory authorities of the western world.

However IFSB, taking bold policy initiatives has decided to settle the issues faced by the Islamic financial institutions.

However, the issues to be covered by IFSB will not include the insurance industry of Pakistan and the Muslim world.

IFSB has also taken upon itself the responsibility to draft guidelines for the Muslim financial institutions.

Another contention is whether the Islamic financial institutions should follow accounting standards set by AAOIFI standards or international accounting standards set by western countries.

The resolution of issue of usage of charity fund, raised through collection of late payment surcharges by Islamic banks will also help in taking steps to make productive use of millions of rupee funds collected under charity fund.

The absence of a guidebook containing the sharia requirements, legal and accounting requirements for the issuance of the Sukuks (Sharia Compliant Bonds) by State Bank of Pakistan or any central bank of the country is also seriously hindering the launch and development of Sukuk Markets in Pakistan and the Muslim world.

Sources said IFSB has started taking serious steps for the implementation of Basel-II and in this regard sought views and recommendation of Islamic financial institutions.

The compilation of the response of the Islamic financial institutions with regard to Basel-II will result in consolidation of the opinions of Islamic financial institutions thus generating a document, which will serve as a guideline for the better and smooth implementation of the Basel-II by the Islamic financial institutions.

Courtesy by “ The News”