KARACHI, March 24: The State Bank of Pakistan, with the help of Institute of Chartered Accountants of Pakistan (ICAP), would make the implementation of Islamic Financial Accounting Standards (IFAS-2) possible to develop Islamic banking in the country.

The central bank on Monday organised a seminar on ‘Murabaha & Ijara Accounting Standards’ to develop an understanding of accounting treatment of such modes of Islamic transactions.

The forum provided an opportunity to participants to discuss the practical problems faced by them in the implementation of these standards.

It was agreed by the participants that the ICAP committee and the SBP would look into respective areas and clarifications issued in due course of time to make the implementation of Islamic Financial Accounting Standards (IFAS-2) possible.

The Accounting and Auditing Organisation for Islamic Financial Institution (AAOIFI), a Bahrain-based international body, is developing the Shariah and Accounting Standards for Islamic Financial Institutions (IFIs) to harmonise the IFIs practices throughout the world.

Securities and Exchange Commission of Pakistan (SECP) has notified Islamic Financial Accounting Standards IFAS-1 for Murabaha and IFAS-2 for Ijara, which have been prepared by ICAP Committee in line with AAOIFI Accounting Standards and tailored according to Pakistan’s needs.

Murabaha and Ijara financings constitute almost 45 and 26 per cent, respectively, of the total financing by the Islamic banks as of the quarter ending December 2007 in Pakistan.

SBP Director (Islamic Banking Department) Pervez Said stated that Islamic banking had shown a tremendous growth globally and Pakistan was no exception to this phenomenon.

The SBP had played a pivotal role in developing Islamic banking and continued to focus on doing so with very encouraging results, he added.

Ebrahim Sidat, Country Manager, Ford Rhodes Sidat Hyder & Co, who chaired the seminar, said with the ‘will and determination’ of all stake-holders, Islamic banking would grow further in Pakistan. He was optimistic about the future prospects of the industry.

Other professional bankers and leading professional accountants also delivered lectures on transaction flow and accounting treatment of Murabaha and Ijara.

Senior executives and representatives from the Securities and Exchange Commission of Pakistan, Islamic banking industry and the SBP attended the seminar.