KARACHI: The State Bank of Pakistan (SBP) announced on Friday the adoption of the Sharia standard issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) to standardise Shariah practices within the Islamic banking industry.

“With a view to further strengthen the Sharia compliance framework and harmonise Sharia practices in the Islamic banking industry, AAOIFI Shariah Standard No 47 (Rules for Calculating Profit in Financial Transactions) has been adopted with immediate effect, subject to clarifications/amendments,” the SBP said in a circular.

The Islamic banking sector experienced significant growth in terms of assets and deposits in FY24. During the year, the SBP adopted 12 additional Sharia standards to strengthen the compliance framework and harmonise Sharia practices in the domestic Islamic banking sector. The SBP is collaborating with the industry and has established a steering committee to provide strategic guidance for converting conventional banks into Islamic banks in line with the 26th Constitutional Amendment bill, which aims to eliminate all forms of ‘riba’ (interest) by January 2028.