Page 29 - CMA Journal (Mar-Apr 2025)

Exclusive Interview

Recognising the rapid growth of digital financial services, To further reinforce our efforts, we have also placed a
we have also proposed the issuance of a Guidebook for strong emphasis on global collaboration. We have
Digital Islamic Finance. This guidebook aims to serve as a established a joint Research and Development Centre
comprehensive reference for industry participants, with AAOIFI, which is a major step toward aligning our
outlining the regulatory, operational, and regulatory practices with internationally recognised
Shariah-related considerations in developing and standards. In addition, we’re working on joint research
offering digital Islamic financial products. It is intended projects with the Islamic Development Bank Institute
to provide guidance on emerging business models, such (IsDBI) and have initiated collaboration with the Islamic
as mobile wallets, digital investment platforms, and Financial Services Board (IFSB). These international
Islamic fintech applications, thereby encouraging partnerships are instrumental in ensuring that Pakistan’s
responsible innovation in the sector. progress in Islamic finance is recognised and aligned
with global principles and best practices.
Additionally, the Islamic Finance Department of the SECP,
along with the Shariah Advisory Committee of the SECP, Overall, our goal is to create a well-regulated, inclusive,
provides ongoing support and guidance for the and forward-looking Islamic finance ecosystem that
development of technology-driven Islamic financial meets both local needs and international expectations.
solutions. Their input is particularly valuable in structuring However, this is a big task, and therefore there are many
models such as digital P2P financing, ensuring these challenges. This includes, among other things, limited
platforms comply with Shariah principles related to public awareness; a shortage of qualified Shariah
risk-sharing, prohibition of interest (Riba), and ethical scholars and professionals in the non-banking financial
investment. Through deliberations and conducting services industry; regulatory and legal challenges for
Shariah reviews, we try to help bridge the gap between Islamic financial services due to inconsistencies in
innovation and compliance, fostering a trustworthy and financial services laws, taxation laws and other
vibrant Islamic financial ecosystem in Pakistan. administrative legislation; and underdeveloped market
infrastructure for Shariah-compliant products.
ICMA: What challenges do you see in expanding
Islamic finance in Pakistan, and how can they be Additionally, there is often hesitation among
addressed? conventional institutions to transition due to operational
complexities and lack of technical expertise. As
Tariq Naseem: At the SECP, our transformation strategy
mentioned earlier, the absence of dedicated primary law
for promoting Islamic finance across regulated sectors
for Islamic financial services, the structuring of
has been carefully crafted to ensure that it supports
Shariah-compliant financial products for digital
innovation and inclusivity—without causing disruption
financing, especially for micro, nano and agri financing,
to ongoing business activities. Our approach has focused
the prescribing of Islamic accounting, disclosures and
on building an enabling environment where industry
auditing standards and requirements, and the engaging
participants are empowered to transition at a
of all stakeholders for synergising efforts for developing
manageable and sustainable pace.
an inclusive Islamic finance ecosystem in Pakistan are
One of the foundational steps we took was conducting a some identified specific challenges.
“comprehensive diagnostic review of Islamic finance
To address these issues, we advocate for a gradual and
within the non-bank financial sector”. This in-depth
collaborative approach involving capacity building,
assessment, which culminated in a published report in
public education campaigns, regulatory reforms, and
2023, helped us identify key gaps, challenges, and
enhanced industry engagement. Strengthening
opportunities within the system. The findings provided a
partnerships with international Islamic finance bodies
clear understanding of where interventions were most
and local professional institutions, encouraging
needed and laid the groundwork for targeted reforms.
innovation through initiatives like the regulatory
Building on that, we developed a “strategic action plan sandbox, and providing clear guidelines and strategic
for 2024–2026”, with input from a broad range of action plans are also central to creating a robust and
stakeholders, including financial institutions, Shariah inclusive Islamic financial ecosystem in Pakistan.
scholars, and market experts. This plan outlines a
The Editorial Board thanks Mr. Tariq Naseem, FCMA, Head of
time-bound roadmap for enabling Islamic finance across Islamic Finance Department, Securities and Exchange
all regulated sectors. It’s not just a policy document—it’s Commission of Pakistan (SECP) for sparing from his precious
a living strategy that’s currently in implementation, time to give exclusive interview for Chartered Management
guiding institutions on how to adopt Islamic finance Accountant Journal.
models gradually and effectively.

ICMA’s Chartered Management Accountant, Mar-Apr 2025 27