Qudsia Bano

Experts lauded the Securities & Exchange Commission of Pakistan’s (SECP) pivotal role in facilitating the issuance of Rs2.25 trillion worth of Ijarah Sukuks since December 2023, stating that it will promote financial inclusion and deepen Pakistan’s Islamic finance sector. They emphasized further regulatory enhancements to sustain long-term growth, reports WealthPK.

This milestone has been achieved through 18 successful auctions, marking a major shift toward Sharia-compliant financial instruments. The initiative stems from the government’s decision to shift the issuance, registration, trading, and settlement of Government Debt Securities (GDS) to capital market institutions (CMIs) for better transparency and efficiency.

The SECP, in collaboration with the Ministry of Finance, the State Bank of Pakistan (SBP), and other financial stakeholders, plays a crucial role in implementing this transition. The move is expected to improve liquidity in the domestic debt market by widening the investor base, increasing secondary market trading volumes, and fostering competition.

Financial expert and former SBP official Dr. Ahsan Raza commended the SECP’s role in expanding the Ijarah Sukuk market, calling it a transformative step. “By integrating Sukuk issuance with the capital markets, the SECP has improved accessibility for a broader range of investors, including banks, mutual funds, and individual investors.

This is a significant advancement for Pakistan’s Islamic finance ecosystem,” he said. However, he cautioned that for sustained success, there must be continuous regulatory refinements to enhance secondary market liquidity and investor confidence. Dr. Syed M. Abdul Rehman, former Shariah Adviser SECP, highlighted the broader economic impact of the initiative.

“Raising Rs2.25 trillion through Ijarah Sukuk shows the increasing demand for Shariah-compliant investment instruments in Pakistan. It also provides the government with a viable alternative to conventional borrowing. However, to maintain momentum, authorities need to ensure transparency in Sukuk structuring and streamline trading mechanisms to attract long-term investors,” he explained.

Experts believe, if properly executed, these developments will support Pakistan’s fiscal stability and position the country as a regional leader in Islamic finance. With continued reforms and regulatory support, the SECP’s initiative could pave the way for a more robust and diversified debt market, benefiting both investors and the broader economy.

Credit: INP-WealthPk