Compliance of Islamic Financial Institutions in Pakistan with the Principles of Islamic Commercial Law: An Illusion or Reality (Views of Islamic Law Scholars)

Abstract

Shar¯ı‘ah compliance of Islamic financial institutions is one of the most important aspects of research in these days. In Pakistan, Shariah compliance is made essential for Islamic Banking Institutions (IBIs) by the regulatory body, the State Bank of Pakistan (SBP). To comply with the Shariah's rules and regulations, SBP, therefore, introduced a comprehensive Shariah Governance Framework (SGF) in 2015. It is the duty of Shariah board to ensure that transactions of the IBIs fall under the ambit of Islamic commercial law. This study, primarily, discusses two dimensions regarding the compliance of the IBIs’ business, i.e., whether it is an illusion or reality. Discussion in "Focused Group", an important technique of qualitative research method has been adopted. While following this, data has been collected through one-on-one interviews. A sample size of fourteen (14) Informants (7 Shariah advisors associated with Islamic banks and finance institutions, and 7 Shariah scholars) was drawn; covering, mainly, two major cities of Pakistan i.e., Lahore and Karachi. Moreover, Shariah Advisors have been selected from the Securities and Exchange Commission of Pakistan (SECP) registered list. Shariah scholars, on the other hand, have been taken from recognized educational institutes of HEC. Interview questions, of the present work, are directly related to Shar¯ı‘ah compliance of IBIs in Pakistan. The findings reveal that Islamic banks are Shariah compliant in Pakistan.