State Bank of Pakistan advises Islamic banks to update profit sharing ratios

State Bank of Pakistan advises Islamic banks to update profit sharing ratios

The State Bank of Pakistan has advised all Institutions offering Islamic Banking to make sure that relevant weightages and ratios are updated regularly, before start of the period concerned, keeping in view the minimum standards that include weightages and profit sharing ratios must be made available to all constituents before beginning of the period concerned.

According to Chief Spokesman of SBP Syed Waseemuddin the weightages and Profit sharing ratios are used by Banks to calculate distribution of profit as per the requirements of Shariah covering Islamic Banking. It had been observed that only few Institutions offering Islamic Banking are regularly updating weightages and profit sharing ratios, before beginning of the period concerned, on their websites, which is not an encouraging situation. The weightages and Profit sharing ratios must be available on website.

The statement declaring weightages and Profit sharing ratios must at the minimum contain date of declaration, period for which they remain effective, all categories, pools and bank’s equity share and their weighatage, types, sizes, tiers of accounts and actual rates paid during the preceding period. The Statement of weightages and Profit sharing ratios must be prominently displayed in all Islamic Banking Branches.

All Islamic Banking Institutions are advised to update the weightages and profit sharing ratios on their websites within 7 days form issuance of instructions. Meanwhile in view of the difficulties faced by banks and DFIs in collection of data on the subject of minimum capital requirements, implementation of Basel II the State Bank of Pakistan has decided to allow a relaxation of 15 days in the 30 days deadline for submission of the capital adequacy reports as required through circular No. 2 of March 26, 2007 for the forthcoming two quarters.

The banks DFIs will submit the Basel II based quarterly statements on calculation of their capital adequacy ratios, consolidated as well as on standalone basis, on the prescribed formats within 45 days from the end of the quarters ending 31 December 2007 and 31 March 2008 only. From the quarters ending June 30, 2008 and onward, the banks and DFIs shall continue to follow the timeline as communicated under the above referred circular. They are further advised to streamline their process for timely submission of the reports on calculation of capital adequacy ratios.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s