All Islamic Banks / Islamic Banking Branches

Outright Purchase and Sale of GOP Ijara Sukuk (GIS) by Government of Pakistan (GOP)

In order to facilitate Islamic Banking industry in their liquidity management, it has been decided that GOP may outright purchase GIS on deferred payment basis (Bai-Muajjal) and sell these GIS on ready payment basis through uniform price based competitive bidding auction process. These transactions will be executed as per the approval of the SBP Shariah Board.

Following transaction modalities will be adopted:

1. Only Islamic banks and Islamic banking branches will be eligible to participate in these auctions.
   
   
2. Notice for auction will be issued by SBP through Reuters/Bloomberg one day prior to the auction date.
   
   
3. To participate in the auctions all eligible participants will place their sealed bids as per required format, in a Tender Box (kept on the reception counter of Domestic Market & Monetary Management Department, 4 th Floor) up to the time mentioned in Auction Tender notice detailing face value of security and deferred price (in case of Bai-Muajjal as per Annexure-C) or price (in case of ready payment basis as per Annexure-D). Price should include accrued profit and can be quoted up to two decimal places. Minimum bid size will be Rs. 25 million and its multiple thereof.
   
   
4. GOP will decide the cut off price and reserves the right to reject all or any of the bids without assigning any reason.
   
   
5. If the deferred payment date falls on public/bank scheduled or un-scheduled holidays, then the contracts will be extended to the next business day and there will be no change in deferred payment price.
   
   
6. GOP will have the discretion to accept the bids on a ‘pro-rata volume’ basis as par rules stipulated in DMMD Circular No. 02 of 2007 dated September 29, 2007.
   
   
7. The auction result will be announced by SBP through Reuters/Bloomberg on the same date.
   
   
8. Successful bidders will send a contract to SBP BSC for confirmation and settlement. (Annexure -E for Bai-Muajjal & Annexure-F for ready transaction).
   
   
9. In case of purchase of GIS on deferred payment basis by GOP, the GIS will be transferred from SGLA of successful bidder to the SGLA of the GOP on settlement date, while payment will be made on deferred payment date. The deal cannot be terminated before the deferred payment date. In case of Sale of GIS on deferred payment basis to GOP, banks cannot include the GIS in their SLR calculations from the settlement date. However, the outstanding obligation of Government of Pakistan towards banks (deferred payment amount) will be a SLR eligible security as per the Gazette notification of Government of Pakistan dated 21 Oct 2015.
   
   
10. In case of sale of GIS on ready payment basis by GOP, the GIS will be transferred to the SGLA of the successful bidder on the settlement date against payment on the same settlement date. These GIS can be included in SLR calculation by successful bidders.