The Presidents/CEOs
Islamic Banks/Heads of
Banks having Islamic Banking Branches

Dear Sirs

ISLAMIC FINANCIAL ACCOUNTING STANDARD-1 MURABAHA

Please refer to SRO No 865(I)/2005 dated August 24, 2005 issued by SECP on captioned subject, in terms of which Islamic Financial Institutions were required to disclose Murabaha transactions at amortized cost. Moreover, your attention is being drawn to BSD Circular No 4 of 2006 dated February 17, 2006, where banks were advised to prepare the Annual Audited Accounts on revised formats.

Some Islamic Banking Institutions sought guidance whether they should prepare QRC as per requirement of IFAS1-Murabaha. It is clarified that as per Accounting Polices of QRC, banks are required to follow the same polices as used in preparation of annual audited accounts. T herefore Islamic Banking Institutions are advised that with effect from quarter ending on September 30, 2007, QRC would be prepared following the Islamic Financial Accounting Standard -1 “Murabaha”.