The Presidents/Chief Executives

All Islamic Banks and

All Conventional Banks having Islamic Banking Branches

Dear Sir/Madam,

Shari’ah Standard on ‘Sharikat ul Milk and Diminishing Musharakah’

Please refer to Para 8 of Appendix-A to Annexure-1 of IBD Circular No. 2 of 2008 wherein essentials for carrying out ‘Diminishing Musharaka’ are prescribed as ‘minimum requirements’ for Shariah compliance for Islamic Banking institutions (IBIs). To further strengthen the Shariah compliance framework and to harmonize the Shariah practices in Islamic banking industry, Shariah Standard on ‘Sharikat ul Milk and Diminishing Musharakah’ is issued and annexed herewith. The same shall be applicable w.e.f July 01, 2013.

2. It may be noted that the Standard is in addition to current Prudential Regulations, guidelines and other circulars and directives issued by SBP from time to time and is not replacing them by any means.
3. The IBIs shall ensure that all facilities to be offered on the basis of ‘Sharikat ul Milk and Diminishing Musharakah’ from 1st July 2013 are in conformity with the aforesaid Standard. The failure to comply with these instructions may invoke penal action under the provisions of Banking Companies Ordinance 1962.

Please acknowledge receipt.

Encl: Annexure