The Presidents / Chief Executives,
All Islamic Banks, Islamic Banking Subsidiary and
All Conventional Banks having Islamic Banking Branches

Dear Madam/Sir,

Adoption of ‘Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI) Shariah Standards

With a view to further strengthen Shariah compliance framework and harmonize the Shariah practices in Islamic banking industry, following AAOIFI Shariah Standards have been adopted with immediate effect subject to clarifications/amendments as given in the attached Appendix – A.

1. Shariah Standard No. 4 (Settlement of Debts by Set-Off),
2. Shariah Standard No. 7 (Hawalah),
3. Shariah Standard No. 16 (Commercial Papers),
4. Shariah Standard No. 22 (Concession Contracts),
5. Shariah Standard No. 48 (Options to Terminate Due to Breach of Trust (Trust-Based Options)),
6. Shariah Standard No. 51 (Options to Revoke Contracts Due to Incomplete Performance),
7. Shariah Standard No. 52 (Options to Reconsider (Cooling-Off options, Either-Or Options, and Options to Revoke Due to Non-Payment))

2. The adoption of above Standards is in addition to applicable regulations, instructions and directives issued by SBP from time to time.

3. Failure to comply with these instructions may invoke penal action under the relevant provisions of the Banking Companies Ordinance 1962.

Please acknowledge receipt.


Encl: Appendix - A