ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has approved revisions to the Shariah screening criteria and methodology for the PSX-KMI All Share Index. The revisions align with international benchmarks and aim to strengthen investor confidence in Shariah-compliant capital market instruments. The decision follows a high-level review meeting of the Committee on the Post-2027 Financial Sector Strategy, chaired by the Finance Secretary. The meeting emphasized accelerating the implementation of initiatives in line with the Federal Shariat Court’s ruling. Progress on the ongoing transformation and next steps toward transitioning Pakistan’s financial system to a Riba-free framework were reviewed. The SECP was directed to prepare a comprehensive plan for transforming SECP-regulated sectors into Shariah-compliant models and to develop a post-2027 strategy to sustain the transition. The enhancement of Islamic indices forms part of this broader reform agenda under the SECP’s Strategic Action Plan 2024-26 for enabling of Islamic finance in all regulated sectors.These measures are part of the ongoing implementation of the Federal Shariat Court’s ruling and the 26th Constitutional Amendment relating to Article 38(1)(f), which mandate the elimination of riba from the financial system in a phased manner by December 2027. The revised framework is expected to support the development of the Islamic capital market, facilitate informed investment decisions, and encourage listed companies to adopt Shariah-compliant capital structures. Under the new criteria, the non-compliant debt-to-total assets ratio has been reduced from 37 percent to 33 percent, reflecting increased availability of Shariah-compliant financing and alignment with global practices. APP
