SBP moves to streamline disclosures of Islamic banks, IBBs

The central bank Tuesday asked the banks offering Islamic banking and those conventional banks having Shariah-complaint branches to use specific nomenclatures while formulating their financial statements.
The State Bank said the move was aimed at streamlining and standardising disclosures of the Islamic banks and/or the Islamic Banking Branches (IBBs).
To achieve the goal, the regulator issued a circular Tuesday that required the concerned banks to rename in their balance sheet the head ‘financings’ and the related note as “Islamic Financing and Related Assets”.
It said all financings, advances (against Murabaha etc.), inventories and any other related item(s) pertaining to Islamic modes of financing, presently being reported under ‘Other Assets’ or any other head, shall be mentioned under the above head.
“The break-up of ‘Islamic Financing and Related Assets’ into Islamic modes of financing and their respective subdivision into financings, advances, inventories and any other related item(s) shall be reported in the notes to financial statements,” the State bank said.
The IBBs too have been asked to rename the heads on their balance sheets accordingly.
The SBP said the disclosure for IBBs contained in Annexure-2 to BSD Circular No. 04, issued February 17, 2006, also stood amended as per above instructions.
“All Islamic Banks/Islamic Banking Branches have been advised by SBP to comply with the above-mentioned instructions which have been made effective from December 31, 2012 while reporting their annual, half-yearly and quarterly financial statements,” the central bank said.