The Islamic banks will find a new window for Shariah-compliant investment as the central bank plans to issue fresh Islamic bonds under a revised transaction structure.
The Government of Pakistan, Ijara Sukuk (M-3), will be issued in accordance with the provisions of SBP’s previous circulars: FSCD Circular No. 13 of September 06, 2008 and FSCD Circular No. 10 of July 08, 2010.
Under the new mechanism, profit on the Sukuk will be based on the following: Rental rate benchmarked against the latest weighted average yield of the six month Market Treasury Bills or six month PKRV (as per FSCD circular 13 dated September 06, 2008).
The rental rate as mentioned at (i) above may be adjusted based on the difference between estimated supplementary rental and actual maintenance expenses of the underlying asset as explained in Annexure “C”. The State Bank has decided that for this particular issue of GIS (M-3), the total auction participation of a single primary dealer would be capped at whichever is the lower of Rs 25 billion or 20pc of Total Demand and Time Liabilities-Islamic, excluding FE-25 deposits, of the respective bidder.
For this purpose, Total Demand & Time Liabilities – Islamic as of 28th March, would be used as reported to the State Bank. In case any PD breaches the aforesaid limit, SBP reserves the right to cancel all or some of the bids of the concerned bank. All Islamic banks and commercial banks with Islamic branches are designated as primary dealers for participating in the auction. All designated primary dealers for the GOP Ijara Sukuk are advised to ensure meticulous compliance with the above instructions. All other instructions on the subject shall, however, remain unchanged.
