The Securities and Exchange Commission of Pakistan (SECP) has revised 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.
According to a press release issued by the SECP on Thursday, 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 emphasised 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 Islamic finance in all regulated sectors.
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 per cent to 33 per cent, reflecting increased availability of Shariah-compliant financing and alignment with global practices.
A Shariah compliance rating mechanism has been introduced, assigning three, four, or five-star ratings to qualifying companies to enhance transparency and enable investors to assess levels of compliance.
The list of Shariah-compliant companies for the PSX-KMI All Share Index will be published with a five-working-day objection window for evidence-based requests for revision. A mechanism has also been introduced for interim inclusion of newly listed companies, subject to screening and approval by the KMI Index Committee.
SECP has further advised PSX to consider additional enhancements, including reducing the non-compliant investments-to-total assets ratio from 33 per cent to 30 per cent, introducing quarterly index updates, and automating data collection.
SBP’s liquid foreign reserves rise by $16 million to $16.2 billion
