The State Bank of Pakistan (SBP) has introduced new guidelines regarding profit payouts by Islamic Banking Institutions (IBIs) on Pakistani Rupee (PKR) saving deposits. These revisions aim to ensure that IBIs maintain a fair profit-sharing system for their depositors.
Starting January 1, 2025, IBIs will be required to pay a profit on their PKR saving deposits equivalent to at least 75% of the weighted average gross yield of all pools of the institution. To calculate the gross yield of each pool, the monthly gross earnings of the pool will be divided by the monthly average assets, excluding fixed assets. However, pools created by IBIs for Shariah-compliant standing ceiling facilities and Shariah-compliant open market operations (OMOs) will be excluded from this calculation.
The revisions also include specific changes to existing instructions for profit and loss distribution:
- Clause 4.2.3 has been deleted.
- Clause 5.2.1 now allows IBIs to forego part of their Mudarib share as hiba to meet market expectations if the returns earned by the pool are lower than expected. IBIs maintaining a Profit Equalization Reserve (PER) will only reduce their Mudarib share if the PER is insufficient to improve the profit payouts to depositors.
- Clause 5.2.2 has been updated to allow IBIs to provide hiba to saving account depositors if needed to meet the minimum profit rate requirement.
These changes will come into effect on January 1, 2025, ensuring that depositors receive a fair share of profits in line with market conditions.
