LAHORE: About 1,000 Shari’ah scholars, regulators and Islamic finance specialists met in Bahrain this week for the 24th annual conference of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), a standard-setter whose rulebook carries growing weight in Pakistan as the country’s January 2028 deadline to end interest-based banking approaches.
The two-day gathering at the Crowne Plaza Hotel in Manama, held on Oct 11 and 12 with the support of the Central Bank of Bahrain, closed on Monday. More than 4,000 people followed the proceedings online, AAOIFI said in a statement. The sessions were conducted in Arabic, and Urdu was one of only two languages, alongside English, into which they were interpreted live.
The Pakistani interest is practical. The State Bank of Pakistan has so far adopted 20 AAOIFI Shari’ah standards, folding them into the rules local Islamic banks must follow. Those banks now hold 28% of deposits and 38% of financing in the banking system, and the 26th Constitutional Amendment requires riba to be eliminated before Jan 1, 2028, following the Federal Shariat Court’s April 2022 judgment.
This year’s five working sessions tackled questions that sit close to that transition including how AAOIFI standards can be reconciled with national legal systems, how the actual direct cost of a loan should be estimated, what controls should apply when a syndicated financing pairs an Islamic tranche with a conventional one, how unforeseen circumstances affect contracts and debts, and whether value may be exchanged against a binding commitment.
Mixed Islamic and conventional syndicates are a familiar feature of large project loans, while Pakistan’s transition plan envisages conventional public debt still outstanding in December 2027 being replaced with Shariah-compliant financing as it matures.
Opening the conference, Shaikh Ebrahim bin Khalifa Al Khalifa, chairman of AAOIFI’s board of trustees, conveyed the greetings of King Hamad bin Isa Al Khalifa and Crown Prince and Prime Minister Salman bin Hamad Al Khalifa. He said the meeting had guided the industry for 23 years and noted that this edition coincided with the 35th anniversary of AAOIFI’s founding.
Other keynote speakers were Dr Ali Yassin Sheikh, deputy governor of the Central Bank of Somalia; Dr Rabiu Olowo, executive secretary of the Financial Reporting Council of Nigeria; and AAOIFI Secretary General Omar Mustafa Ansari.
AAOIFI signed memoranda of understanding with the Nigerian council, the Union of Arab Securities Authorities, the Chamber of Auditors of Uzbekistan and IDENFO, a compliance technology firm represented by its co-founder and managing director, Raza Abidi.
The organisation says its standards are adopted or recognised by about 50 regulators in more than 40 countries. Saudi National Bank was the main sponsor. The conference ended with closing remarks and a meeting of AAOIFI’s general assembly.
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