Pakistan’s financial regulatory body grants first Shariah-compliant certificates to two real estate trusts

A man sits outside a bank along a street in Rawalpindi on July 15, 2023. (AFP/File)
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Updated 25 August 2023
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Pakistan’s financial regulatory body grants first Shariah-compliant certificates to two real estate trusts

  • The development comes after a court instructed the state to comply with Islamic financial system
  • The recent development will help the two firms carry out lending activities under an interest-free system

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued the first-ever Shariah-compliant certificate to two real estate investment trusts (REITs), facilitating them to carry out all lending activity under an interest-free system, as stated in an official statement on Friday.

The development came after the country’s Federal Shariah Court issued a judgment earlier this year, directing the previous administration of Shehbaz Sharif to comply with the Islamic principle of interest-free financial transactions, based on profit and loss sharing.

Following the court order, the SECP issued its 2023 guidelines related to Islamic financial services while highlighting its intent to facilitate conventional institutions who wanted to embrace Shariah-compliant business models.

Since the issuance of the guidelines, several financial entities applied for certification to position themselves as Shariah-compliant companies in the market.

“The Securities and Exchange Commission of Pakistan (SECP) has issued the first-ever certificate of Shariah compliance to two real-estate investment trusts (REITs), namely Signature Residency REIT and Rahat Residency REIT,” the official statement said.

It added that Signature Residency was a close-end developmental trust with a fund size of Rs825 million and a four-year indicative life, adding it aimed to build apartments and retail units and generate income for investors by selling them to customers.

The SECP revealed Rahat Residency had a fund size of Rs1,650 million and an indicative life of five years.

“The issuance of Shariah compliance certificates to REIT developments is a significant step towards connecting the real estate industry with Islamic financial markets and providing Shariah-conscious investors with a regulated transparent investment alternative,” the statement added.

With the second-largest Muslim population in the world, many of Pakistani citizens are cautious about the religious dimension of their banking and financial transactions.

According to the World Bank, only 21 percent of the country’s adult population had a bank account in 2017, with 13 percent citing religious reasons for not having them.


Pakistan Supreme Court halts trial of prominent lawyer over alleged anti-military tweets

Updated 57 min 11 sec ago
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Pakistan Supreme Court halts trial of prominent lawyer over alleged anti-military tweets

  • Top court orders lower court to pause proceedings after lawyers allege due-process breaches
  • Mazari-Hazir, husband face charges under cybercrime law that carry up to 14 years in prison

ISLAMABAD: Pakistan’s Supreme Court on Thursday halted the cybercrime trial of prominent human rights lawyer Imaan Mazari-Hazir and her husband, Hadi Ali Chattha, after their lawyers argued that a lower court had recorded witness testimony in their absence, violating due-process rules.

Mazari-Hazir, one of Pakistan’s most outspoken civil liberties lawyers, and Chattha are being prosecuted under the Prevention of Electronic Crimes Act (PECA) over posts on X that authorities say incited ethnic divisions and portrayed the military as involved in “terrorism.” Both reject the allegations. If convicted under the relevant PECA provision, they face a prison term of up to 14 years.

The case has drawn broad attention in Pakistan’s legal community because Mazari-Hazir, who has been repeatedly detained over her criticism of the security establishment, argues that the trial court ignored basic procedural guarantees despite her medical leave request. The case also comes as Pakistan faces sustained scrutiny over the use of PECA against activists, journalists and political dissenters, with lawyers arguing that lower courts often move ahead without meeting minimum fair-trial standards.

The couple’s lawyer, Riasat Ali Azad, said his clients filed a petition in the Supreme Court because the lower court had moved ahead improperly.

“Today, the Supreme Court of Pakistan has stayed the lower court proceedings, the trial court proceedings and has said that the [Islamabad] High Court should decide our pending revision petition for which a date has already been fixed,” he told reporters.

Azad said the violation was clear under Pakistan’s Code of Criminal Procedure, which requires evidence to be recorded in the presence of the accused.

“Yet, on that very day, evidence of four witnesses was recorded in their absence, and a state counsel was appointed to conduct cross-examination on their behalf,” he said. “All these things are against the right to a fair trial under Articles 10 and 10-A.”

A three-judge bench led by Justice Muhammad Hashim Khan Kakar ordered the trial court to pause proceedings and instructed the Islamabad High Court to hear the couple’s pending criminal revision petition first.

The trial had been scheduled to resume on Dec.15, but the Supreme Court’s stay now freezes proceedings before both the additional sessions judge and the special PECA court. 

The Islamabad High Court is expected to hear the criminal revision petition next week.

Chattha, who is also a lawyer, said the SC ruling underscored the need for procedural safeguards.

“It is a victory for the constitution and the law,” he said, arguing that the trial court had ignored their request to re-record witness statements in their presence.