One of the primary distinctions between conventional and Islamic financial institutions is the Sharīʿah compliance in products, services, and operations. In Islamic financial institutions, the products, services and procedures are approved by the Sharīʿah board. Besides, the Sharīʿah auditor assures that the operations of an Islamic bank are according to Islamic law and fatawa of Sharīʿah board. In this regard, the State Bank of Pakistan has required all the Islamic banking institutions to arrange internal and external Sharīʿah audit. The Sharīʿah audit is facing challenges of professional competence of their human resource. Hence, the objective of this paper is to analyse by using qualitative methods, the qualification and competency of a Sharīʿah auditor as envisaged in the existing Sharīʿah governance frameworks and standards of different standard setting bodies such as AAOIFI, BNM, SECP and SBP. After detailed analysis of the syllabus of the reputed accountancy organizations, the study concluded that the Sharīʿah audit personnels may not have the adequate knowledge of Sharīʿah to assess the transactions of Islamic Banks. The study recommended that the accountancy organizations should prepare Sharīʿah audit guidelines.
Keywords: Islamic Banking, Sharīʿah Audit, Qualification, Competency of Sharīʿah Auditors

The emerging markets are evidently very attractive to the international investors especially the shariah compliant equity markets, due to their resistant nature against financial crisis. The economic crisis of 2008, which started in United States (U.S.), had devastating impact on the global economy, yet the past studies validate the fact that the U.S. equity investors exert highly significant influence on the price movement of equities in emerging market, hence it is imperative to study the influence of the U.S. economic determinants in the Shariah Compliant Equity Market of Pakistan. The employed methods are the Autoregressive Distributed Lag (ARDL), Granger Causality, Variance Decomposition, and the function of Impulse Response. Results have shown that the Variance Decomposition test outcome suggests that U.S. T-bill and rate of Interest spread has exerted the highest level of influence by 7% in long-run (month 10), secondly the U.S. money supply has influenced the volatility of the KMI 30 index of Pakistan by 3.14% in 10-month period. The rationale behind the U.S. Interest rate volatility is that any fluctuation in federal fund rate reacts inversely to the equity price index in emerging markets. The outcome of Granger Causality test verifies the existence of unidirectional influence of KMI 30 index on economic growth of U.S. because of high level of U.S. investors’ investment interest in emerging markets like Pakistan, keeping other aspects constant. The study reveals that U.S. macroeconomic determinants especially Interest rates both long-run and short-run are crucial to the determination of movement of the Islamic equity returns in emerging market.
Keywords: ARDL Test, Islamic Equities, Macroeconomy, U.S. economy, Variance Decomposition

Ḥiyal (legal stratagems) means to find an unconventional way to meet an end in a complicated Shari’ah issue. It has a wide application in today’s versatile cutting-edge Shari’ah matters to avoid the Sharī’ah non-compliance risk. It is the risk of financial damages suffered by IFIs as a result of non-compliance with Sharī’ah principles in their operations. These stratagems should comply with the Maqasid-e-Shari’ah to remain legal. The research objective of this study is to explore the application of Ḥiyal (legal stratagems) in Islamic financial institutions in mitigating and managing Sharī’ah non-compliance risk. The study uses the content analysis method to achieve its objective. The study finds that Islamic finance scholars have developed the Ḥiyal theory that is well applied as a solution to manage this special kind of risk. Keeping these Hiyal within the limits of Sharī’ah is a real challenge. That is why the application is criticized by other jurists for advising such relaxed Ḥiyal. Several cases from classical jurists’ scriptures as well as from AAOIFI standards are discussed and analyzed to assess how this technique is useful in managing the Sharī’ah non-compliance risk.
Keywords: Ḥiyal, Legal Stratagems, Sharī’ah Risk, Mitigation technique, Islamic Finance.

This paper describes in detail the Islamic principles of investment and partnership and then takes a closer look at the current banking practices in vogue in Inslamic Banking system of Pakistan. Islam is a complete code of life which sets high moral values in all the social aspects of human life including economics. The Science of economics has attained a pivotal role in the modern era. All economic activities are directly or indirectly controlled by the existing banking systems which work on the principle of interest. Although the contemporary Islamic banking system has gradually evolved and it is claimed that it works according to Islamic sharia; however, it is still a question whether this system works according to the true spirit and principles of Islam. The present study uses the descriptive analysis technique to give a detailed account of the conventional and Islamic banking and related current practices of banking in Pakistan. The paper gives an overview of bank, its types, and a little history if banking system. It also exhibits how “Interest/Riba” has been condemned in the Holy Quran and Sunnah. Then, the paper adderesses some of the criticism raged against the principles of investment being used in Islamic baamking. The paper suggests how an alternate to the existing interst based banking system may be introduces in the light of the recommendations put forth by the Council of Islamic Ideology. The contemporary Islamic banking thrives on its investment mostly made in Musharakah, Mudarabah, Murabaha, Ijara, As Salam, and Istisna’a. Very often, on having a close look into the tools and procedures of Islamic banking, we come to the conclusion that the existing Islamic banking system is not working according to the true spirit of Islam. Instead, it has muddled the concepts of permissible and impermissible things and practices contrary to the principles of Islamic Jurisprudence. Our Holy Prophet Muhammad ﷺ was also a successful trader but “ MUSHARKAH “and “MUDARABAH” were always done on the basic principles of profit and loss. Our Holy Prophet ﷺ has strictly prohibited interest and declared it an open war against Allah and His Prophet ﷺ. But instead of all these facts, it is has been found that our contemporary Islamic Banking system has camouflaged the Islamic Shariah and still works on net profit gain and not on profit and loss principle. Under these circumstances, it is the need of the hour and a challenge to Islamic finance scholars and the experts of economics to rethink, contemplate, and make reforms to evolve a new mechanism regarding the contemporary Islamic Banking in the light of Islamic Shariah.
Keywords: Science of economics, Islamic finance, interest-free banking, Principles of Islamic banking, Mudarabah, Musharakah, Ijara, Salam.

Agricultural sector is the backbone of Pakistan but there are a number of problems and challenges for agriculture sector in Pakistan. In this regard, agricultural sector is facing mostly credit- related financial problems among the framers. The Islamic Shariah has provided solutions to these problems through various Islamic financial contracts including Salam, Musaqat, Muzaraat and Mugharasa but the effectiveness of these contracts can only be possible if required institutional and infrastructural facilities are adequate for their applicability. Keeping in view this, the current research studies the issues related to the applicability of these Islamic financial contracts in Pakistan through Islamic banks. The main objective of the research is to review the issues in agriculture credit system of Pakistan through banks and the scope of Salam contract as an effective alternative. The research also focuses on the problems in Salam agriculture financing through Islamic banks. The study has applied the qualitative research method. The data for the research has been collected through semi structured interviews of ten bankers of Islamic banks. Besides this, expert opinion of the five eminent religious scholars has also been sought. The data collected is then processed through thematic content analysis. The findings revealed that there are problems of insufficient institutional credits for farmers, very high rate of interest, issues in managing collaterals and exhausting credit procedures in existing agricultural financing. It is also observed that Salam financing through banks is inefficient because required infrastructure facilities are not available. Therefore, it is recommended through that farmers should be provided Salam based credit financing through institutions other than IBs.
Keywords: Agriculture credit, Salam, Islamic banks (IBs), Muzaraat, Collateral