Under the rules, released on Thursday, sukuk will have to be structured to comply with standards of the Bahrain-based Accounting and Auditing Organisation for Islamic Finance Institutions, as well as those set by the local regulator.

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The draft rules also include requirements for disclosure of information about the issuers and for the issuers to appoint Islamic scholars who vet the sukuk structures. There is a consultation period on the draft until Oct. 15.

The number of individual sukuk issues in Pakistan has shrunk in recent years, despite the rapid growth of issuance globally, which is projected by Commerzbank to exceed $100 billion this year.

Last year, the Pakistani sukuk market was led by three sovereign sukuk, which raised a combined 163.6 billion rupees ($1.72 billion), according to securities commission data. Three corporate sukuk raised a combined 5.4 billion rupees.

This compares with 21 sukuk in 2007, most of which were corporate, raising a combined 49.3 billion rupees. In 2008 there were 18 sukuk, which raised 31.9 billion rupees.

AAOIFI standards indicate how Islamic financial products should be structured; following the standards could increase the interest of foreign investors in investing in Pakistani sukuk.

Pakistan aims to lift Islamic finance’s share of its banking sector through a series of reforms; last month the central bank said it was developing a five-year plan for Islamic banking. The country is introducing new rules for takaful (Islamic insurance) designed to increase competition. (Reuters)