Islamic Fund Management
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4.3.4 Key Factors Underpinning the Development of Pakistan’s Islamic Fund
Management Industry
The growth of Pakistan’s Islamic capital market in general, and its Islamic fund management
industry in particular, has been more noticeable after the launch of the CMDP 2016-2018 by
the SECP in 2016 (refer to the earlier charts depicting the growth of the NBFC sector). The key
factors underpinning the growth of Islamic funds in Pakistan are analysed based on the
following pillars:
Legal and Regulatory Framework
From the initial stage of NBFCs’ setting up, including funds, the SECP has been issuing various
regulations, rules and circulars governing these entities. In fact, several amendments have
been made to the original rules and regulations to meet contemporary market requirements
and expedite industry growth.
The rules and regulations governing the Islamic fund management industry issued by the SECP
on existing conventional mutual funds include the following:
 Non-Banking Finance Companies (Establishment & Regulation) Rules, 2003 (the Rules)
 Non-Banking Finance Companies & Notified Entities Regulations, 2008 (the Regulations)
 Part VIII of The Companies Act, 1984 (the Ordinance)
 Income Tax Ordinance, 2001
 Trust Act, 1882
 Voluntary Pension System Rules, 2005
 REIT Regulations, 2008
 Circulars and directives issued by the SECP under the provisions of the Ordinance
The fund management industry is highly regulated in Pakistan, to the extent that the SECP has
jurisdiction over the expenses chargeable to a fund and the amount of management fees that
AMCs can charge to different categories of funds, as explained in The regulation
provides certainty to investors as fund managers must be transparent in disclosing the various
types of fees imposed in the offering documents.
Box 4.4: Allowable Fees under NBFC Regulations 2008
List of Allowable Expenses:
 Remuneration of the AMC.
 Remuneration of the trustee or custodian.
 Shariah advisory fee.
 In the case of an investment company, directors’
fees and related expenses for attending
meetings.
 Listing fee payable to the stock exchange,
including renewals.
 Charges and levies of the stock exchange,
national clearing and settlement company, and
central depository company.
 Rating fee under the CIS payable to the
approved rating agency.
 Auditors’ fees and out-of-pocket expenses, as
billed.
 Brokerage and transaction costs related to
investment in and divestment of the assets
under the CIS.
 Expenses incurred by the trustee in effecting the
registration of all registerable assets in the name
of the trustee.
 Legal and related costs incurred to protect the
interests of the unit, certificate or shareholders
of the CIS.
 Bank charges as well as borrowing and financial
costs.
 Printing costs and related expenses when
issuing the quarterly, half-yearly and annual
reports of the CIS.