ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) is exploring the revival and modernization of Waqf (Islamic endowment) to align with contemporary socio-economic needs of Pakistan.
The SECP’s concept paper discusses the historical significance of Waqf, an essential institution in Islamic society, and its contemporary practices. Historically, Waqf has funded education, healthcare, and social welfare, supporting institutions like Al-Azhar and the Ottoman public works system. It remains an important player in the socio-economic fabric of the Muslim world.
Countries like Malaysia, Turkey, and Indonesia have successfully adapted Waqf to modern financial systems through regulatory frameworks, innovative governance models, and Shariah-compliant financial instruments. However, in Pakistan, Waqf remains underutilized due to outdated management practices and the lack of a robust regulatory framework.
The concept paper proposes strategies to harness Waqf for Islamic social finance, including reinvigorating the Waqf institution, enabling the establishment of Waqf in corporate structures as Waqf companies, and developing Islamic instruments and financial services products for such companies. These proposals aim to improve efficiency, complete the Islamic finance ecosystem, and create social impact in Pakistan. The suggested pathway to transform Waqf into a dynamic, sustainable, and impactful institution for socio-economic development will be deliberated and discussed with key industry stakeholders before initiating the required regulatory interventions.
To address concerns pertaining to jurisdiction and legal considerations, the concept paper includes proposed options such as amending provincial Waqf laws, amending the Companies Act, 2017, or amending NPO Regulations to provide for Waqf companies under the Companies Act, 2017.
It is expected that the revival and modernization of Waqf will enable sustainable Islamic social finance institutions, thereby helping achieve the objective of shared prosperity by making resources available for social and welfare projects.
The Waqf (Islamic endowment) is a centuries-old institution rooted in Islamic tradition, aimed at fostering social welfare and economic development, and played a pivotal role in sustaining public welfare and economic justice in the modern world. The term Waqf, derived from the Arabic root “aqaf” (to stop, contain, or preserve), refers to an endowment made by a Muslim for charitable or religious purposes. Waqf traditionally involves dedicating assets, such as property or funds, for charitable purposes, where the principal remains intact, and only its yield or profits are used for welfare activities.
It is expected that the Waqf companies may provide enhanced accountability, sustainability, professional management, and increased public trust. Their corporate structure ensures transparent and accountable management of assets, generating income through investments and endowments. The formalization of Waqf companies attracts funds and investors, while clear governance structures and reporting requirements enhance public trust in Waqf companies.
We are cognizant of the fact that some traditional Waqf institutions may resist adopting a corporate structure, but this can be addressed given the voluntary nature of Waqf companies and through awareness campaigns and demonstrating accountability.
Additionally, the successful introduction of the concept of Waqf Companies requires expertise in Islamic law and corporate governance, which can be addressed by recruiting skilled professionals and providing ongoing training.
In conclusion, we believe that introducing Waqf companies under Section 42 of the Companies Act, 2017, represents an innovative approach to modernizing the management of Waqf assets in Pakistan. By formalizing the governance and management of Waqf companies, this proposal has the potential to increase the impact, sustainability, and transparency of charitable initiatives across the country. The establishment of Waqf companies will contribute to the broader goals of social welfare, poverty alleviation, and the overall well-being of society. This proposal calls for the necessary legal amendments, regulatory frameworks, and stakeholder collaboration to bring this vision to fruition, SECP added.
Copyright Business Recorder, 2025
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