ISLAMABAD: A Senate panel on Wednesday approved a bill to lift the virtual freeze on lending to businesses in Khyber Pakhtunkhwa and Balochistan, which the banking sector had informally imposed. However, another piece of legislation seeking to grant the Senate financial powers to determine the perks and privileges of senators, similar to those enjoyed by their counterparts in the National Assembly, did not pass. The hallmark of the Senate Standing Committee on Finance meeting, presided over by Saleem H. Mandviwalla, was the inability of the State Bank of Pakistan team led by Governor Jameel Ahmad to confirm if the ‘Islamic banks’ followed its regulatory requirements. However, Mr Ahmad revealed that the central bank was working on an alternative plan to free Islamic financing from the mandatory requirement of assets as collateral. “We are working on an alternative structure, looking at means to issue sukuk without the condition” of it being backed by an asset,“ he told the Senate panel. SBP chief unaware of regulatory checks on Islamic banking; senators seek powers to set their perks and privileges He said one of the key challenges to Islamic financing compared to conventional banking was the asset constraint, meaning that Islamic bonds or lending must have an asset as collateral. He said the Islamic scholars currently were opposed to asset-less Islamic financing, but “we are in touch with Islamic scholars for a relaxation”, as some other countries were already doing such transactions. The SBP officials said Islamic banks were not passing on the losses to their customers through a profit pool sharing, under which they transfer their profits through Hiba (a gift method). Senator Anusha Rehman contested that there was no such condition in template agreements that banks sign with customers. The SBP officials said this was a regulatory requirement, but when various senators questioned if the SBP was monitoring banks to confirm enforcement, the SBP governor and his colleagues expressed their ignorance and promised to get back with a status report later. After thoroughly examining the Islamic banking mechanisms, the committee members concluded that further discussions are necessary to assess how Islamic banking is regulated under Islamic principles. The committee unanimously approved the government bill titled “ ,” with amendments proposed by the committee. Additionally, the private member’s bill titled “The State Bank of Pakistan (Amendment) Bill 2024,” introduced by Senator Mohsin Aziz, was also passed by the majority, as PMLN’s Anusha Rehman abstained. The proposed bill requires banks to increase their lending to 60pc of their deposit base from respective provinces. The SBP governor opposed the bill, saying other measures needed to be taken than just legislation. Furthermore, the additional finance secretary addressed the amendments to sections 14B and 14C of the Members of Parliament (Salaries and Allowances) Act 1974 through the Finance Act 2024, stating that it is the prerogative of parliament to adopt these changes as deemed appropriate. The committee directed the Ministry of Finance to respond in three days. Additionally, a briefing on the need for the FBR to hire audit firms, including the procedures and criteria involved, was discussed.