PSX Revises Shariah Screening: 4% Reduction in Non-Compliant Debt Threshold for Listed Companies
Karachi — The Pakistan Stock Exchange (PSX) has announced a revision in the Shariah screening criteria for its All Share Index, reducing the permissible limit of non-Shariah compliant debt by 4 percent — a move aimed at strengthening the alignment of listed companies with Islamic financial principles.According to sources, the revision has been made to…
Karachi — The Pakistan Stock Exchange (PSX) has announced a revision in the Shariah screening criteria for its All Share Index, reducing the permissible limit of non-Shariah compliant debt by 4 percent — a move aimed at strengthening the alignment of listed companies with Islamic financial principles.
According to sources, the revision has been made to bring the screening standards closer to internationally recognized Islamic finance benchmarks. Under the updated criteria, companies whose debt structure contains a non-compliant component exceeding the revised threshold may be excluded from the Shariah-compliant investment list.
Financial experts have welcomed the decision, noting that it will provide greater confidence to Islamic banking institutions, halal investors, and Shariah-conscious funds operating in Pakistan’s capital markets. The move is also expected to enhance Pakistan’s standing in the global Islamic finance landscape by demonstrating a commitment to higher compliance standards.
However, some market participants have raised concerns that the tightening of screening criteria could reduce the number of companies qualifying for the Shariah-compliant index, potentially affecting the portfolio options available to Islamic investors and leading to short-term market adjustments.
The PSX’s decision reflects a broader national push toward expanding and strengthening the Islamic finance ecosystem in Pakistan, which has seen significant growth in recent years across banking, insurance, and capital market segments.
