for oversight of financial sector in an integrated manner. besides coordination and cooperation among regulators, there is a need for consolidated supervision framework for financial institutions, guidelines for consolidated public financial statements and application of regulatory prudential limits on group wide basis and coordination to examine the intra group linkages with industrial and commercial entities. while conventional and islamic financial industry would have to adopt similar approaches to integrated supervision, it has to be recognized that fund management, as used here, refers to management of islamic mutual funds and modarabas. a number of banks have formed subsidiaries and floated modarabas like nbp, hbl, abl, habib metropolitan bank, etc. no islamic bank has yet floated a modaraba. the latter is a relatively nascent industry and hence the targets should be modified to match the ground realities. v. conclusion ifsb ’ s ten year roadmap has highlighted the cross sector nature of ifis and the resultant need for supervision to evolve accordingly. it is in recognition of these factors that ifsb has sought to broaden its membership to securities and insurance supervisory authorities as full members of ifsb. ifsb ’ s efforts for developing islamic regulations as well as accounting, auditing and governance standards will facilitate adoption of unified principles for the development, operation and regulation of islamic financial services.

there is a need for addressing the idiosyncratic nature of if industry, products and market players. moreover, with regard to if, both the regulators are following different approaches towards shariah compliance in the institutions regulated by them. sbp requires islamic banks to appoint shariah advisors according to a prescribed fit and proper criteria and a shariah board has been constituted at the level of sbp to deal with issues relating to shariah interpretation and compliance among islamic banks. secp ’ s approach varies across different segments of if. a religious board, constituted by the government, is responsible for approving the prospectus of each modaraba containing the types of business to be conducted, management, etc. while the religious board has a significant role, there is no requirement for modarabas or their management companies to appoint shariah advisers at individual fund level. islamic mutual funds and takaful operators, on the other hand, are required to appoint shariah council / boards but no explicit fit and proper criteria has been laid down by secp in this regard. secp is also authorized to appoint a central shariah board under the takaful rules, 2005, which has not been established as yet. the greatest challenge resulting from different shariah compliance practices followed by islamic banks, modarabas, takaful companies, etc. is the reputational risk faced by ifis and misperceptions in the minds of public about shariah compliance. this issue, therefore, needs to be addressed through coordination amongst the supervisors. another issue arises from overlapping supervisory jurisdiction. the banking company ordinance allows banks to act as modaraba management companies for floatation of modarabas. in terms of modaraba companies ordinance, modarabas can be formed to conduct any type of business, which is permitted under shariah, be it trading, manufacturing, airline, financing, leasing, services, etc. and these are regulated by secp. due to overlapping regulatory jurisdictions, banks are floating modarabas through separate subsidiaries, 5 resulting in higher administrative, set up and regulatory costs. for sometime ( from 1991 - 1997 ), these modarabas were under the regulatory control of sbp, but the powers relating to licensing, winding up, etc. were retained by secp ; consequently the regulatory authority has been reverted to secp. again, this highlights the need for cross sector regulation of ifis. eventually there is a need to develop mechanisms