Islamabad, April 4, 2026 – The Securities and Exchange Commission of Pakistan (SECP) has approved the country’s first Shariah-compliant credit risk-sharing product, marking a significant milestone in the development of Pakistan’s Islamic finance sector.
The innovative product, developed by the National Credit Guarantee Company Limited (NCGCL), is designed to reduce credit risk while expanding financing opportunities for underserved sectors, including micro, small and medium enterprises (MSMEs) and agriculture. The initiative aims to improve financial inclusion and support economic growth by enabling easier access to credit under Islamic principles.
Unlike conventional credit guarantee systems, the new product operates on a Shariah-compliant risk-sharing model. Participating financial institutions contribute to a pooled fund on a donation basis, known as Tabarru, which is managed by NCGCL as an agent (Wakeel) under a Wakalah arrangement. In the event of eligible defaults, losses are covered from the pooled fund, ensuring genuine risk-sharing without guaranteeing returns, in line with Islamic finance principles.
The SECP’s Shariah Advisory Committee carefully reviewed the structure and formally approved it, confirming its compliance with key Shariah requirements. The Committee also recommended enhancing governance frameworks and strengthening documentation to ensure smooth implementation and transparency.
This development is expected to play a crucial role in expanding access to financing for priority sectors such as agriculture and MSMEs, which are vital for Pakistan’s economy. By encouraging responsible lending and reducing credit risk, the product will help financial institutions extend credit to a broader segment of borrowers.
The SECP emphasized that this initiative aligns with the broader vision of promoting Islamic finance in Pakistan, in line with directives from the Supreme Court and government policies aimed at transitioning toward a riba-free financial system.
Officials believe the new framework will not only strengthen the Islamic finance ecosystem but also contribute to financial stability, sustainable growth, and greater economic inclusion across the country.