SBP eases rules for Islamic Banking Windows

June 10, 2026 (MLN): The State Bank of Pakistan (SBP) has issued revised instructions regarding Islamic Banking Windows (IBWs) operations with immediate effect.

According to the revised framework, banks and Microfinance Banks (MFBs) may establish IBWs within conventional branches approved for conversion under the annual branch conversion plan or through a separate request, without prior SBP approval.

These IBWs may operate for an interim period starting from the initiation of the branch conversion process until final conversion, according to the SBP notice.

During the conversion phase, banks and MFBs are allowed to offer Shariah-compliant products, including all types of deposits and financing (funded and non-funded).

Institutions are required to specify their IBW establishment plan at the time of seeking SBP approval for branch conversion or through a separate request.

No processing or annual fee will be applicable on IBWs opened during the interim conversion period.

The requirement to display the IBW name on ¼th portion of the conventional branch signboard has been relaxed.

However, banks and MFBs must ensure alternative arrangements at the branch entrance and prominent internal signage indicating the availability of Islamic banking products and services.

SBP has also revised the connectivity requirement, allowing IBWs to be linked with the controlling branch, hub, or centralized data centre instead of only the nearest Islamic banking branch or hub, to support better technological integration and fund segregation.

The revised instructions also extend applicability to MFBs for offering Islamic banking products through IBWs.

All banks and MFBs operating IBWs are required to continue submitting quarterly data through DAP within seven days after the end of each quarter, using the prescribed template.

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