SECP clears first islamic risk-sharing credit product

April 4, 2026 (MLN): The Securities and Exchange Commission of Pakistan has approved the country’s first Shariah-compliant credit risk-sharing product, which marks a significant step toward expanding Islamic financing for underserved sectors such as micro, small and medium enterprises (MSMEs) and agriculture.

Developed by the National Credit Guarantee Company Limited, the product introduces an alternative to conventional credit guarantees by using a Shariah-compliant risk-sharing framework.

The structure is designed to reduce credit risk while improving access to finance, particularly for sectors that often face funding constraints.

Under the model, participating financial institutions contribute to a pooled fund on a donation (Tabarruʿ) basis, according to a press release issued.

The fund is managed by NCGCL acting as an agent (Wakeel) under a Wakalah arrangement.

Losses arising from eligible defaults are covered through this pool, ensuring genuine risk-sharing without offering guaranteed returns, in line with Islamic finance principles.

The SECP’s Shariah Advisory Committee reviewed and approved the structure, confirming its compliance with key Shariah requirements.

It also advised enhancing governance mechanisms and documentation to support effective implementation of the product.

The initiative is expected to boost financing access for MSMEs, agriculture, and other priority sectors, while promoting financial inclusion and responsible lending practices.

It also reinforces Pakistan’s broader efforts to strengthen its Islamic finance ecosystem.

The SECP continues to push forward with reforms aimed at advancing Islamic finance, in line with directives from the Supreme Court and the government’s vision of transitioning toward a riba-free financial system, while maintaining financial stability and supporting sustainable economic growth.

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