The Securities and Exchange Commission of Pakistan has approved Pakistan’s first Shariah-compliant credit risk-sharing product, marking a significant step toward expanding access to financing for underserved sectors such as micro, small and medium enterprises (MSMEs) and agriculture.
The innovative product has been developed by the National Credit Guarantee Company Limited and is designed to reduce credit risk through a Shariah-compliant mechanism while promoting broader financial inclusion.
According to the regulator, the structure offers a viable alternative to conventional credit guarantees by utilizing a pooled fund based on Tabarruʿ (donation) contributions from participating institutions.
Under the model, the fund will be managed by NCGCL as an agent under an arrangement, with losses arising from eligible defaults covered through the shared pool. This ensures genuine risk-sharing without offering guaranteed returns, aligning the product with Islamic finance principles.
The SECP’s Shariah Advisory Committee reviewed and approved the framework, while also recommending enhanced governance practices and stronger documentation standards to ensure effective implementation.
Officials stated that the initiative is expected to significantly improve access to financing for MSMEs, agriculture, and other priority sectors, while supporting Pakistan’s broader transition toward a riba-free Islamic financial system.
