Pakistan approves first Shariah-compliant credit guarantee
Pakistan’s Securities and Exchange Commission (SECP) has approved the country’s first Shariah-compliant credit risk-sharing product, aimed at improving access to financing for micro, small and medium enterprises (MSMEs) and the agriculture sector, the regulator said on Saturday.
The product, developed by the National Credit Guarantee Company Limited (NCGCL), introduces a risk-sharing mechanism designed to reduce credit exposure for financial institutions while remaining aligned with Islamic finance principles. It offers an alternative to conventional credit guarantees, which are typically interest-based.
According to the regulator, the product, which has not yet been formally named, is structured as a Takaful-based credit guarantee built on the principle of tabarru. It has also advised NCGCL to introduce a brand identity and consider establishing an Islamic window to offer similar solutions.
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Muhammad Ali Bandial