Regulatory Alerts2026-06-16 | IFPD Circular Letter No. 03SBP Guidelines for Facilitating Conversion of Conventional Banking Branches into Islamic Banking Branches
The State Bank of Pakistan (SBP) has revised the criteria to facilitate conventional banks in converting their branches to Islamic banking operations, eliminating licensing fees and streamlining the application process. Banks must submit an Annual Branch Conversion Plan and obtain in-principle approval while ensuring rigorous customer consent procedures, including mandatory disclosures and a 30-day response window for account holders. The guidelines also permit the temporary use of virtual cost centres for unconvertible portfolios and allow flexible reporting structures, provided that strict Shariah compliance, audit, and risk mitigation measures are maintained throughout the transition.
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