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Rule · SBP · 12 Jun 2026 · IFPD Circular No. 01

Prohibition on Placement of Islamic Banking Funds with Conventional Parent or Head Office

islamic-finance

The Islamic Finance Policy Department issued Circular No. 01 of 2026 to prohibit Islamic Banking Institutions from placing funds with their conventional parent or head office under loan (Qard) or subsidized financing contracts. This directive mandates the immediate withdrawal of any such existing placements, while explicitly exempting funds held to meet regulatory requirements. The order is issued under the authority of Section 39H of the Banking Companies Ordinance, 1962.

PakistanState Bank of Pakistan

Circulars/Notifications - Islamic Finance Policy Department

IFPD Circular No. 01 of 2026

June 12, 2026

The Presidents/Chief Executives All Conventional Banks having Islamic Banking Branches

Dear Sir/Madam,

Placement of Funds of Islamic Banking Institutions (IBIs) with Conventional Parent or Head Office based on the Contract of Loan (Qard) or any other form of Subsidized Financing

In terms of the powers conferred under Section 39H of the Banking Companies Ordinance, 1962, it is clarified that Islamic Banking Institutions (IBIs) are not permitted to place any funds with their conventional parent or head office based on the contract of loan (Qard) or any other form of subsidized financing. However, any such existing placements, if already executed, should be withdrawn with immediate effect.

  1. Moreover, the above instructions are not applicable on funds placed at Head office for meeting any regulatory requirements.

  2. Please acknowledge receipt.

Yours truly,

Sd/-

(Dr. Zahid Ur Rehman Khokher) Director

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