A new SECP guidebook aims to help non-bank lenders build Shariah-compliant products, bringing ethical finance to Pakistan’s underserved borrowers.
Key Takeaways:
- SECP has issued a practical guidebook to help lending NBFCs structure halal financing products, including BNPL, micro-loans, and housing finance.
- Five lending NBFCs are already fully Shariah-certified, with 16-17% of 265 surveyed products across 89 NBFCs found to be Shariah-compliant.
- The move aligns with Pakistan’s constitutional obligations and the Federal Shariat Court’s directive to eliminate riba from the financial system.
Islamabad, Pakistan – Pakistan’s financial regulator has taken a significant step toward broadening access to interest-free credit, issuing a practical guidebook to assist lending Non-Banking Finance Companies (NBFCs) in building Shariah-compliant products for borrowers who cannot or will not engage with conventional, interest-based lending.
The Securities and Exchange Commission of Pakistan (SECP) said the guidebook is designed to help NBFCs develop halal financing options covering installment plans, micro-loans, and housing finance. The regulator noted that Shariah-compliant digital lending is expected to significantly improve credit access for groups that have historically been left behind by the formal financial system, including low-income households, small businesses, farmers, freelancers, and gig workers who lack conventional credit histories.
With 36 percent of non-bank financial assets already Shariah-compliant, Pakistan’s Islamic finance shift is no longer aspirational. It is already happening.
Risk-Sharing Over Exploitation
The SECP said the products outlined in the guidebook are structured around risk-sharing and asset-backed models rather than interest extraction. The regulator argued that this approach promotes ethical finance by reducing the exploitation and hidden charges that often accompany conventional micro-lending in Pakistan. The move also responds to a clear market signal. Citing growing demand for Islamic financial services, the SECP said greater participation by NBFCs in this space will sharpen competition in the non-bank sector, which should, in turn, deliver better pricing, greater transparency, and improved service standards for borrowers.
A Market Already in Motion
The scale of what is already happening in the sector suggests the guidebook arrives at the right moment. An analysis of 265 products from 89 lending NBFCs found that around 16 to 17 percent are already Shariah-compliant. Five lending NBFCs have received full Shariah certification and are actively offering products across Buy-Now-Pay-Later (BNPL), nano-lending, housing finance, and microfinance. Several other companies have also approached the SECP seeking guidance on structuring halal products, signalling wider appetite within the industry.
The broader non-bank financial sector is growing rapidly. As Arab News reported, Pakistan’s non-bank financial sector expanded in the second half of 2025, with total assets rising 21 percent to Rs 6.84 trillion by December 31. Shariah-compliant assets within the sector totalled Rs 2.47 trillion, accounting for 36 percent of overall industry assets.
For a freelancer or a small farmer with no credit history, a halal nano-loan is not just a religious preference. It could be the only loan they ever qualify for.
A Constitutional Imperative
The SECP made clear that this initiative is not merely a market-driven exercise. It forms part of the regulator’s Strategic Action Plan, which is aligned with Pakistan’s constitutional requirements and the directives of the Federal Shariat Court. As Arab News reported, the Federal Shariat Court’s 2024 ruling set a deadline of January 1, 2028, for the elimination of riba from Pakistan’s financial system, putting regulators under pressure to act with urgency across all financial sub-sectors.
Business Recorder reported that the SECP’s Strategic Action Plan 2024-26 targets a 15 percent increase in the share of Islamic finance in the non-bank financial sector and capital market, placing significant emphasis on encouraging Islamic financial institutions to develop innovative products for under-developed sectors essential to the country’s economic growth.
The guidebook is now available on the SECP’s official website.
