First Islamic credit risk-sharing product

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has approved the country’s first Shariah-compliant credit risk-sharing product, enabling Islamic financial institutions to expand financing to underserved sectors such as micro, small and medium enterprises and agriculture. The product, developed by National Credit Guarantee Company Ltd, reduces credit risk through a risk-sharing mec­­h­­anism while enhancing access to fin­ance and ensuring Shariah compliance. It offers an alternative to conventional credit guarantees through a Shariah-compliant risk-sharing model. Under this structure, participating institutions contribute to a pooled fund on a donation (Tabarru) basis, managed by NCGCL as an agent (Wakeel) under a Wakalah arrangement. Losses arising from eligible defaults are covered from this pool, ensuring genuine risk sharing without guaranteed returns. Published in Dawn, April 5th, 2026

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