Primary source: IFPD Circular No. 03 of 2026 dated 16 October 2026 · Research date: 19 October 2026. Verify the complete primary publication and later amendments.
The new SBP circular is an operative Islamic-banking instruction. Its practical effect must be assessed together with the attached clarifications and need-based guidance.
What the State Bank has adopted
IFPD Circular No. 03 of 2026, dated 16 October 2026, adopts AAOIFI Shariah Standard No. 30 on Monetization (Tawarruq) with immediate effect, subject to Appendix A of the circular. SBP has separately issued guidelines on applying Ḥājah (need) in Tawarruq-based transactions.
The adoption operates in addition to existing SBP regulations, instructions and directives. Implementation cannot be assessed from the unmodified international standard alone; local clarifications and accompanying guidance form part of the operative framework.
Institutions and transactions affected
The circular is addressed to Islamic banks, Islamic banking subsidiaries and conventional banks offering Islamic banking through dedicated branches. Affected institutions should identify products and operational workflows that employ Tawarruq-based structures.
Review should include Shariah-board documentation, necessity assessments, product manuals, customer documents, agency arrangements, approval controls and record retention in light of the applicable standards.
Supervision and compliance
SBP expressly indicates that failure to comply may attract penal action under applicable provisions of the Banking Companies Ordinance, 1962. The exact scope of an obligation or exception must be determined from the circular and annexures.
Compliance teams should address any mismatch between current product documentation and the newly adopted standard through an approved remediation process, rather than assuming an automatic exemption for existing practice.
What should affected organisations do?
Affected banks should undertake a documented product-level gap assessment against the circular, including appendices and existing SBP instructions.
Recommended action checklist
- Obtain the circular, Appendix A and Annexure I.
- Map Tawarruq-linked products and evaluate Ḥājah documentation.
- Agree revised procedures and evidence requirements with the Shariah compliance function.
Timing and legal status
SBP IFPD Circular No. 03 of 2026 dated 16 October 2026 states immediate effect, subject to its clarifications.
The summary does not replace the full AAOIFI standard as adopted and amended, or individual Shariah and legal analysis.
State Bank of Pakistan — official IFPD circular