The Presidents/Chief Executive Officers
All Banks having Islamic Banking Branches

Dear Sir/Madam,

Islamic Banking Windows (IBWs)

Please refer to IBD Circular No. 6 of 2007 read with Para 10 (v) of Annexure III of IBD Circular No. 2 of 2004, which requires the banks having Islamic banking branches to submit certain information before the start of Islamic banking windows operations at their conventional banking branches.

2. In order to further strengthen the Islamic banking windows (IBWs) operations, the following additions/amendments have been made in the earlier instructions on the subject:

i)	Before opening of each IBW, bank shall obtain prior written approval from Banking Policy and Regulation Department (BPRD) of SBP.
ii)	A non-refundable processing fee of Rs 50,000/- per IBW shall be paid by the bank along with their request for permission to open IBW(s).
iii)	In addition to processing fee, Annual fee @ Rs 25,000/- per IBW shall also be applicable on IBWs operating in conventional banking branches of big cities, as defined in Branch Licensing Policy issued vide BPRD Circular No. 15 of 2007 as amended from time to time. No annual fee shall be applicable for IBWs operating in other than big cities.
iv)	IBW(s) may be closed without prior approval of SBP. In case of closure of IBW(s), bank would inform SBP before or within seven working days of closure along with the updated list/position of IBWs and the reason for closure of IBW(s).
v)	IBWs may also be shifted to other branches with prior written approval from BPRD of SBP. No processing fee shall however be applicable for shifting of IBW(s).
vi)	Before applying for permission, the bank shall ensure that the designated Staff, Operation Manager and the Branch Manager of the branch where IBW is proposed and the related marketing staff have been provided comprehensive Islamic Banking training, so that they are not only able to understand the key differences between conventional and Islamic banking products but are also be able to respond effectively to the queries regarding various Islamic Banking modes/products and services.
vii)	The bank shall submit their request for opening or shifting of IBW(s) to the Director – BPRD with a copy to Director – Islamic Banking Department along with the prescribed fee and following information:
	a) Number of Islamic Banking Branches of Islamic Banking Institutions operative in the vicinity i.e. within the radius of 1 Km. b) Details about Staff/HR arrangements for proposed IBWs; dedicated IB Staff or mixed staff. c) Marketing arrangements; separate marketing staff or mixed marketing (please explain and specify). d) Details about physical infrastructure for IBW in the branch, if any, like separate counters for walk-in clients. e) Contact details of the proposed Branch/officials. f) A report containing the details of Islamic banking training provided to the staff of the proposed branches including the contents/structure, schedule and lists of trainer(s) & trainees etc. g) Shariah Advisor’s opinion regarding the HR capacity and the overall system/arrangements for the proposed IBW(s).

3. The above instructions are applicable with immediate effect. All new IBWs shall require prior written approval of SBP along with processing fee. The annual fee regarding IBWs however shall be paid by 7th January each year starting from the year 2015. The processing and annual fee can be paid either through the bank’s authority letter duly signed by the bank’s authorized signatory for debiting their current account maintained with SBP BSC (Bank) or through cheque in the favour of State Bank of Pakistan. The authority letter and/or cheque may be sent to the Director, BPRD of SBP.

4. All other instructions contained in IBD Circular No. 6 of 2007 and IBD Circular No. 2 of 2004 shall remain the same.

Please acknowledge receipt.