Circulars/Notifications - Islamic Banking Department  
 IBD Circular No. 04 of 2020 October 02, 2020

The Presidents / Chief Executive Officers
All Banks and Development Finance Institutions

Dear Sir/Madam,

Guidelines and Criteria for Establishing Islamic Banking Institutions (IBIs) and Commencement of
Shariah Compliant Business and Operations by Development Finance Institutions (DFIs)

Please refer to IBD Circular No. 2 dated 29th April, 2004 wherein the guidelines and criteria for establishing Islamic banking institutions have been prescribed.

2. Subsequently, various developments have taken place in the licensing and regulatory regime for the conventional and Islamic banking institutions (i.e. full-fledged Islamic banks, Islamic banking subsidiary and Islamic branches of conventional banks).The abovementioned circular has accordingly been updated and the revised instructions in form of enclosed guidelines and criteria covering the following areas are being issued to facilitate the existing conventional banks, DFIs, IBIs and the potential new entrants.

  1. Guidelines & criteria for setting up full-fledged Islamic commercial bank (Annexure-I).
  2. Guidelines & criteria for setting up of an Islamic banking subsidiary by the existing conventional
    commercial bank (Annexure-II).
  3. Guidelines & Criteria for:
    a. Opening of standalone Islamic banking branches (IBBs) by a conventional commercial bank (Annexure-III).
    b. Commencement of Shariah Compliant Business and Operations by a DFI (Annexure-III).

3. These guidelines and criteria shall be applicable with immediate effect and shall supersede the instructions issued vide IBD Circular No. 2 dated 29th April, 2004.

4. Please acknowledge receipt.

Encl: Annexure-I
         Annexure-III (along with its Appendix-A & Appendix-B)

Yours truly,


(Ghulam Muhammad)


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