Islamabad, Mar 6, 2025: The State Bank of Pakistan (SBP) has made it obligatory for Islamic Banking Institutions (IBIs) to provide collateral when accessing the Sharia-compliant Mudarabah-based Standing Ceiling Facility and Open Market Operations (OMO – Injections) through Government Investment Sukuk (GIS) maintained by the Central Depository Company (CDC).
IBIs must pledge the collateral in favor of SBP within the Central Depository System (CDS) using the allocated codes 2025-30 for the ceiling facility and 2025-29 for OMO injections.
The market valuation of the collateral provided by IBIs to obtain the Mudarabah-based Financing Facility (MFF) must be at least equal to the sum of the financing amount obtained from SBP, the expected return on MFF, and any applicable deduction on the market value of the security offered as collateral.
The Financial Market Association of Pakistan (FMAP) will determine the valuation of GIS (CDC) used as collateral based on revaluation rates published on the last working day before a facility request submission.
During the facility tenure, pledged collateral will remain encumbered and excluded from the IBIs’ Statutory Liquidity Requirement (SLR).
Once IBIs confirm the deal and SBP verifies the collateral pledge in CDS, SBP will credit the required funds to the IBIs’ current accounts.
On the maturity or settlement date, SBP will debit the respective IBI’s account to recover the principal amount and expected return before releasing the pledged securities in CDS.
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IBIs utilizing MFF against approved collateral must submit a duly authorized deal confirmation letter to the Chief Manager of the SBP Banking Services Corporation (BSC) Karachi Office.
All other related instructions remain unchanged.
This process aligns with the collateral requirements periodically communicated by SBP.
The valuation of GIS (CDC) for collateral will be based on revaluation rates published by FMAP as of the last working day before the facility request.
As per SBP’s guidelines, any collateral pledged under this scheme will remain encumbered and will not contribute towards IBIs’ SLR compliance throughout the facility period.
SBP introduced the Mudarabah-based Sharia-compliant Standing Ceiling Facility and OMO injections last year to support eligible IBIs.
For effective execution, SBP will establish a Group ID on CDS to facilitate the pledging of GIS (CDC).
