SBP allows non-bank investors to participate in GIS auctions

KARACHI: The State Bank of Pakistan (SBP) has expanded investor access to Government of Pakistan Ijarah Sukuk (GIS) auctions conducted on a Bai-Muajjal basis, allowing non-bank investors, including corporate, investment funds and individuals, to participate alongside Islamic banks and Islamic banking branches.

The move is aimed at broadening the investor base, enhancing market liquidity and supporting the development of Pakistan’s Islamic finance sector.

SBP, in 2025, decided that Government of Pakistan (GOP) may outright purchase GIS on deferred payment basis (Bai-Muajjal) and sell these GIS on ready payment basis through uniform price based competitive bidding auction process. However, initially only Islamic banks and Islamic banking branches were eligible to participate in these auctions.

Now, it has decided to include non-bank investors, including but not limited to corporate, funds, individuals, as eligible participants in these auctions of outright purchase of GOP Sukuk on deferred payment basis (Bai-Muajjal) by the GOP and sale of these GOP Sukuk on ready payment basis through uniform price based competitive bidding auction process.

As per term and conditions, non-bank investors will be allowed to participate in these auctions, by submitting pass-through bids or non-competitive bids, through any Islamic Banking Institution (IBI) or Islamic Banking Branch (IBB).

IBIs or IBBs will submit the documents on behalf of the non-bank investors submitting pass-through or non-competitive bids.

The SBP has also laid down a framework for the submission of non-competitive bids in Bai-Muajjal auctions of GIS and under the revised mechanism, IBIs and IBBs will submit non-competitive bids on behalf of investors, specifying the investor’s name or account title and the amount of Sukuk to be sold or purchased, without quoting a price.

According to the new guidelines, non-bank investors seeking to participate in the auctions will be required to submit an undertaking and authorisation form to their respective IBIs or IBBs before the auction.

The SBP has stipulated that only a single bid will be allowed to be submitted in each tenor, while such bids must be submitted at least one day before the competitive auction or in accordance with the auction schedule announced by the SBP from time to time.

The SBP further clarified that all non-competitive bids will be accepted at the uniform price determined through the competitive auction process. The arrangement is aimed at facilitating wider participation in the Islamic government securities market while ensuring a transparent and standardised price discovery mechanism. According to SB, all other instructions shall remain unchanged.

Copyright Business Recorder, 2026