More and more Pakistanis want to keep their savings away from riba (interest), and the banking sector has responded. According to the State Bank of Pakistan (SBP), Islamic banking held about 23.7% of banking assets and 29.2% of deposits by June 2026, and the share keeps growing. In this guide we explain how Islamic banks in Pakistan work, list the main full-fledged Islamic banks and Islamic windows, compare their savings account types, and share what to check before opening an account.
This article is for general information only and is not financial or religious advice. Profit rates change every month, and for Shariah questions you should consult a trusted mufti.
How Islamic Banking Works in Pakistan
A conventional bank pays you a fixed interest on deposits and charges interest on loans. An Islamic bank must follow Shariah rules, supervised by its own Shariah Board and by the SBP’s Shariah Governance Framework. Instead of interest, it uses contracts such as:
- Mudarabah: you provide money, the bank invests it in Shariah-compliant businesses, and profit is shared at an agreed ratio. Any loss is borne by the capital provider (except in case of the bank’s negligence).
- Musharakah: a partnership in which both sides contribute and share profit and loss.
- Murabaha: the bank buys an asset and sells it to the customer at a disclosed profit, often used for trade finance.
- Ijarah: leasing, often used for car financing.
- Diminishing Musharakah: joint ownership that the customer gradually buys out, common in home financing.
- Qard: a loan to the bank with no return, used for current accounts.
Pakistan’s Federal Shariat Court ordered in 2022 that riba be eliminated from the economy, and the 26th Constitutional Amendment set a target date of 1 January 2028. That is why many banks are expanding their Islamic operations.
Full-Fledged Islamic Banks in Pakistan
| Bank | Background | Known for |
|---|---|---|
| Meezan Bank | Pakistan’s first full-fledged Islamic commercial bank (2002), now the largest | Large branch network, wide product range, strong digital app |
| BankIslami Pakistan | Full Islamic bank since 2006 | Savings accounts, home and car finance |
| Dubai Islamic Bank Pakistan | Subsidiary of Dubai Islamic Bank (UAE) | Consumer finance, premium accounts |
| Al Baraka Bank Pakistan | Part of the international Al Baraka group | Islamic trade and SME finance |
| MCB Islamic Bank | Subsidiary of MCB Bank, launched 2015 | Growing network, MCB group backing |
| Faysal Bank | Converted completely from conventional to Islamic (completed around 2023) | Large converted branch network across Pakistan |
Each of these banks is fully Islamic, so all of their products and branches operate under Shariah rules.
Islamic Banking Windows of Conventional Banks
Many conventional banks run separate Islamic branches or “windows” with separate funds and Shariah boards. Some well-known ones are:
- HBL Islamic (Habib Bank Limited)
- UBL Ameen (United Bank Limited)
- Bank Alfalah Islamic
- Bank Al Habib Islamic Banking
- HabibMetro Sirat
- Askari Ikhlas
- NBP Aitemaad (National Bank of Pakistan)
- Soneri Mustaqeem
Some customers prefer a full Islamic bank to avoid any mixing with a conventional parent. Others are comfortable with windows because funds are kept separately. This is a personal choice.
Types of Islamic Savings Accounts
| Account type | Contract | Profit? | Suitable for |
|---|---|---|---|
| Current account | Qard | No profit | Daily transactions, salary, business payments |
| Savings account | Mudarabah | Yes, variable monthly | Regular savers |
| Term deposit (certificates) | Mudarabah | Yes, usually higher for longer terms | Money you will not need for months or years |
| Kids / women / senior citizen accounts | Mudarabah | Yes, with special features | Specific groups |
| Asaan / basic accounts | Qard or Mudarabah | Depends | First-time and low-income customers |
Profit rates on Islamic savings accounts are not fixed. Banks announce expected rates each month based on actual earnings and the general rate environment. Check the latest profit rate sheet on the bank’s official website or at the branch.
How profit is calculated
Banks assign “weightages” to different accounts and balances. For example, a larger balance or longer term deposit gets a higher weightage and therefore a larger share of the pool’s profit. The bank must publish these weightages, so ask the branch for them.
How to Choose the Best Islamic Bank in Pakistan
- Branch and ATM network: make sure there is a branch near your home or office, especially outside big cities.
- Digital banking: check reviews of the mobile app, Raast transfers and bill payments.
- Profit history: compare the last few months of actual profit rates, not just advertised ones.
- Charges: ask about debit card fees, SMS alerts, cheque books and minimum balance.
- Shariah board: read who sits on the Shariah board and whether you are comfortable with their approach.
- Customer service: try the helpline before opening an account.
Islamic bank deposits are covered by the Deposit Protection Corporation up to a set limit per depositor per bank, just like conventional banks. Check the current limit on the SBP / DPC website.
Scholars’ Views and Common Questions
Scholars in Pakistan hold different views. Many prominent scholars support the current Islamic banking model as a big improvement over interest-based banking, while some ulema have raised objections that certain products are too close to conventional ones in practice. Both sides agree that riba is forbidden and that the system should keep improving. Respectfully, it is best to ask a scholar you trust, from your own maslak, before making a decision.
Zakat on savings accounts
Under Pakistani law, Zakat is deducted from savings accounts of Muslim account holders on the 1st of Ramadan, unless the customer submits the CZ-50 declaration form for a valid reason. Many people prefer to calculate and pay their own Zakat directly to deserving people. Ask your bank about the process.
FAQs about Islamic Banks in Pakistan
Which is the biggest Islamic bank in Pakistan?
Meezan Bank is the largest full-fledged Islamic bank in Pakistan by deposits and branch network.
Is profit from Islamic savings accounts halal?
Islamic banks pay profit under Shariah-approved contracts supervised by Shariah boards. Most scholars accept this; some differ. Ask a trusted mufti for your personal case.
Can an Islamic bank account lose money?
In a Mudarabah account, profit varies and losses are theoretically possible, but in practice banks manage pools carefully. Current accounts (Qard) do not earn profit but are not exposed to investment loss.
Are Islamic banks regulated by SBP?
Yes. All Islamic banks and windows are licensed and regulated by the State Bank of Pakistan.
Can non-Muslims open accounts in Islamic banks?
Yes, Islamic banks serve all customers, and Zakat deduction does not apply to non-Muslims.
Do you bank with an Islamic bank already? Share your experience with service and digital banking in the comments to help other readers decide.