Amanullah Khan, CFA

Assistant Manager

Strategy, Products & Data Science

Government of Pakistan Ijarah Sukuk (GIS) has seen significant progress in its issuance and accessibility since the shift of its primary market auctions to the Pakistan Stock Exchange (PSX) in December 2023. This transition to the capital market infrastructure has broadened participation, improved transparency, and streamlined the auction process through provision of a robust, in-house digital auction system developed by PSX.

GIS are Shariah-compliant financial certificates representing ownership in tangible assets, usufructs, or services. Unlike conventional bonds, GIS provide returns based on asset rentals rather than interest, making them compatible with Islamic principles. The Government issues primarily Ijarah Sukuk based on lease contracts, offering investors an ethical and Shariah-compliant investment option. The launch of GIS auctions at PSX marked a historic shift, enabling greater transparency, efficient price discovery, and wider market access. Investors can submit competitive bids, specifying the desired rental rate or spread - or non-competitive bids, accepting the rate set by the market. GIS offers stable, low-risk returns through fixed or variable rental payments, with tenors of 1, 3, 5, and 10 years. The minimum investment requirement of PKR 5,000 enables accessibility to a wide investor base, including individuals, non-resident Pakistanis (via Roshan Digital Accounts), and foreign investors. Investors can participate in primary market auctions and can also trade GIS in the secondary market via any Bills and Bonds (BnB) enabled broker (https://www.psx.com.pk/psx/themes/psx/uploads/List-of-BnB-Enabled-Brokers.pdf) .

Since the introduction of GIS on the PSX platform, primary market issuance has reached approximately PKR 3 trillion, while secondary market trading has surpassed PKR 600 billion. The primary market auctions have consistently witnessed an average oversubscription of 3.91 times, indicating strong investor interest. Retail investors can participate in these auctions through registered brokerage firms or online trading platforms, with detailed procedures available on PSX’s website.

A significant milestone for PSX and by association Pakistan, was the launch of the first-ever Green Sukuk at PSX, which successfully raised PKR 31.99 billion. The proceeds from this issuance are dedicated to funding environmentally sustainable projects, including renewable energy and climate resilience initiatives. This Green Sukuk aligns Pakistan’s capital markets with global Environmental, Social, and Governance (ESG) standards and highlights the growing global ESG Sukuk market, where Islamic financial instruments are increasingly used to support green investments worldwide.

Looking ahead, the GIS program aims to introduce additional tenors and expand Islamic financing structures, including Bai Muajjal Sukuk. Efforts are also underway to enhance retail investor participation through improved digital platforms and awareness initiatives. These developments reflect Pakistan’s commitment to expanding Islamic finance while integrating with modern capital market infrastructure. GIS represents a major step forward in aligning Islamic finance with contemporary capital markets. For investors seeking a Shariah-compliant, low-risk, and transparent option, it provides a credible and well-structured solution. Information on upcoming auctions, primary market data, and secondary market trading is available at www.psx.com.pk and www.dps.psx.com.pk