Many people need loans for financing their business. For this purpose, they often seek the help of banks. However, most people are reluctant to do so as mostly banks take interests on loans, which is the permanent means of income for banks. Due to religious purposes, seeking an interest free loan is nearly impossible in Pakistan but we are here to answer all your questions.

A few Islamic banks in Pakistan claim to provide interest free loans, however, with higher interest rates it takes forever for people to pay the price back to banks in the form of land, house or property.

Here are a few foundations and initiatives in Pakistan from where you can get interest free loans.

1.Al-Khidmat Foundation Mawakhat program

With the rate that unemployment is increasing each year, it can prompt a dangerous increase in poverty and can influence the country’s economy also. Understanding this need, Al-khidmat foundation has introduced the ‘Makhwat Program’, which offers loans to individuals who need to start their business. In Pakistan, individuals have talent, abilities, and motivation. They simply just need backing and money to go into business. This is what ‘Al-Khidmat foundation’ does.

With the primary goal to provide interest-free loans to the destitute and poor, it enables individuals to be strong and financially independent, maintaining he Islamic rules of banking.

It has two types of schemes:

  1. Home-based schooling

This scheme provides interest-free loans under home-based schooling. By spending 1,542,500 rupees, this scheme has already helped 50 families in karachi with low-income individuals.


  1. Mobile vocational trainer

Understanding the importance of skills, Al-khidmat foundation helps people obtain those skills.


2.Akhuwat Islamic MicroFinance (AIM)

Promoting social justice and brotherhood, Akhuwat Islamic MicroFinance is a company that provides interest-free microfinance to the underprivileged, lower-class members of society.

Eligibility criteria

The applicant:

  • Must have valid CNIC number
  • Can maintain a business at the initial stage
  • Should be 18-62 years in age
  • Should not have any criminal record
  • Must have a good social and moral character

The candidate needs two guarantors other than a family member/relative for this loan.

Two types of loans come under Akhuwat MicroFinance:

Group Lending

Three or six members partake in group lending. All individuals from the group give an assurance and credentials to one another. Group members solve their social and financial problems through decision-making. Individuals shouldn’t be relatives; however, they can be living close-by.

Individual Lending

Individual Lending is for members who fulfil the eligibility criteria and then can apply for interest-free loans. The member will need to provide 2 guarantors to get loans.

The two guarantors guarantee that this individual will pay the loan on time. In case of group lending, members give a guarantee of each other.

3.IFC business finance

IFC is an individual from the World Bank Group. Its main goal is to eliminate poverty from society by giving freedoms to individuals to work on their lives. IFC addresses difficulties that influence private sector improvement; it centers around giving finance to small and medium ventures. IFC joined forces with financial institutions to work with SMEs and stimulate economic growth inside the country. In 2009, IFC made collaboration with HBL to create jobs.

By providing services in both English and Urdu, IFC has successfully increased its small business customers to more than 80,000 new customers.

It has prepared 4400 business entrepreneurs. The association has made dispute resolution centers in Karachi. It permits and assists the smaller endeavor with settling their problem without going to court. An incredible example of IFC is to work with HBL.

4.Dubai Islamic Business Finance

Dubai Islamic Business Finance is completely based on sharia’s rules and regulations. DIBPL enters Shirkatul Melk’s relation with its customers. It purchases a share of your residence. In this way, it leases your undivided share in the property against monthly rental. It fulfills all sharia manners.

It is the only type of product available that follows Islamic standards. It gives 500,000 to 20 million financing sums and has a quick application processing time. This plan offers 70% of your property benefit. Tenor rescheduling choice is also available. Terms and conditions, however, may apply to get the loan.

Eligibility criteria:

The applicant must be Pakistani with age between 26-40.

The property’s minimum value must be 2000,000 and it should be located in Karachi, Lahore, Islamabad, Rawalpindi, Faisalabad, Multan, Bahawalpur, Sialkot, Gujranwala, Hyderabad and Peshawar.

5.Prime Minister Youth Loan Scheme

In an era of skilled, innovative and motivated youth, PM has started the Prime Minister Youth Business loan with the aim to offer loans to unemployed youth to help make them financially independent. Providing better employment opportunities, this scheme will play a vital role in growing the economy.

Terms and conditions apply

  • Mark-up 6% per annum
  • The maximum loan size will be 2 million
  • The application fee is Rs. 100
  • Tenure will be 8 years maximum

Requirements of the Scheme

The following are the requirements of the scheme that an applicant must fulfill.

  • Applicants must be of age between 21 and 45.
  • The applicant should be Pakistani with a valid CNIC.
  • An applicant with a new startup will show relevant technical skills/educational degrees.
  • A person who has an existing business will show involvement in the industry and genuine business concern.
  • The loan amount should be equal to or the same as the life insurance of the applicant.
  • The guarantor should have 1.5 times more net worth than the requested income. He should be a government employee for the remaining service of 8 years.
  • The applicant can provide more than three guarantors.


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