Wednesday’s video announcement from the finance minister disclosed that the coalition administration, in collaboration with the State Bank of Pakistan (SBP), has decided to withdraw both Supreme Court petitions against the Shariat court’s judgement to stop the Riba system. In the future years, the country would have a Riba-free (interest-free) banking system, as announced by the finance minister.
Dar stated that because the Sharia court had issued the directives in accordance with the Quran and Sunnah, the government should do the same.
“We have discussed with the Governor of the State Bank of Pakistan the future roadmap for Islamic banking, and with Allah’s aid, we will implement the Islamic system,” the finance minister stated.
Former finance minister Miftah Ismail indicated in the past that he asked the National Bank of Pakistan (NBP) to withdraw its appeal against the Federal Shariat Court and that he would discuss the matter with the SBP.
A special committee comprised of Mufti Taqi Usmani and other academics was reportedly constituted by the finance minister during his stint as finance governor from 2013 to 2018.
In addition, he stated that the current government will do its utmost to create an Islamic banking system in the country, despite the difficulty of instantly transforming the conventional system to an Islamic banking system.
The Shariat Court issued a ruling in a long-pending case on April 28, pronouncing the current interest-based banking system to be contrary to the Shariah and ordering the government to enable all loans under an interest-free basis. Regarding the introduction of Islamic banking in the country, the court has urged the government to enact legislation within five years.
However, SBP and NBP contested the verdict before the Supreme Court.
On Saturday, June 26, the SBP filed an appeal under Article 203D of the Constitution challenging certain inconsistencies in the FSC’s ruling through Attorney Salman Akram Raja. Through the appeal, the SBP requested clarifications.
The SBP noted that it had began the transition to a Shariah-compliant banking sector around the turn of the millennium and that both Islamic and conventional banking were permitted to function concurrently.
In addition, the SBP emphasised in the appeal that, despite the increased interest of foreign providers in Islamic forms of finance, the central bank could not mandate their implementation.
The Jamaat-e-Islami has organised campaigns to boycott banks that have disputed the verdict of a Shariah court.
In addition to NBP and SBP, United Bank Limited (UBL), Allied Bank Limited, and MCB Bank have also filed an appeal.
