Pakistan can be interest-free in 5 years: Ishaq Dar

Finance Minister Ishaq Dar Wednesday said the country can become interest-free in five years as stipulated by the Federal Shariat Court (FSC) in its judgement earlier this year.

"The banking system has become a necessity of life and transparent transactions can be ensured through it," Dar said speaking at a seminar held in Karachi.

The seminar was organised under the auspices of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and the Centre for Islamic Economics in Karachi where religious leaders from all schools of thought, businessmen, bankers, and politicians spoke at length about the “benefits” of an interest-free economy.

The FSC judgement issued in April 2022 gave the government five years to implement an Islamic and interest-free banking system in the country, as the economic system of an Islamic country like Pakistan should be free of interest.

In his verdict, Justice Dr Syed Muhammad Anwar stated that the abolition of riba was fundamental for an Islamic system, adding that any transaction involving riba was wrong.

“The abolition of riba and its prevention is in accordance with Islam. The interest taken in any case, including on debt, falls under riba. Riba is completely forbidden in Islam,” stated the verdict.

“If you make a sincere decision only for the pleasure of Allah, interest can be eliminated from the country in 5 years.”

Since then, the religious parties and clerics are demanding the government implement the verdict and forced it to withdraw the appeals against it.

Today, addressing the seminar, the finance minister said that currently Islamic banking has reached 20 to 21% in the country and the assets of Islamic banking are Rs7 trillion.

Expressing agreement with the speakers, Dar said an Islamic banking system was possible in the country.

He said that the SBP and other banks had filed appeals against the decision of the FSC, which had been withdrawn.

Resolution

A resolution was also presented at the end of the seminar, asking the government to take concrete steps in implementing the verdict of the FSC and urging private banks to withdraw appeals against it.

“We welcome the decision of the FSC against usury and express concern that private banks have not withdrawn appeals against the verdict,” the resolution stated.

It asked the government to take immediate steps to implement the court verdict in which meaningful progress can be seen.

The government should take practical steps to end the interest-based system within the stipulated period, the resolution said.

The gathering also asked for the Transgender Act to be amended in accordance with Sharia, while demanding to ban the film Joyland.

The concerns were also raised on the strength of the FSC which has reduced from 7 to 2 judges.

SBP governor vows joint efforts

Vowing joint efforts to completely eliminate interest, State Bank of Pakistan (SBP) Governor Jameel Ahmad said the market share of Islamic banking had increased to 21%.

“We have withdrawn the appeal against the decision of the Federal Shariat Court and the SBP is working to implement the decision of FSC,” the SBP governor said.

"The central bank has activated a high-level working group in this regard."

He said Pakistanis wanted to get rid of non-Islamic banking system.

Business magnate Arif Habib, the founder of the Arif Habib Group, acknowledged that Islamic banking was expanding rapidly in the country.

“Now Pakistanis want to get rid of the interest-based system,” he said and urged the Ulema to guide the citizenry who had become part of the prevailing system.

'All schools united on Islamic banking'

Renowned religious scholar Mufti Taqi Usmani said that "we all have to raise our voices unanimously to end the scourge of usury".

Addressing the seminar, the eminent religious scholar said there was no difference in the stance of different schools of thought of Muslims on usury.

“Interest-free banking should be implemented, the curse of usury should be eradicated. There is unanimity on this matter.”

Mufti Usmani said it was good that scholars of all schools of thought were participating in the seminar. "Implementation of Shariat is the most important issue, but an armed struggle for its implementation is not permissible."

He said that the purpose of this seminar was to demand from the government and related institutions that practical efforts be made to eliminate usury.

Earlier, according to Acting President FPCCI Sulaiman Chawla, the business community considers interest as haram but Pakistan pays 40% interest.

“Islamic banking facility should be fully implemented in banks, Chawla added.