The 26th Constitutional Amendment Bill, 2024, recently passed by the Senate, has established a deadline of January 1, 2028, for the end of the practice of Riba (interest-based banking) in the country.
Jamiat Ulema-e-Islam-Fazl (JUI-F) requested the government to include this clause in the Constitutional Amendment Bill.
The current clause states that “eliminate Riba as early as possible,” and the government replaced this with “as far as practicable, by the 1st of January, 2028.”
Earlier in 2022, the Federal Shariat Court 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.
Federal Court’s verdict
Justice Dr Syed Muhammad Anwer read out the verdict that was reserved by a three-member bench of the Federal Shariat Court.
The verdict stated that abolition of Riba is fundamental for an Islamic system, adding that any transaction involving Riba is “wrong”.
“The abolition of Riba and its prevention is in accordance with Islam. The interest taken in any case, including debt, falls into Riba, which is completely forbidden in Islam,” said the Federal Shariat Court.
Shariat court’s verdict
The Shariat court’s verdict also stated that interest given on external and internal loans by the government also falls under Riba.
“The government should ensure that internal, external loans and transactions should be made interest-free. Transactions with international institutions, including the IMF and World Bank, should be made interest free as well,” said the court.
It is important to mention here that in line with the Federal Shariat Court’s ruling on Riba, the SBP has granted in-principle approval for establishing a digital retail Islamic bank and Shariah compliant digital banking through Islamic window operations.
