Pakistan to move away from interest-based banking system

Islamabad: In a sudden decision, the Pakistan government on Wednesday announced that it will move ahead to establish an interest-free, Islamic banking system and withdraw in the coming days appeals filed against it in the Supreme Court, according to a media report.

This was announced by Finance Minister Ishaq Dar on Wednesday, Samaa TV reported.

In a televised statement, Dar said that in recent years, the progress on imposing an Islamic system of banking had faced hurdles and challenges.

He disclosed that when the Federal Sharia Court earlier this year issued its verdict to impose an Islamic form of financial and banking system, the government had knowledge that the State Bank of Pakistan (SBP) and the National Bank — both representatives of the government in the banking and financial sector — had separately filed appeals in the Supreme Court against the verdict.

“Because this is ordained in the Holy Quran, and I believe the barometer of our decisions is the Quran and Sunnah, we all should follow it,” he said, Samaa TV reported.

Dar said that with permission from Prime Minister Shehbaz Sharif and after due consultation with SBP Governor Jameel Ahmed, both the central bank and the National Bank will withdraw their appeals in the Supreme Court and that the government will try its utmost to enforce the Islamic system of banking as soon as possible, the report said.

He also prayed for divine guidance on imposing this new, interest-free system.

Dar, however, reminded that there are a lot of challenges in implementing this system since Pakistan’s entire banking system in vogue for the past 75 years cannot suddenly move to a different system.

“The government has decided in the light of teachings of the Holy Quran and Sunnah, the two appeals against the Federal Shariah Court’s verdict by the government will be withdrawn, and work will begin to implement the system within a defined timeline,” he said.