Ahmed Mukhtar Naqshbandi
ISLAMABAD: Federal minister of finance and revenue Senator Ishaq Dar stated on Wednesday that the government can achieve an interest-free economy within a span of five-year. He also said that his government is committed to ending the interest-based financial system in the country.
Speaking at a conference on “Hurmat-e-Sood” organized by the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) in Karachi, Ishaq Dar maintained that “modern banking has become a necessity of life.”
“The banking system has become a necessity of life and transparent transactions can be ensured through it,” Dar said spoke at the FPCCI seminar.
The government remains committed to promoting Islamic finance and doing away with the nation’s interest-based system, the finance minister said while praising the Federal Shariat Court’s (FSC) ruling.
“A base has already been established,” said Dar, adding that more work needs to be done in this area. According to total assets and deposits, Islamic banking has a market share of 20% and 21%, respectively.
In addition to Islamic banking, he stated that development was needed in the mutual funds, insurance, and capital markets on Islamic terms.
Government Making Efforts to Increase Financial Inclusion
Dar claimed that efforts are being made to increase financial inclusion globally. During our previous tenure, we made significant progress in this area, and about 30% of the population joined the banking industry, according to Dar, who also noted that actions are being taken to ensure that every person has access to the financial system.
Earlier, Jameel Ahmad, governor of the State Bank of Pakistan (SBP), said that Islamic banking has grown to be an important component of the nation’s financial industry.
“In Pakistan, there is a much greater demand for Islamic banking than for traditional banking. As a result, the SBP and the government are taking additional measures to satisfy public demand, the central bank governor said in a speech at the Hurmat e Sood conference, which the FPCCI organised in Karachi.
Ahmad said that the nation’s central bank is still dedicated to advancing Islamic banking. I’d like to reiterate that SBP is still committed to carrying out the FSC’s decision. We have started working on a transformation plan to change conventional banking into Islamic banking in this regard,” he said.
A high-level working group composed of representatives from the SBP, SECP, and Ministry of Finance has been established in this regard. He continued, “This working group is charged with developing Sukuk structures.”
Mufti Taqi Usmani Urges Government for Measures to Establish Interest-free System
In his remarks at the seminar, eminent Islamic scholar Mufti Taqi Usmani praised the government’s earlier choice to withdraw its appeals against the FSC decision while urging the Ministry of Finance to take effective measures to establish an interest-free system.
The Islamic scholar urged the public to boycott such banks and financial institutions, claiming that private banks have not yet withdrawn their appeals and have not consulted the Federal Shariat Court.
“We also call on the government to implement workable measures as soon as possible to abolish this interest-based system. The finance ministry needs to set up a permanent division with a task force within it to develop an interest-free system, he continued.
An agreement between the government and the SBP and National Bank of Pakistan (NBP) to withdraw their appeals against the Federal Shariat Court’s (FSC) directive to implement an Islamic banking system in Pakistan by 2027 was announced earlier this month by Dar.
By ordering the government to abolish the interest-based banking system by the end of 2027 on April 28, 2022, the FSC declared that eliminating interest from the economic system was both a religious and legal obligation.
The case was referred back to the court in 2002 by the Supreme Court in response to appeals against the FSC’s ruling in the case of petitions against Riba (usury).
When he made his decision in the long-pending case public in April, Judge Syed Muhammad Anwar emphasised that interest-free banking could be implemented anywhere in the world. He gave the Pakistani government the order to work toward removing interest from the nation’s banking system within the next five years.
It is important to note that the Shariat Appellate Bench of the Supreme Court of Pakistan remanded the Riba-free economy case in 2002.
