Governor State Bank of Pakistan (SBP) Jameel Ahmad on Wednesday said Islamic banking has become a crucial aspect of the country’s financial sector.
“The demand for Islamic banking is much higher than conventional banking in Pakistan. Therefore, the SBP and the government are taking further measures to meet public demand,” said the central bank chief while addressing at a conference titled ‘Hurmat e Sood’ arranged by the FPCCI in Karachi
Jameel said that the central bank remains committed to promoting Islamic banking in the country. “I want to restate that SBP remains committed to implement the FSC decision. In this regard, we have commenced work on a transformation plan to convert conventional into Islamic banking,” he said.
In this regard, a high-level working group has been formed including officials from SBP, SECP and Ministry of Finance. “This working group is responsible for developing Sukuk structures,” he added.
Addressing the seminar, renowned Islamic scholar Mufti Taqi Usmani lauded the government’s earlier decision to repeal their appeals against the FSC decision, while urging the Ministry of Finance to take practical steps to put in place an interest-free system
“Private banks are yet to rescind their appeals and have not consulted the Federal Shariat Court,” said the Islamic scholar, while urging the people to boycott such banks and financial institutions.
“We also urge the government to take practical measures on an emergent basis to rid from this interest-based system. In order to develop an interest-free system, the finance ministry should establish a permanent division, under which a task force should be set up,” he added.
Earlier this month, Dar announced that the government had reached an understanding with the SBP and National Bank of Pakistan (NBP) to repeal their appeals against the Federal Shariat Court’s (FSC) order to implement Islamic banking system in Pakistan by 2027.
On April 28, 2022, the FSC had ruled that elimination of interest from the economic system was a religious and legal responsibility, ordering the government to end the interest-based banking system by the end of 2027.
The decision was made on petitions against Riba (usury) after the Supreme Court referred the case back to the court in 2002 following appeals against the decision of the FSC.
While announcing the verdict in the long-pending case in April, Judge Syed Muhammad Anwar had emphasised that interest-free banking can be implemented all over the world. He directed the government of Pakistan to make efforts to eliminate interest from the country’s banking system in the next five years.
It is pertinent to mention that the Riba-free economy case was remanded by Shariat Appellate Bench of the Supreme Court of Pakistan in 2002.
More to follow