Dar announces Riba free banking system, withdrawal of appeal against FSC verdict

ISLAMABAD: Finance Minister Ishaq on Wednesday revealed that the coalition government in consultation with the State Bank of Pakistan (SBP) has decided to withdraw both appeals filed in the Supreme Court against Federal Shariat Court (FSC) verdict against Riba system in the country.

The finance minister also announced that preparations for devising a Riba free (interest free) banking system would be introduced in the country in the coming years.

In a video statement on Wednesday, Dar said that the Shariat court had given the verdict keeping in view the Quranic teachings and Sunnah and the government would follow these lines.

“We have discussed the future of Islamic banking roadmap with the Governor State Bank of Pakistan and Insha’Allah, we will implement the Islamic system with the help of Allah,” the Finance minister added.

In the past, former finance minister Miftah Ismail also stated that he instructed National Bank of Pakistan (NBP) to withdraw its appeal against the Federal Shariat Court and that he will discuss the issue with the SBP.

The finance minister also claimed that in his previous tenure as finance governor in 2013 to 2018, there had been considerable work on developing the Islamic banking system in the country, including a special committee established consisting of Mufti Taqi Usmani and other scholars.

He also said that although there are challenges with converting the conventional system immediately to Islamic banking system, the current government will try its best to implement Islamic banking system in the country.

On April 28, the Shariat Court announced a verdict in a long-pending, declaring the prevailing interest-based banking system as against the Shariah and directed the government to facilitate all loans under an interest-free system. The court had instructed the government to make laws within five years with regard to the implementation of Islamic banking within the country.

However SBP and NBP had challenged the decision in SC.

On Saturday June 26, the SBP filed an appeal under Article 203D of the Constitution through Advocate Salman Akram Raja against certain discrepancies in the FSC judgment. The SBP, through the appeal, sought clarifications.

The SBP explained that it had already begun the transformation of the banking system into a Shariah compliant one at the start of the millennium and that Islamic and Conventional banking were both allowed to operate simultaneously.

Moreover, in the appeal, the SBP further explained that while Islamic modes of finance were a growing area of interest for foreign providers, the central bank could not enforce adoption.

The Jamaat-e-Islami has run campaigns to boycott banks that have challenged the Shariah court’s decision.

Others that have filed an appeal include United Bank Limited (UBL), Allied Bank Limited, MCB Bank, in addition to NBP and SBP.

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