- Clause added as proposed by JUI-F.
- January 2028 is the deadline for completing Riba practice.
- All transactions involving Riba are “wrong.”
The 26th Constitutional Amendment Bill, 2024, recently passed by the Senate, sets a deadline of January 1, 2028 for termination of riba (interest-based banking) operations in the country.
This clause was added to the draft amendment at the suggestion of Jamiat Ulema-Islam-Fazl (JUI-F), a regional party led by Maulana Fazl-ur-Rehman, and the government had a hard time submitting the amendment. Draft amendment.
To eradicate this form of usury, the Senate approved an amendment to Article 38(f) of the Constitution on the Promotion of Social and Economic Welfare.
The current clause reads “remove Riba as soon as practicable'', which the government has replaced with “as far as practicable, by 1 January 2028''.
In early 2022, the Federal Shariat Court granted the government five years to implement an Islamic interest-free banking system in the country, stating that the economic system of an Islamic country like Pakistan should be interest-free. Gave.
Judge Syed Muhammad Anwar read out the verdict, which was reserved by a three-member bench of the Federal Shariat Court.
The ruling said the abolition of riba is fundamental to the Islamic system, adding that any deal involving riba is “wrong.”
“The abolition of riba and its prevention is in accordance with Islam. Interest taken in any case involving debt falls under riba, which is completely prohibited in Islam,” the Federal Shariat Court said.
The Shariat Court judgment also stated that interest granted on external and internal loans by the government is also subject to riba.
“The government should ensure that internal and external loans and transactions are interest-free. Transactions with international organizations, including the IMF and the World Bank, should also be interest-free,” the court said.
It should be noted that following the Federal Shariah Court's judgment in Riba, the SBP has given in-principle approval for the establishment of a digital retail Islamic bank and Shariah-compliant digital banking through Islamic counter operations.
According to the SBP's Governor's Report 2023-24 released on October 18, 2024, the Federal Shariat Court's judgment on Riba provides a clear direction, and the SBP will take that direction in line with the government and other interests. We are actively working with relevant parties to implement the ruling. .
“A multi-pronged approach was adopted in this regard under the guidance of the high-level ‘Islamization of Conventional Banking Committee’,” the report said.
This will include a review of existing national laws and comparison with international best practices, an assessment of the existing regulatory framework, awareness sessions on Islamic banking and finance, and stakeholder capacity building, according to the SBP report. .
