Pakistan is introducing an interest-free banking system
Last Updated on October 23, 2024 5:14 am
Pakistan is going to introduce an interest-free banking system. The country has already amended its constitution for this purpose.
Through the 26th amendment to the Pakistani constitution, the country will stop the ‘riba’ or interest-based banking system and introduce interest-free banking from the beginning of 2028. This information came to light in a report by Arab News on Monday.
The report said that this clause was added to the draft amendment on the advice of the regional political party Jamiat Ulema-e-Islam (JUI-F) led by Maulana Fazlur Rehman. However, this issue made it difficult for the government to present it in the final bill.
The Senate, the upper house of Pakistan’s parliament, has approved an amendment to Article 38(f) of the constitution to end interest in the banking system. This clause is related to the promotion of social and economic welfare.
The current clause states, ‘Riba (interest) shall be abolished as soon as possible.’ At the same time, the Senate government has said that this system will be implemented as early as January 1, 2028.
Earlier, in 2022, the Federal Sharia Court had directed the government to implement an Islamic and interest-free banking system in the country within five years. They argued that the economic system of an Islamic state like Pakistan should be interest-free. The three-member bench of the Federal Sharia Court of Pakistan gave this ruling.
In the ruling, Justice Dr. Syed Mohammad Anwar said, ‘The abolition of interest (riba) is very important for the Islamic system and any transaction that involves riba is wrong.’
The ruling also said, ‘The abolition of riba and its prevention are in line with Islam. Interest taken in any case, including loans, falls under riba, which is completely prohibited in Islam.’
The Federal Sharia Court also said, ‘The interest that the government pays on internal and external loans is also included in riba. The government must ensure that internal and external loans and transactions are interest-free. Transactions with international organizations, such as the IMF and the World Bank, should also be made interest-free.