Islamabad: On 21 October, the Pakistan Times & Business Recorder stated that the Pakistan’s parliament has enacted a constitutional act that absolves Pakistan from ‘riba’ or interest from January 1, 2028.
It is very soul awakening and encouraging news for Islamic Republic of Pakistan. Riba (Sud) is considered as one of the greatest sins in Islam. Hence elimination of Riba is a very positive, encouraging and leading news. This landmark decision is in regard to a judgment given by the Federal Shariat Court (FSC) in the year 2022 to ban all types of Interest before the year 2027. The court stated simply that interest in any form is unlawful under Islamic law. This mandate was actively developed with the assistance of the FSC – the body that is responsible for the compliance of Pakistan’s laws with the principles of sharia.
Islamic banking has already been targeted for growth by the State Bank of Pakistan and part of the strategy is to increase its share to 35 percent of the overall commercial banking by the year 2025. Today it controls about 20% of the total banking system globally while it has a strong prospect for the future. The operations of Islamic banks have been on the rise in the last five years and assets and deposit balances showed an average annual growth rate of 25% and 22%.
That’s why in the present day and age, Pakistan possesses six absolutely functioning Islamic banks providing a broad assortment of monetary services. This constitutional amendment should also help put the country on the fast track to eliminating interest-based financial systems and bring its banking system in line with the objectives set by the FSC.
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