KARACHI: The State Bank Pakistan (SBP) on Saturday announced that it has approached the Supreme Court for guidance in Federal Shariat Court’s (FSC) judgment in Riba (interest) case.
The FSC on April 28, 2022, announced a verdict on the long-awaited Riba case and declared the prevailing interest-based banking system as against the Shariah. The court also asked the federal and provincial governments for amendments to relevant laws and said that the country’s banking system should be free of interest by December 2027.
Although, the SBP welcomed the FSC verdict, however, on Saturday announced that it has reached out to the Supreme Court for guidance in the FSC decision.
“After a detailed review of the judgment and based upon the advice of our chief legal adviser and external counsel, we have sought guidance from the honorable Shariat Appellate Bench of the Supreme Court in terms of its implementation and practicalities involved,” the SBP said.
The SBP said that it welcomes the Federal Shariat Court’s judgement of April 28, 2022 on Riba case, as has already been done by the honorable finance minister. In particular, we appreciate the substantive part of the decision.
According to the SBP, as the prime custodian and regulator of the financial and monetary framework of the Islamic Republic of Pakistan, the SBP is deeply committed to ensuring compliance with the injunctions of Islam, in particular those pertaining to Riba, while protecting the stability and security of the financial sector of the country that functions as part of the global financial system.
In this context, SBP has always remained at the forefront in promoting Islamic banking in the country. The SBP is among the few regulators across the globe where comprehensive legal, regulatory, and Shariah Governance frameworks have been successfully developed and implemented.
The SBP mentioned that currently, 22 Islamic Banking Institutions (5 full-fledged Islamic banks and 17 conventional banks having standalone Islamic banking branches) with a branch network of 3,983 branches along with 1,418 Islamic banking windows (Islamic banking counters at conventional branches) are operational across the country.
The industry now accounts for 19.4 percent of the country’s overall banking system in terms of assets while in terms of deposits the share is 20 percent (as of March 31, 2022), it added.
In addition, SBP has also been taking measures to bring the legal and regulatory infrastructure in compliance with Shariah principles.
Full FSC bench comprising Chief Justice Muhammad Noor Meskanzai, Justice Dr Syed Muhammad Anwar, and Justice Khadim Hussain M Shaikh had heard a number of constitutional petitions filed against the interest-based banking system in the country and announced the decision of the case after the completion of arguments of the lawyers of the parties. In the written judgment, the bench said the prohibition of Riba is the “cornerstone of the Islamic economic system.”
Copyright Business Recorder, 2022