ISLAMABAD: The State Bank of Pakistan (SBP) on Saturday filed an application before the Supreme Court to withdraw its Civil Shariat Appeal against the Federal Shariat Court (FSC)’s verdict directing the government for a complete transformation of the banking system into Shariah-compliant banking by December 2027.
Finance Minister Ishaq Dar, four days ago, had announced that the government will be withdrawing the SBP’s and National Bank of Pakistan (NBP)’s appeals against the FSC’s judgment. On Saturday, only the SBP filed the application to withdraw the appeal.
A Full Bench of FSC comprising Chief Justice Muhammad Noor Meskanzai, Justice Dr Syed Muhammad Anwer, and Justice Khadim Hussain M Shaikh, on April 28, 2022, in its reserved judgment declared that the prohibition of Riba is complete and absolute in all its forms and manifestations according to the injunctions of Islam; therefore, asked the government to implement the decision by 31st December 2027.
The SBP and the commercial banks challenged the FSC’s judgment before the apex court in June this year.
According to the application, “Civil Shariat Appeal is pending adjudication before this court in which no next date of hearing has been fixed so far. The Applicant/ Appellant seeks the kind indulgence of this Court for withdrawal of the Civil Shariat Appeal unconditionally.” It prayed to the apex court to dispose of the Civil Shariat Appeal.
In its appeal, the SBP contended that being the premier custodian and regulator of the financial and monetary framework of Pakistan, the bank was deeply committed to ensuring compliance with the injunctions of Islam, while protecting the stability and security of Pakistan’s financial sector that functions as part of the global financial system.
However, the SBP said, “While Islamic modes of finance are a growing area of interest for foreign providers of finance, the adoption of particular modes of finance with respect to any particular advance is not in the hands of the state of Pakistan and its various instrumentalities.
Funding arrangements with international providers of finance are a matter of negotiations carried out by the designated officials/ authorities of the state of Pakistan. The form and the terms of such arrangements are not dictated by any law in force in Pakistan but are a result of the best outcome that the state can achieve in the arena of international finance.”
The FSC’s judgment said five-year period is reasonably enough time for the implementation of its decision completely, i.e., convert economy of Pakistan into, equitable, asset based, risk sharing and interest-free economy. Therefore, it said by 31st December 2027 the decision shall take effect by way of complete elimination of Riba from Pakistan.
The federal, as well as, provincial governments are directed to complete the necessary legislative amendments in the impugned laws in order to bring such laws or provisions of the laws into conformity with the injunctions of Islam by 31st December 2022. It said all such laws will take effect prospectively.
The judgment noted that legal and statutory framework backed by the SBP for embracing the interest-free banking in Pakistan is already available, in furtherance of which the existence of Section 25 (2) (b) of the Banking Companies Ordinance, 1962 and Section 22 of the State Bank of Pakistan Act, 1956 pave the way for complete elimination of Riba from the economy.
Copyright Business Recorder, 2022