Finance Minister Ishaq Dar launched Shariah-compliant investment instruments on Monday, saying that the government intends to promote Islamic financial system and gradually eliminate interest-based banking in Pakistan.

Addressing the launching ceremony of Shariah-compliant products by National Savings, a state-owned entity which falls under the wings of the Finance Ministry, Dar said, “the government remains committed to implementing an interest-free Islamic financial system.”

The finance minister said that Islamic banking has witnessed strong growth in recent years, and currently enjoys a share of 21% in the country’s banking pie.

The products will be available from July 1, said Dar.

National Savings will offer four products i.e. saving accounts and term-account of 1-, 3- and 5-year tenors, said the finance minister.

“This is the first time that National Savings is introducing Shariah-compliant products,” he said.

“We wish that these products will dominate in the coming years.”

The finance minister was of the view that the entire banking system cannot be converted overnight or in a short span of time. “However, such serious steps will help us in progressing towards an interest-free, Islamic financial system,” he said.

Dar said that the Shariah-compliant products were one of the announcements made in the recent budget.

“Similarly, the government would keep all its promises announced in the budget,” he said.

On Saturday, the government revised the budget for the next fiscal year by imposing additional taxes of Rs215 billion, besides slashing expenditure by Rs85 billion – in an effort to complete the pending 9th review of the International Monetary Fund (IMF) programme.

While winding up ongoing debate on budget for the next fiscal year, Dar maintained that there would be no impact of these changes on development budget and increase in salary and pension of the government employees.