Court Orders Pak Government To Abolish Interest By 2027

Federal Shariat Court (FSC) of Pakistan Issues Directive to Abolish Interest from Nation’s Financial System by 2027

Delve into the thought-provoking concept of “To Abolish Interest” and its potential to revolutionize the traditional financial system. The Federal Shariat Court (FSC) of Pakistan has issued a directive to the government to eradicate Riba (interest) from the nation’s financial system by December 31, 2027. The court declared that all forms of Riba are un-Islamic and contrary to the teachings of the Quran and Sunnah.

The FSC has set December 31, 2027, as the deadline for the complete removal of Riba, stating that the five-year period until then should be sufficient to transform Pakistan’s economy into a fair, asset-based, risk-sharing, and interest-free system.

The verdict, delivered by a three-judge panel consisting of FSC Chief Justice Muhammad Noor Meskanzai, Justice Dr. Syed Muhammad Anwer, and Justice Khadim Hussain M Shaikh, spans 298 pages. It clarifies that any interest involved in government loans, whether sourced domestically or internationally, is considered Riba and is explicitly forbidden by the Quran and Sunnah.

The court has instructed both the federal and provincial governments to make necessary legislative changes to align with Islamic injunctions by the end of 2027. It also mandated the government to adopt Shariah-compliant methods for future borrowings, whether domestic or foreign.

Advocates strongly advocate for the abolish of interest, aiming to create a more just and equitable economic structure, free from the burden of debt and exploitation.

The FSC acknowledged the positive stance of international financial institutions like the International Monetary Fund, Asian Development Bank, and the World Bank towards Shariah-compliant, Riba-free financing modes, citing their productivity and economic feasibility.

The court also noted that China is open to using Islamic financing for China-Pakistan Economic Corridor projects. It pointed out that Pakistan is already employing Riba-free Shariah-compliant financing methods in dealings with the Islamic Development Bank and some Islamic countries.

The verdict emphasizes that any additional amount charged over the principal loan amount is Riba, which is strictly prohibited according to the Quran and Sunnah of the Prophet Muhammad (PBUH). It further clarifies that any form of bank interest is Riba, regardless of the purpose of the loan or the interest rate.

The FSC declared that all laws or provisions containing the word “interest” in the context of banking interest are Riba and thus prohibited. It also stated that any additional payment made to delay an outstanding due payment, calculated as interest, falls under the category of Riba and is therefore forbidden.

The court expressed hope that the federal government will fulfill the constitutional requirement of Article 29(3) by submitting an annual report to the National Assembly and the Senate on the implementation of the Principles of Policy, specifically Article 38(f) of the Constitution, regarding the complete elimination of Riba within the stipulated period.

The FSC noted the rapid expansion and growth of interest-free banking not only in Pakistan but also globally, asserting that an interest-free banking system is not only practical but also feasible.

The court’s decision is a major victory for Islamic finance advocates in Pakistan and around the world. It is a clear signal that the FSC is committed to upholding Islamic law and principles in the financial sector. The decision is also a major challenge to the conventional banking system, which is based on interest. The FSC’s ruling is likely to have a significant impact on the way banking is done in Pakistan, and it could have implications for other countries as well.

The FSC’s decision is a positive step towards a more just and equitable financial system. It is a reminder that Islamic finance is not just a religious obligation, but also a practical and feasible alternative to the conventional banking system. Join the ongoing dialogue and explore the possibilities of a world without interest, where financial transactions are driven by fairness, sustainability, and the empowerment of individuals and communities.