Pakistan’s Islamic Banking Aims for Riba-Free 2027

KARACHI — The increasing footprint of Islamic banking in Pakistan attests to a growing preference for Islamic principles among both individual consumers and businesses, said Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Irfan Iqbal Sheikh on Monday.

According to Sheikh, Islamic banking now commands over 21% of the market share in Pakistan, a number poised for rapid expansion as the country’s central bank pursues a mandate to convert all banking operations to be riba-free by 2027.

These comments were made during a seminar titled “The Role of Islamic Finance in Solving Economic Challenges,” jointly organized by the FPCCI and its central standing committee on Islamic Economics and Finance. The event drew an array of attendees, including top officials from the central bank, Islamic finance scholars, business leaders, and members of the FPCCI.

Sheikh further highlighted the robust and prudent growth of Islamic banking operations in Pakistan. The sector’s market share of deposits and assets stood at 19.4% and 18.6% respectively, for 2021. He noted that these figures represented a substantial rise in net financing by Islamic banking institutions, which surged by 38.1% in 2021 — a strong growth by any standard.

FPCCI’s Senior Vice President Suleman Chawla underlined the landmark ruling by the Federal Shariat Court (FSC) mandating the elimination of riba (interest) from the economy by 2027. He discussed the proactive measures being taken by Pakistan’s government and regulators to meet this target.

Chawla called for a united front from the Ministry of Finance, Ministry of Law, State Bank of Pakistan, Banking Council, and other stakeholders to make Pakistan a riba-free nation. He affirmed that the prohibition of riba, as per the directives of Islam and in line with the teachings of the Holy Quran and Sunnah, is absolute in all its forms and manifestations.