ISLAMABAD: Federal Minister for Finance and Revenue Ishaq Dar has said the government is determined to promote Islamic finance and eliminate the interest-based system in the country. He was addressing a conference titled “Hurmat- e- Sood” in Karachi on Wednesday.
Finance Minister said that the country is needed at five years to move towards an ‘interest-free’ banking system under Islamic law.
The minister informed the participants that a special wing would be set up at the State Bank of Pakistan (SBP) for the promotion of an interest-free system. “I would notify the wing in a week’s time,” he added.
The finance minister lauded the Federal Shariah Court (FSC) decision, saying that the “A base has been already been established, as Islamic banking, in terms of overall assets and deposits, enjoys a market share of 20% and 21%, respectively,” said Dar, while adding that further progress needs to be made in this regard.
Ishaq Dar said that significant progress is required in non-banking sectors including mutual funds, insurance and capital markets on Islamic terms.
Dar said that attempts are made worldwide to improve financial inclusion. “In this regard, we made considerable progress during our previous stint and approximately 30% of the population became part of the banking sector,” he said adding that steps are being taken that every individual is included in the financial system.
The finance minister observed that the country is facing twin deficits i.e. current account and budget deficit. “There is a need to impose a fiscal discipline. We need to increase our incomes while rationalising our expenses in order to the budget deficit,” he added.
He also assured that resolutions of the seminar would be shared with the Prime Minister.
Earlier this month, Dar announced that the government had reached an understanding with the SBP and National Bank of Pakistan (NBP) to repeal their appeals against the FSC order to implement Islamic banking system in Pakistan by 2027.
On April 28, 2022, the FSC had ruled that elimination of interest from the economic system was a religious and legal responsibility, ordering the government to end the interest-based banking system by the end of 2027.
The decision was made on petitions against Riba (usury) after the Supreme Court referred the case back to the court in 2002 following appeals against the decision of the FSC.
