Islamabad: In a major development, the Federal Shariat Court (FSC), on Thursday, declared the interest-based banking system running in the country contrary to the teaching of the Shariat and directed the government to end all interest-based banking systems within five years.
A three-member bench of the Federal Shariat Court said in its verdict that it was the government’s responsibility to replace the existing system and bring laws as per the guidance of the Quran and Sunnah.
The decision was made on petitions against ‘Riba’ after the Supreme Court referred the case back to the court in 2002 following the appeals against the decision of the FSC.
The FSC ruled that the federal and provincial governments must amend relevant laws and issue directives that the country’s banking system should be free of interest by December 2027.
The ruling said that the Islamic banking system was “risk-free and against exploitation” and added that the eradication of Riba from society was one of the basic Islamic injunctions.
The court also banned the payment of interest over the late payments of bank loans.
“The government should immediately remove the word ‘interest’ from all laws,” the decision said.
Following the decision, Federal Minister for Finance and Revenue, Miftah Ismail, made a tweet in which he said that they welcomed the decision of the Federal Shariat Court.
We welcome the Federal Shariat Court (FSC) decision in the Riba case. The government and SBP will carefully study this important decision and then seek guidance and clarification from the FSC about the process, steps and timeframe to implement this decision.
— Miftah Ismail (@MiftahIsmail) April 28, 2022
Regarding the processes and steps to implement the decision, the finance minister said, “The government and SBP will carefully study this important decision and then seek guidance and clarification from the FSC about the process, steps and timeframe to implement this decision.”