The Federal Shariat Court (FSC) has sent a questionnaire to the State Bank of Pakistan (SBP) asking the central bank various queries with regard to the Islamic model of banking being practiced in other countries as well as the government’s steps to implement a Riba-free financial system.
A three-judge bench presided over by FSC Chief Justice Muhammad Noor Meskanzai on Monday resumed hearing of a case that can be traced back to the 1992 when the FSC had declared ‘Riba’ repugnant to the injunctions of Islam.
In the questionnaire, the FSC asked the SBP as to how many countries practice the Islamic financial system; how these systems are being operated generally and which example is best suited for Pakistan.
The court also asked how many international banks and financial systems are using Islamic banking or Islamic financing models in different forms to provide Riba-free service to their customers.
“Is there any example in the world that the international financial transactions of a sovereign state with the international financial institution are somehow linked with Islamic banking transaction?"
"What steps have so far been taken by the SBP and government of Pakistan through Ministry of Finance to promote Islamic banking in Pakistan and what is the future framework/timeline for its promotion?"
The court asked what was the response of international financial institutions – the World Bank, the International Monetary Fund (IMF) and the Asian Development Bank etc – to the Islamic banking purely from economic and banking points of view and if they provide financing on Islamic principles.
"What is the latest status of compliance of the Commission for Transformation of Financial System (CTFS) and the two taskforces created in the Ministry of Finance and Ministry of Law in this regard?"
The court also asked as what is the opinion of the SBP Shariat Board about "indexation" vis-a-vis banking loans and banking deposits and Riba-ul-fadl vis-a -vis banking transactions.
Riba al-fadl refers to exchange or sale transactions in trade which effectively result in the charging of 'interest' through the exchange of the same commodity, but of a different quality or quantity.
In 1992, the FSC had termed ‘Riba’ repugnant to the injunctions of Islam in a case filed by the Jamaat-e-Islami (JI). Later, hearing an appeal against the decision in 1999, the Supreme Court’s Shariat Appellate Bench had upheld the FSC ruling.
The SC had also asked the then government to amend all banking laws and other statutes, prohibiting Riba, within two years. However, the government and some banks had filed a review petition in the SC.
In 2002, the apex court referred the case back to the FSC to reconsider its ruling. The apex court also directed the FSC to solicit input from contemporary jurists from the Muslim world. The matter has been pending before the FSC for the past 18 years.
During the hearing on Monday, the JI senior leaders Dr Fareed Paracha and Professor Ibrahim appeared before the FSC bench. The JI was represented by Qaisar Imam and Saifullah Gondal advocates.
On Monday, SBP’s counsel Salman Akram Raja could not appear as he was busy in high court. The hearing was adjourned till next Monday.
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We r waiting for d updates. There are other challenges in d way, must be addressed once for all. There z a need to take economists on board having knowledge of shariah and finance. I am supervising a phd thesis on that issue. May Allah help u.