FSC seeks consensus on Islamic banking system

CJ Muskanzai says govt, its institutions should not create obstacles

ISLAMABAD:

Federal Shariat Court (FSC) Chief Justice Muhammad Noor Muskanzai on Friday said the government and its institutions should not create obstacles in the Islamic banking system, instead, they should reach a consensus with financial institutions to make its implementation easier.

A three-member FSC bench, headed by Justice Muskanzai, heard a case related to the interest-bearing financial system.

Advocate Salman Akram Raja took the position that the State Bank of Pakistan (SBP) was serious about establishing a system for interest-free transactions. However, he said an Islamic banking system could not be established overnight, rather it was an evolutionary process.

The chief justice said that this task could be easier if the government and financial institutions reached a consensus.

On this, the lawyer said that it was not an easy task either, as there were some legal difficulties. “The question now remains whether an Islamic banking system is a policy matter or is subject to a court order.”

The chief justice said that the government and its institutions should not create obstacles.

Justice Dr Syed Muhammad Anwar, in his remarks, said that parliament is supreme as it makes the law. “Parliament has already legally agreed that laws will be enacted in accordance with Shariah.”

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He also pointed out that the International Monetary Fund (IMF) had a role in the financial system. He asked that when the government itself is moving towards Islamic banking, why are obstacles there.

He further said that in non-Muslim countries like Australia, an interest-free banking system was being set up.

A National Bank lawyer said that Allied Paper Mills was not repaying the loan under the guise of the court’s decision.

The CJ said that the court had not issued a restraining order against interest and that a relevant forum was present for such complaints.

A representative of Tanzeem-e-Islami said that currently, two parallel banking systems were running in Pakistan. “Islamic banking cannot develop in the presence of a parallel system,” he added.

The CJ said that the court could not close banks, adding that no system could work without legislation.

Justice Anwar said that interest cannot be removed immediately. “It is an evolutionary process.”

The court then summoned the attorney general and adjourned the case till February 1.