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Thursday March 28, 2024

State Bank sees Riba and interest as one and the same

By Ansar Abbasi
December 10, 2015

ISLAMABAD: State Bank of Pakistan (SBP) Deputy Governor Saeed Ahmad has said that Riba and Interest are one and the same and thus the Bank will not seek review of the 1992 definition of Riba from the Federal Shariat Court (FSC). “There is no doubt about it that Riba and Interest are one and the same,” Saeed Ahmad said, adding that the SBP counsel in the Riba case before the FSC will be told not to create any doubts on issue that is already settled. Talking to The News on phone here on Wednesday, the deputy governor said the SBP does not want to “re-invent the wheel” by seeking from the FSC to redefine Riba.

Saeed Ahmad was appointed as SBP deputy governor by Prime Minister Nawaz Sharif with the objective to encourage Islamic banking for the eradication of Riba/ Interest-based banking in Pakistan. The deputy governor was displeased over the reported argument of the SBP’s counsel during the last hearing of the Riba case before the FSC. He said that he would soon brief the SBP counsel that make the Bank’s stance clear. Saeed Ahmad said that he had also taken up the matter with Finance Minister Ishaq Dar.

It is learnt that Chairman of SBP’s Sharia Board and one of the topmost religious scholars in Pakistan Mufti Taqi Usmani has also taken serious exception to the reported arguments of the Bank’s counsel in the same case.

During the hearing of the case on October 29, the SBP counsel had clearly told the FSC that no immediate alternate was available to replace the existing interest-based economic system and banking sector of the country.

The counsel had unambiguously told the FSC that interest had an important role in Pakistan’s economy, which he insisted could not survive in isolation from the outside world which followed the same system of interest-based economy.

The FSC was told by the SBP counsel in his initial arguments that even if all forms of interest were considered un-Islamic there was neither any alternate solution available for immediate change nor any state in the world practised Islamic system of economy. The SBP counsel kept on urging the FSC judges that they should give a substitute if the present interest-based economic system was declared un-Islamic.

He told the four-member bench, hearing the case that the government was not shy of Islam and had faith in what the religion says. But in the same breath, he had urged upon the judges to decide the case keeping in view the ground realities and the global environment where we live.

The court was told that Pakistan’s economy could not survive by introducing an economic system which was not compatible with the global system. “Can our economic system survive behind iron curtain with no connection with the outside world,” the counsel had asked, while questioning the understanding of some the judges, who had previously ruled against Riba/ Interest and had sought its complete elimination.