‘Shariat Court verdict on interest-free economy a step in right direction’

ISLAMABAD: The much-awaited verdict of the Federal Shariat Court (FSC) on interest-free economy, despite being overly delayed, sets the course in the right direction by cogently answering all reservations put forward earlier.

This was the consensus of a hybrid roundtable organised by Institute of Policy Studies (IPS), Islamabad to discuss the way forward following the FSC judgment prohibiting and eliminating interest in all its manifestations. The session, chaired by Khalid Rahman, chairman IPS, was joined by a galaxy of experts, policy practitioners, scholars, and Islamic banking, and finance industry leaders.

The participants were unanimous that the decision, by validating the practical viability of an interest-free economy, has opened up new opportunities for the realization of this dream, and should be treated as a stepping-stone by the government and all stakeholders collectively to further build upon.

The FSC’s declaring the prohibition of Riba, absolute in all its forms and manifestations according to the injunctions of Islam, was dubbed as a landmark decision. Chairman IPS said the FSC had finally given its verdict regarding Riba but there were suspicions about the political will in implementing it.

“If political will is not present, then it will be an even bigger fight than in the case of materializing this judgment,” Rahman said. “This judgment cannot be considered as an end in itself. It is just a step further towards molding the whole economy and financial sector according to the injunctions of Islam and laying the foundations of a true Islamic society.”

Task forces and working groups be formed along with advocacy and awareness campaigns, Rahman suggested and added that the role of mainstream and social media, scholars, and politicians in creating awareness and support for the move was of critical importance.

The experts reminded that Islamic economic system did not just mean Riba-free banking, it also meant the whole financial and economic system should be interest-free.

It was mentioned that FSC has given a very reasonable grace period to the federal government and relevant departments till December 31, 2027, for the implementation of the judgment.

The participants cautioned that some of the banks or even any government department might file for a review of the judgment, which might result in yet another stay order causing further stalemate.

They demanded that banks should not be allowed to open any new conventional banking branches following the judgment.

“The grey areas of banking should be identified and converted into Islamic banking,” the experts said adding,” However, there are few banking products for which there were no alternatives in Islamic banking”. They said as such work should begin in earnest for workable solutions, while the need was to work out financing products for specific sectors of the economy, e.g., agriculture, industry, SMEs, etc.

The discussants believed that FSC judgment had removed any legal resistance in the way of implementing an Islamic economic system and has effectively blocked the way for any review of its judgment.

“The judgment has been delivered in pursuance of a remand order of the Supreme Court and has addressed all points mentioned in the judgment.” As such there would be a limited chance of success for the federal government if it files an appeal again in the Supreme Court, the participants pointed up.