Towards Riba-free system

DESPITE criticism from some circles about slow progress, the authorities concerned are moving firmly and steadily to realize the goal of a Riba-free system in the country in a gradual manner. This was highlighted in a report titled “Strategy Paper Post 2027 Financial System in Pakistan”, released by the Ministry of Finance, which says all new transactions, including loans, will be contracted on a Shariah-compliant basis from Jan 1, 2028, while existing arrangements will continue until maturity. The strategy envisages the post-2027 financial system landscape and highlights key actions, risks and milestones during the transition to remove uncertainty about the shape and environment of the financial system after 2027. It also defines the roles and responsibilities of different stakeholders. Preparation of the Strategy Paper in consultation with stakeholders, regulators, banks, financial institutions and religious scholars is, indeed, a clear declaration of intent by the Government to fulfill legal and constitutional obligations vis-à-vis establishment of Riba-free system in the country. The strategy has been formulated in light of the Federal Shariat Court’s April 28, 2022, judgement, which declared that “Riba is absolutely prohibited in all its forms and manifestations” and mandated its elimination from Pakistan by Dec 31, 2027. The 26th Amendment to the Constitution, adopted in October 2024, also set a timeline for the earlier constitutional provision and envisaged the elimination of Riba “before the first day of January, two thousand twenty-eight”. This newspaper has also been playing an active role in promoting discussions on the subject with a view to creating an enabling environment and exploring ways and means to get rid of the interest system, which runs contrary to the clear injunctions of Quran. Pakistan Observer organized a series of Roundtable Conferences (RTCs), participated by planners, decision-makers, stake-holders, economists and religious scholars, pr