Parliament, executive working to make financial rules conform to Islam, FSC told
ISLAMABAD: The government called upon the Federal Shariat Court (FSC) on Wednesday to exercise “judicial restraint” by leaving it to the executive and the legislature to amend laws on Riba (interest) and other financial rules in keeping with Islamic traditions.
Attorney General Khalid Jawed Khan told the FSC that parliament, the executive and other organs of the state were trying to thrash out a consensus on measures needed to make banking and financial laws conform to Islamic injunctions.
The Supreme Court had remanded the Riba case back to the Shariat Court in 2002, asking it to review its 1992 judgement which declared that interest, or riba, was repugnant to Islam.
Banks and other financial institutions brought a total of 67 appeals against the judgement before the Shariat appellate bench of the Supreme Court. The bench upheld the FSC verdict and directed the government to amend all banking laws and statutes in accordance with it.
Dr Babar Awan, Adviser to the Prime Minister on Parliamentary Affairs, is expected to appear before the FSC on Thursday (today) as amicus curiae to assist it in understanding banking practices across the world. Anwar Mansoor, a former attorney general, will also assist the FSC.
Interest-free banking thriving
In his submission, the attorney general (AGP) stated that a robust interest-free banking sector had evolved over the last three decades and was providing services to clients.
He said the legislature had carried out amendments in financial laws to make the Islamic mode of banking practicable, citing changes in the State Bank of Pakistan Act of 1956 and the Banking Companies Ordinance of 1962.
The AGP argued that instruments in the Islamic mode now accounted for 17 per cent of assets with banks while in terms of deposits, the share was over 18 per cent.
At present five Islamic banks are operating in the country while 17 other banks are providing Shariah-compliant products and services through a network of 3,456 branches, the AGP informed the Shariat Court.
“Any Pakistani desirous of engaging in banking and other financial transactions in accordance with religious injunctions can do so as Islamic banking is thriving in the country,” Khalid Jawed Khan said.
“The success of Islamic banking in Pakistan and other Muslim states has now convinced even some non-Muslim countries that it is practicable. After the 2008 financial crisis, the West saw for itself the resilience of the Islamic banking sector.”
Since then, Islamic banking had spread to Europe, North America and Africa, Khalid Jawed claimed.
Luxembourg, Hong Kong, South Africa and the United Kingdom have issued Islamic bonds in recent years, he recalled.
The attorney general cited a study, Islamic Banking and Finance Development Report of 2020, which said the Islamic finance industry saw a double-digit growth of 14 per cent in 2019 to record a total of $2.88 trillion in assets. The amount is estimated to reach $3.69tr by 2024.
“It is a humble endeavour of the federal government to persuade the FSC that while all organs of the state are bound by, and committed to, the obligation of bringing laws in conformity with the injunctions of Islam, the most democratic, effective and sustainable means of the fulfilment of this obligation is through parliament,” the AGP emphasised.
Parliament and other institutions, including the Council of Islamic Ideology, were engaged in a ‘collaborative process’ to bring all the laws in conformity with the injunctions of Islam, Khald Jawed Khan said.
“This will help the state honour its obligation under Article 227 of the Constitution,” he added.