Sign In
Learn bits
Economy
Mahesh

11/11/22 13:30 PM IST

Pakistan govt to implement 'interest-free' banking system by 2027

In News 
  • Pakistan's Finance Minister Ishaq Dhar recently announced that the country would move towards an 'interest-free' banking system under the Islamic law by 2027.
Interest Free banking 
  • The concept of interest free banking system is derived from the Islamic form of banking.
  • It operates based on ethical standards and prevents Muslims from paying or receiving any kind of interest.
  • It is considered to be an effective tool to achieve the economic objectives of Islam.
Journey of Interest free Banking 
  • The first petition to abolish the existing interest-based banking system in Pakistan was filed in 1990 at the Federal Shariat Court (FSC) – the constitutional court that has the power to examine and determine whether the Pakistani laws comply with the Sharia law.
  • In 1992, a three-member bench at the FSC sought the implementation of the interest-free banking system in the country.
  • The government of Pakistan challenged this decision in the country’s Supreme Court.
  • In 1999, the Supreme Court upheld the FSC’s decision and again directed the government authorities to implement the system by June 30, 2000.
  • In 2002, a review appeal was filed at the apex court and the decision of the FSC was suspended. The case was referred back for the FSC’s interpretation.
  • In April 2022, the FSC again called for abolishing interest-based system in five years since it goes against the Sharia law.
  • It called on the government to eliminate Riba – the Islamic term for interest – from the country’s banking system by December 31, 2027.
  • Government borrowings from domestic and foreign sources also come under the definition of Riba and is prohibited under Islamic law.
Source- Business Standard 

More Related Current Affairs View All

24 Sep

Leveraging transit-oriented development to build productive cities

'Indian cities are on the brink of a transportation revolution, with a projected expenditure of ?3 trillion (between 2022–2027) set to be spent on approved metro rail project

Read More

24 Sep

Section 107 of BNSS

'The Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, introduced Section 107, which deals with properties which are “proceeds of crime”.' Until recently, this term w

Read More

24 Sep

Supreme Court strengthened child pornography law

'Tightening the law on child pornography, the Supreme Court recently said that even viewing, possessing, and not reporting such content is punishable under the Protection of Childr

Read More

India’s First Ai-Driven Magazine Generator

Generate Your Custom Current Affairs Magazine using our AI in just 3 steps