FSC Seeks Consensus on Islamic Banking

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ISLAMABAD:

Federal Shariah Court (FSC) Chief Justice Muhammad Noor Muskanzai said on Friday that the government and its institutions should not create obstacles to Islamic banking, but rather reach consensus with financial institutions to facilitate its implementation.

A three-member bench of the FSC, led by Judge Muskanzai, heard a case related to the interest-bearing financial system.

Lawyer Salman Akram Raja has argued that the State Bank of Pakistan (SBP) is seriously considering establishing an interest-free transaction system. However, he said an Islamic banking system could not be established overnight, but rather was an evolutionary process.

The chief justice said this task could be made easier if the government and financial institutions reached a consensus.

On this, the lawyer said that it was also not an easy task, because there were legal difficulties. “The question now remains whether an Islamic banking system is a political matter or subject to a court order.”

The Chief Justice said the government and its institutions should not create obstacles.

Justice Dr Syed Muhammad Anwar, in his remarks, said parliament is supreme because it makes law. “Parliament has already legally agreed that laws will be enacted in accordance with Shariah.”

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He also pointed out that the International Monetary Fund (IMF) has a role to play in the financial system. He asked that when the government itself is moving towards Islamic banking, why are there obstacles.

He further said that in non-Muslim countries like Australia, an interest-free banking system was being introduced.

A National Bank lawyer said Allied Paper Mills is not repaying the loan under cover of the court ruling.

The Chief Justice said the court did not issue a restraining order against interest and a proper forum was present for such complaints.

A representative of Tanzeem-e-Islami said that currently two shadow banking systems are operating in Pakistan. “Islamic banking cannot develop in the presence of a parallel system,” he added.

The chief justice said the court could not close the banks, adding that no system could work without legislation.

Judge Anwar said interest cannot be removed immediately. “It’s an evolutionary process.”

The court then summoned the attorney general and adjourned the case until February 1.

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