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Pakistan’s top Islamic court asks govt to implement an interest-free banking system by 2027

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Islamabad(PTI): Pakistan’s top Islamic court, on April 28, 2022, declared the prevailing interest-based banking system against the Sharia law and directed the government to replace it with an interest-free system by the end of 2027.

Announcing the verdict in a long-pending case on Riba (interest), the Federal Shariat Court (FSC) directed the government to facilitate all loans under an interest-free system.

The FSC gave its verdict after the Supreme Court had referred the case back to the court in 2002 following the appeals against the decision of the FSC.

A full FSC bench comprising Chief Justice Muhammad Noor Meskanzai, Justice Syed Muhammad Anwar, and Justice Khadim Hussain M Shaikh heard a number of constitutional petitions and reserved a verdict on April 12 after the conclusion of the case.

In its long-awaited verdict, the FSC ruled that eliminating interest was a religious and legal obligation as parliament had already agreed to make Sharia-compliant laws.

In the written judgment, the bench said the prohibition of Riba is the “cornerstone of the Islamic economic system.”

However, it said that the government can fully make the economic system free of interest by the end of 2027.