Abstract

The elimination of ribā (interest) has been a longstanding aspiration of the people of Pakistan. This goal is rooted in the nation's desire to align its financial system with Islamic principles. Earlier, Article 38 (f) of the Constitution provided a policy principle to “eliminate Riba as early possible”. However, the interest-free system could not be adopted despite the passage of 50 years. While the Federal Shariat Court (FSC) reiterated in its judgment of February 2022 that interest is ribā and must be eliminated from the economy by December, 2027, 26th amendment provided a clear timeline mandating the State of Pakistan to eliminate the ribā from the country by January 01, 2028. This landmark amendment in the Constitution requires the government and the regulators of banking and nonbanking business and finance institutions to take urgent and well-thought-out steps for the transition of the economy to ribā-free bases.

Keywords

Towards a Ribā-Free Pakistan: 26th Constitutional Amendment and the Way-Forward