Abstract

The controversy of whether modern-day commercial interest falls under the purview of riba¯ and, therefore, prohibited or not was resolved globally by the end of the 1980s by resolutions, fatawa, and reports of various forums and committees. Accordingly, Islamic banking started evolving, and Pakistan was the pioneer in this regard. Yet, as the Constitution of the Islamic Republic of Pakistan required elimination of riba¯ from the entire economy, certainly a difficult task, the controversy was re-initiated when an appeal was preferred by the government against the judgment of the Federal Shar¯ıat Court (FSC) of Pakistan declared in its of 14th November 1991. The FSC (1991) declared that the Non-Interest Based (NIB) system introduced by the SBP in 1985 was un-Islamic due mainly to the involvement of ‘Sell and Buy-Back’ and sale of debts/receivables and ordered that the whole system be Islamised in its true sense by the end of June 1992. Cont'd...

Keywords

Federal Shar¯ıah Court’s, Judgment, forRiba¯ Free, Pakistan