The Senate recently passed the 26th Constitutional Amendment Bill, 2024, setting a firm deadline of January 1, 2028, to end Riba (interest-based banking) in Pakistan. This decision follows a proposal from Jamiat Ulema-e-Islam-Fazl (JUI-F), led by Maulana Fazl-ur-Rehman, significantly influencing the amendment’s drafting process.
The amendment modifies clause (f) of Article 38 of the Constitution, dedicated to promoting social and economic well-being, by committing to “eliminate Riba as far as practicable, by the 1st of January, 2028.” This change updated the previous language, which called for eliminating Riba “as early as possible.” The government’s internal and external loans, including those from international institutions like the IMF and World Bank, should also be interest-free.
Justice Dr. Syed Muhammad Anwer delivered the verdict, emphasizing that Riba’s abolition is crucial for maintaining an Islamic economic system, declaring all Riba-involved transactions inherently incorrect.
The SBP’s Governor’s Report 2023-24 outlined these initiatives, highlighting a multi-pronged strategy to transform conventional banking into Islamic banking. This strategy involves reviewing domestic laws and conducting Islamic banking and finance awareness sessions.
Fulfilling its mandate, the SBP included in its fourth strategic plan, “SBP Vision 2028,” the goal of “Transforming to a Shariah-Compliant Banking System (SG-4),”.
