Finance Minister Wants to Eliminate Interest-Based System in Pakistan

Finance Minister Ishaq Dar has for the second time in a week reiterated the government’s commitment to promote Islamic finance and eliminate the interest-based system in Pakistan.

Addressing the ‘National Islamic Economic Forum’s conference on Roadmap for Islamization of the Economy’ on Thursday, Dar said a high-level three-member committee, chaired by the Governor of the State Bank of Pakistan (SBP), has been formed to plan the Islamicization of Pakistan’s financial system.

“I will be monitoring this committee directly,” he stated, adding that “the interest-based system will be eliminated from Pakistan as soon as possible”.

Finance Minister Senator Ishaq Dar expressed commitment of Govt for fully supporting SBP in replacing interest based banking system with Islamic banking in the country while addressing" National Islamic Economic Forum's conference on Roadmap for Islamization of the Economy." pic.twitter.com/IJw96xvWzE

— Ministry of Finance, Government of Pakistan (@Financegovpk) February 2, 2023

Dar recalled his previous stint as finance chief when his government first introduced a number of measures to promote Islamic finance in the country. “Among the actions taken in this regard was the formation of a high-level steering committee comprised of all key stakeholders, including the Ministry of Finance, the State Bank of Pakistan (SBP), the Securities and Exchange Commission of Pakistan (SECP), and Shariah scholars,” he explained.

“Back then, we had only one Islamic bank i.e. Meezan Bank, with only a hundred branches. It now has over 1,000 branches. Faysal Bank has also made significant progress in this regard,” he added.

The finance minister also noted how deposits with Islamic banks have increased significantly. “This demonstrates that the Federal Shariat Court’s (FSC) deadline of five years to convert the current financial system can be met,” he said, but also warned that Sharia-compliant banking will be a huge challenge.

Meanwhile, lambasting his predecessors, Dar said the current issues including rising inflation, Letters of Credit (LCs) delays, and economic crunch are a result of the mismanagement and misgovernance of the previous government.