KARACHI: The State Bank of Pakistan (SBP) has appealed the Federal Shariah Court’s decision to transition to a riba (interest-free) economy to the Supreme Court.
According to the information, there was widespread protest across the country at the failure to implement the Federal Court’s decision on interest and at the four banks that had gone to the Supreme Court to challenge certain provisions of the decision, demanding changes. Also taking part in the protest are clergy, the public and owners of industrial companies, who are closing their accounts at four banks, escalating the protest.
However, SBP has addressed the Supreme Court, stating that while the spirit of the Sharia court’s decision is commendable, there are some contradictions that require clarification by the respected Supreme Court, which is why SBP is appealing the ruling.
SBP has stated in its appeal, in a letter sent to SC, that SBP’s responsibilities include control of the country’s financial system and that it has taken steps to promote Islamic banking in the country, creating five full-fledged Islamic banks and 17 Riba-free conventional banks are running. SBP is the only institution in the world that has taken steps in this regard.
A report entitled “Planning for the Islamic Banking Industry 2021-2025” has been prepared based on the steps to be taken in this regard and the way forward. With regard to the decision of the respected Federal Shariah Court, the following aspects must therefore be clarified.
The esteemed FSC, in its ruling, has mandated the transfer of international credit and investment to Sharia-compliant methods such as sukuk, but the problem is that international investment and credit are not in the hands of the state, so they cannot be persuaded in any particular way.
Furthermore, they are not subject to any law of Pakistan while the FSC has to decide under Articles 203D and 203B(c) of Constitutional Jurisdiction whether the laws/regulations in force in the country are in accordance with the Qur’an and Sunnah and is available. (Hence, the court does not have the power to rule on these international loans).
The Federal Shariah Court has issued a general order exonerating Riba within five years. The court does not have constitutional authority to make such a general order because the court has jurisdiction over laws and this general order does not relate to a specific law. In addition, it would be impossible to free the economy from interest in five years. The Islamic banking system implemented so far has lasted twenty years, so it will take five times as long to free the entire economy from interest.
The respected Federal Sharia Court has given its ruling five years to exempt the economy from interest, which is purely the court’s own estimate, when in fact more time would be required for this work.
The date given for the statutes to be invalid (June 1, 2022) is also unconstitutional because the invalidity of these statutes is contingent on the federal or any state government failing to appeal. The constitution allows a federal or state government to appeal for up to six months. Therefore, the invalidity date of the laws is October 27, but the appeal period for governments other than federal and state governments, such as the Landesbank, etc., is sixty days. Laws that have been declared contrary to Islamic law have been given a deadline for amendment of December 31, 2022, although lawmakers cannot be bound by any date. Giving the legislature such a deadline is unconstitutional and contradictory.
The Honorable Supreme Court, which overturned the decision in 2002, had ordered an opinion on the process of indexing for currency devaluation, but the Federal Shariah Court refrained from giving an opinion on indexing. It was explained to be contrary to the orders. Clear guidance from the SC is required in this regard.
The repeal of Rule No. (9) of the Banking Companies Rules 1963 requires the guidance of the respected Supreme Court as this rule does not justify an interest in Pakistan but is applicable abroad.
Since various rules related to Savings Certificates and Defense Savings Certificates were declared to be against Islamic rules, orders were made to transfer these certificates to alternative Islamic financing methods like Sukuk etc. As this would be difficult to implement, the Honorable Supreme Court should provide guidance on this. The Supreme Court returned the ruling in 2002, asking the prestigious Federal Shariah Court to rule on the implications of Articles 29, 30(2), 38(f), 81(c) and 121(c) of the Pakistani Constitution the present decision does not mention the relevant provisions.
Therefore, changes should be made in the decision of the Federal Shariah Court in light of the matters mentioned above in the Complaint.