It is the religious and constitutional duty of all to lay out a roadmap for the conversion of the financial system of Pakistan to riba-free according to the injunctions of Islam and implement it accordingly. All sectors of government borrowing, external debts, the banking sector, the non-banking sector, capital market, as well as legal and regulatory framework need to bring changes at strategic as well as operational level.
This was underscored during a session titled “Implementing the FSC Judgement on Riba: Addressing the How”, jointly organized by the Institute of Policy Studies (IPS), IBA-CIEF (Institute of Business Administration’s Centre for Excellence in Islamic Finance (IBA CEIF), and Centre of Islamic Economics (A division of Jamia Darul Uloom, Karachi) at the IBA City Campus.
The session was addressed by Ahmed Ali Siddiqui, director, IBA-CEIF, Omar Mustafa Ansari, secretary general, Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), Mufti Irshad Ahmad Aijaz, chairman, Shariah Advisory Committee, State Bank of Pakistan and Securities & Exchange Commission of Pakistan, Farrukh Raza, CEO, Islamic Finance Advisory & Assurance Services (IFAAS) Group, Dr. Imran Usmani, vice chairman Shariah Supervisory Board, Meezan Bank, and Khalid Rahman, chairman, IPS.
The experts highlighted that all of these financial and related sectors already have the capacity to convert existing non-Islamic procedures and means to riba-free Islamic standards by reinforcing the appropriate ways and means to implement the Federal Shariat Court judgment.
The speakers further emphasized that the federal government must devise a conversion policy with yearly targets and proper monitoring of all sectors. This national-level strategy must be developed with the consensus and inclusion of all stakeholders to ensure coordination and commitment to Shariah-compliant guidelines.
The government should also focus on creating an enabling environment by consulting all related organizations, introducing educational reforms, and taking capacity-building measures for officials. Along with the national-level strategy and policy, sector-level planning is also significant.
Fintech, combined with tools of Islamic social finance, can provide solutions to challenges of financial inclusion through increased access to credit, financial safety nets, consumer protection, crowdfunding models, and microfinance and entrepreneurship development. These tools like the qard-e-hasana model, micro-takaful, waqf, zakat, and sadaqat, can also create economic justice in the system.
The speakers laid out aspects foundational to bring the required change in the system: a vision that is shared and supported by all stakeholders and trusted by the people; political willingness and sense of ownership; defined targets and processes coupled with an action plan and resources; legislation and comprehensive regulatory supervision and its implementation; good governance; capacity building; and system development through technology and infrastructure building.
As the lack of awareness and trust in people with regards to change weakens the advocacy for the cause, therefore, maintaining communications at all levels to create awareness and consciousness among people is equally important towards achieving the goal of a riba-free economy, it was highlighted. They called for the need to keep talking about it at all levels and in all capacities to delineate that the Islamic financial system can provide solutions to economic problems, deliver justice, and fill the gaps and human needs.
In his concluding remarks, Khalid Rahman highlighted that while international economic dynamics may present challenges in some contexts, but in the larger context it provides an opportunity for Pakistan to contribute to the system by introducing a change that would fill the gaps and meet the economic needs of the world. He further underlined that transformation to Islamic banking demands a change in all sectors of the economic system and Pakistan, as it is in a journey in progress, can incorporate developmental changes.
In this regard, a culture of conservation, political will to implement, transparency, a culture of commitment to the constitution, the moral training of society, reforms through academic and educational channels, and work at constitutional, infrastructural, institutional, as well as operational levels in all capacities are the areas that need consequential improvements to carry out the change in the system.
To read our blog on “From 2023, SBP urges banks to expand their Islamic Banking footprint,” click here.
