Efforts to Revive Islamic Banking and Finance in Pakistan (1992–1998)

Abstract

The Federal Shariat Court resolved in November 1991 that the prevalent interest-based banking and finance system has not been replaced by the IBF system and that the government should take immediate steps to transform the economy of Pakistan on Islamic lines. Earlier in July 1991 the government had constituted a Commission for Islamization of Economy (CIE) with the main objective of adopting measures for restructuring the economic and financial sector of Pakistan on Islamic lines. The CIE had been working on the same assignment when the FSC judgement on riba was announced. The government put pressure on the CIE to finalize its recommendations for eliminating interest from the banking and financial sector of Pakistan. In June 1992 the CIE submitted the Report on Banks and Financial Institutions for abolishing interest from the existing financial set-up of Pakistan.