Pakistan’s top Shariat Court, on Thursday, declared the Interest Act 1839 of Pakistan un-Islamic, directing the government to replace the Riba-based financial system with an Islamic system in five years.
A full bench of the Federal Shariat Court (FSC) headed by Chief Justice Muhammad Noor Meskanzai and comprising Justice Dr. Syed Muhammad Anwar and Mr. Justice Khadim Hussain M. Shaikh reserved the judgment against the Riba case on April 12.
The long-pending Riba case was remanded by the Shariat Appellate Bench Supreme Court of Pakistan in 2002.
Justice Syed Muhammad Anwar announced the verdict, stating that introducing an interest-free banking system in Pakistan is possible as it is being practiced by some institutions in the country.
The court ruled that the elimination of Riba is the base of the Islamic system, adding that interest taken on any type of loan falls within the category of Riba, which is prohibited in Islam.
Interest payment on all internal and external debts by the government is Riba, the court ruled and directed the government that transactions with international institutions, including International Monetary Fund (IMF) and the World Bank, should be made interest-free.