I write with reference to the recent verdict given by the Federal Shariat Court (FSC) against the widespread practice of “Riba” that is prevalent in virtually all the financial institutions & transactions in the country. While on the one hand, the FSC took too long to pen down its verdict on this constantly agitating and important national issue, and on the other, it then gave the existing riba-based practices an unrealistically prolonged leverage to continue indulging in this un-Islamic practice for further five years before converting them into a Shariah-based mode. This has killed the very essence of the verdict which in hindsight, seems to have been taken half-heartedly. There is a serious apprehension that towards the end of these five long years, any financial institution may file an appeal, obtain an interim injunction and thereafter let the issue linger on until its implementation will have been lost in oblivion.

Unfortunately, this important issue has been contested and resisted by certain vested interests for too long. The Objectives’ Resolution of 1949 that was subsequently made a preamble to our prevailing constitution clearly lays down that no law repugnant to Shariah shall be practised in this Islamic Republic of Pakistan. Going even earlier, the very slogan on which our unique ideological state was brought into existence was: “Pakistan ka matlab kiya – La Ilaha Illalah…”. What then, makes our so-called technocrats (bureaucrats mostly) weary of allowing this pristine financial system to be implemented & practised in the country? What are they afraid of and whose interests do they serve?

It may be recalled that way back in 1991 too, the then honourable judges of the Federal Shariat Court had given a similar judgement declaring the practice of Riba by the financial institutions as illegal. The said decree directed “… that all kinds of transactions, whether national or international and whether governmental or private, had to take place on a non-interest basis…”. Nonetheless, the then government, as well as several financial institutions immediately filed appeals against this judgement. A total of 67 identical appeals were then filed against it before the Shariah Appellate Bench of the Supreme court and meanwhile an interim injunction was obtained against the implementation of this judgement. Thereafter, eventually, in December 1999, the said Shariah Appellate Bench, comprised of eminent scholarly judges like Mr Justice Khalil-ur-Rahman, Mr Justice Taqi Usmani, Mr Justice Munir A. Shaikh and Mr Justice Wajeehuddin Ahmad announced a unanimous verdict upholding that earlier verdict of the FST and unequivocally declaring all riba-based transactions as illegal, being repugnant to Shariah. Nonetheless, undaunted by this clear-cut landmark judgement that was widely applauded elsewhere in the Islamic world, the then government, as well as one of the leading commercial banks, immediately filed an appeal against this decision, and obtained an interim injunction and ensured that all riba-based practices shall continue unabated. So, what makes us think that this recent verdict of the FSC will not meet the same fate, more so, since they have themselves graciously awarded five years “grace period” for its implementation?

The only silver lining along this entire delaying and avoiding episode has been that sensing the enormous potential of the Islamic form of financial transactions in virtually all the spheres of our economy, several corporate entrepreneurs, as well as certain conventional financial institutions, started seriously considering to set up Islamic modes of finance either on a standalone basis or in parallel with their existing riba-based businesses. Thus between the years 2000 and 2010, at least four dedicated Islamic banks were set up in the country that is now doing a thriving business. In the same period of time, three dedicated Takaful companies, as well as scores of Modaraba companies, also sprung up. On seeing their phenomenal success in attracting a large number of depositors, it was not long before even the conventional banks and DFIs, despite their scepticism and inclination towards their riba-based practices, set up their Islamic banking windows. Conventional insurance companies too adopted a similar line by setting up Takaful Windows within their ambits of operations. There is now hardly any commercial bank in the country that does not have such an Islamic banking operation too. This was greatly facilitated by the regulators (the SBP and the SECP) who took the plea that “consumers want a choice”. However, by doing so, they have tended merely to confuse the general public who keep wondering that if the Islamic Financial system is equally viable and fully Shariah-compliant, then why still keep adhering to the conventional riba-based system too?