KARACHI: Government is getting Rs 14 billion loans every day to meet its expenses on 24 percent interest rate resulting in significant rise in both its domestic and external debt, which now stands at $ 280 billion. Informed sources disclosed that in this way govt. was flouting orders of Federal Shariat Court (FSC) passed in April 2022.

FSC ruled that all prevailing forms of ‘interest’ either in banking transactions or in private transactions do fall within definition of Riba. Similarly any interest stipulated in government borrowings acquired from domestic or foreign sources is Riba and clearly prohibited by Holy Quran.

Court had directed government to take certain steps which according to court were necessary to transform economy of Pakistan like, government should take strict austerity measures to drastically curtail government expenditure and deficit financing should be controlled. It also suggested certain laws to be framed like, an Act to regulate federal consolidated fund and public account, provincial consolidated fund and public account requires to be enacted by Parliament and provincial assemblies for their proper regulations and laws similar to freedom of information Act, Privacy Act and Ethics Regulations of United States, Financial Services Act of Britain be enacted.

FSC suggested certain offices to be established like, Serious Fraud Office to control white collar and economic crimes, credit rating agencies in public sector etc.

Court directed certain special departments to be established within State Bank. In addition to that for transformation of existing financial system to one conforming to Shariah certain time lines were also given by Shariat Appellate Bench. Government was directed to convert domestic inter government borrowings as well as borrowings of government from State Bank of Pakistan on interest free basis.

Federal Shariat Court in its judgment expressed that all those laws or provisions of laws, which contain word “Interest” within meaning of banking interest is Riba, hence prohibited and any payment of extra amount in addition to due payment due to delay, which is considered and calculated as interest over that amount also falls within category of Riba. Hence prohibited being repugnant to injunctions of Islam according to principles as laid down in Quran and Sunnah.

Earlier, Shariat Appellate Bench of Supreme Court also held that any amount big or small, over principal, in a contract of loan or debt in ‘Riba’ prohibited by Holy Quran, regardless of whether loan is taken for purpose of consumption or for some production activity, there is no difference between different types of loans so far as prohibition of Riba is concerned. Prohibition of Riba is absolute irrespective of fact whether additional amount stipulated over principal loan or debt is small or large.

Published in The Daily National Courier, September, 11 2023

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