Pakistan aims for no interest under Islamic banking by 2027

Islamabad: Pakistan plans to abolish interest from its banking system by 2027 under the Islamic Sharia law, according to the top banker in the nation. Jameel Ahmad, governor of the State Bank of Pakistan (SBP), said that the Security and Exchange Commission of Pakistan and the central bank were collaborating on changes to advance the Islamic financial industry while speaking at the Islamic Capital Markets conference in Islamabad.

Addressing the Islamic Capital Markets conference here, State Bank of Pakistan (SBP) Governor Jameel Ahmad said that the Security and Exchange Commission of Pakistan (SECP) and the central bank were working together on reforms to promote the Islamic finance sector.

"In the past decade, the country has seen a 24 per cent rise/growth in Islamic banking, with the Islamic capital market growing to around USD 3 trillion,” he was quoted as saying by the Express Tribune newspaper.

Asserting that the growth has reflected positively in the overall state of the country's economy, Ahmad said, "Islamic banking now makes up 20% of the banking sector in Pakistan."

He added that there are ongoing discussions for funding from the capital market through Sharia compliance and added that the financial requirements of the government could also be met through Sukuk (Sharia-compliant bonds) issuance.

Islamic banking is defined as a banking system which is in consonance with the spirit, ethos and value system of Islam and governed by the principles laid down by Islamic Sharia.

As per Ahmad, Pakistan has issued Sukuk bonds worth Pakistan Rs 2.8 trillion, and a committee has been formed within SBP to convert government debt into Sukuk.

With PTI inputs