The 26th Constitutional Amendment Bill, 2024, recently passed by Pakistan’s Senate, has set a deadline of January 1, 2028, for the elimination of Riba (interest-based banking) in the country. This amendment was introduced following the suggestion of Jamiat Ulema-e-Islam-Fazl (JUI-F), a major political party, which played a key role in the bill’s presentation.
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The bill modifies Article 38(f) of the Constitution, which pertains to the promotion of social and economic well-being. The previous wording, calling for the elimination of Riba “as early as possible,” has been replaced with a more specific deadline: “by the 1st of January, 2028.”
This legislative move is in line with the Federal Shariat Court’s 2022 ruling, which instructed the government to implement an Islamic and interest-free banking system within five years. The court emphasized that Riba is strictly forbidden in Islam and that all forms of interest, including those on government loans, must be abolished.
In response, the State Bank of Pakistan (SBP) is actively working on the transition to an interest-free system. The SBP’s Governor’s Report 2023-24 highlights the creation of a Committee for the Transformation of Conventional Banking into Islamic Banking, reviewing laws, raising awareness, and building stakeholder capacity. The SBP’s Vision 2028 includes a goal to completely convert Pakistan’s banking system to be Shariah-compliant by the set deadline.
This step marks a significant shift towards an Islamic financial system in Pakistan, as it works towards eliminating interest from domestic and international financial transactions.
