WEB DESK: Talking to journalists at the conclusion of a recent seminar in Islamabad, Chairman of the Council of Islamic Ideology, Maulana Mohammad Khan Sherani, urged the State Bank of Pakistan to devise a mechanism for Islamization of the economy suggesting, among other measures, replacement of paper currency with silver and gold coins.
The maulana, of course, is no expert on financial matters and hence unaware of the complexities involved. More importantly, the conference stressed the need to implement an interest-free Islamic system which in fact is already operational, but in parallel with conventional banking. There is no question about its worth considering that Islamic finance is a fast growing industry in several countries.
According to World Islamic Banking Competitiveness report 2014-15, the industry having gone mainstream participation banking’s average growth in core markets over 2009-13 was 1.9 times higher than that for conventional. And assets of Islamic banks showed 18 percent increase per year during 2009-13.
The subject is not debatable anymore, yet progress on complete changeover to Islamic banking continues to hang fire since 1992 because between them the Federal Shariat Court (FSC) and the Supreme Court’s Shariat Appellate Bench cannot arrive at a decision. It has since been going back and forth, as the apex court first sent back the case to FSC to reconsider its judgement declaring bank interest as riba (usury) which is repugnant to Islamic teachings.
Later in 1999, the FSC’s decision was upheld, and the government given two years to amend all the banking rules and related statutes to prohibit bank interest (riba). Then again, a Supreme Court bench hearing a review petition filed by the government and some banks remanded the case to FSC for reconsideration. Still, there is no decision apparently because the judges are caught between literalist and loose interpretations of the issue.
In fact, while remanding the case to the FSC in 2002, the SC bench hearing the review petition had observed “we are of the considered view that the issues involved in these cases require to be determined after thorough and elaborate research and comparative study of the financial systems, which are prevalent in the contemporary Muslim countries.”
Clearly there is need for ijtehad, (independent reasoning) – a decision-making process. The Holy Quran tells its followers to “ask those who have knowledge, if you yourselves do not know”. Already too much time has been wasted. It is imperative therefore that the government, pursue the option of an ijtehad-based solution. It should seek advice from well-respected religious scholars from the Al-Azhar University, renowned bankers, lawyers and jurists. Once a consensus is achieved, a timeline ought to be set for replacing the entire system with interest-free Islamic banking.
Source: Business Recorder