Landmark Decision to End Interest-Based Banking by 2028
In a historic move, the Senate has passed the 26th Constitutional Amendment Bill, 2024, establishing January 1, 2028, as the official deadline for the complete abolition of Riba (interest-based banking) in Pakistan. This amendment aims to fundamentally transform the country’s financial system, steering it towards a Riba-free economic model within the next four years.
Key Role of JUI-F in Amendment
The deadline was introduced following a strong recommendation from the Jamiat Ulema-e-Islam-Fazl (JUI-F), a prominent regional political party led by Maulana Fazl-ur-Rehman. The party’s input was crucial in shaping the bill, despite the challenges it posed for the government during its passage in the Senate. JUI-F has long advocated for a shift to an Islamic banking system that aligns with Shariah law.
Amendment to Article 38 of the Constitution
The amendment revises clause (f) of Article 38 of the Constitution, which addresses the promotion of social and economic well-being. Previously, the Constitution aimed to eliminate Riba “as early as possible.” However, the new wording sets a clear and practical deadline, stating that the elimination of Riba must be completed “as far as practicable, by the 1st of January, 2028.”
A Step Towards an Islamic Economic Model
The passage of this amendment is seen as a significant step towards aligning Pakistan’s economic practices with Islamic principles. The 2028 deadline provides a structured timeline for financial institutions to adapt and transition from interest-based systems to alternative Islamic financial models. The government, along with religious scholars and financial experts, is expected to work closely to ensure a smooth transition.
