Finance Minister Mohammad Ishaq Dar on Thursday said that the government remains committed to implementing the Islamic financial system in Pakistan.

“The subject of Islamic economic system is close to my heart. I desire and pray to eliminate the interest-based system from Pakistan at the earliest,” said Dar, while addressing the ‘National Islamic Economic Forum’s conference on Roadmap for Islamization of the Economy’ via video link.

To this end, Dar said a high-level three-member committee has been formed under the chairmanship of the Governor State Bank, under which the financial system of Pakistan will be planned to run on an Islamic basis. “I will be directly monitoring this committee,” he added.

He said that the Pakistan Muslim League-Nawaz (PML-N) in its past tenure introduced a number of measures to promote Islamic finance in the country, which has led to the progress of Islamic banking in the country.

Govt remains committed to eliminate interest-based banking system in Pakistan: Dar

“One of the actions taken in this regard was the formation of a high-level steering committee consisting of all key stakeholders, including Ministry of Finance, State Bank of Pakistan (SBP), Securities and Exchange Commission of Pakistan (SECP), and Shariah scholars,” he said.

“Back then, we had only one Islamic bank i.e. Meezan Bank, with only hundred branches. Now it stands at over 1,000 branches. Faysal Bank has also made major strides in this regard,” he said.

SBP, NBP to withdraw appeals against Shariat Court’s order: Ishaq Dar

Dar said deposits in Islamic banks have increased significantly. “This shows that the time given by the Federal Shariat Court (FSC) of five years to convert the current financial system can be achieved,” he said.

However, he added that making the banking system Sharia compliant will be a huge challenge.

Last year, the FSC had ruled that elimination of interest from the economic system was a religious and legal responsibility, ordering the government to end the interest-based banking system by the end of 2027.

The decision was made on petitions against Riba (usury) after the Supreme Court referred the case back to the court in 2002 following appeals against the decision of the FSC. The Riba-free economy case was remanded by the Shariat Appellate Bench of the Supreme Court of Pakistan in 2002.

Meanwhile, criticising his predecessors, Dar said the current issues including rising inflation, Letters of Credit (LCs) issue, and economic volatility are a result of the “mismanagement and misgovernance” of the previous government.