ISLAMABAD: Pakistan’s Finance Minister Ishaq Dar on Friday reposed his confidence in the country’s push to free its banking sector of Riba (interest), the finance ministry said, following a meeting to review progress on the matter. 

Pakistan’s Federal Shariat Court (FSC), which determines whether Pakistani laws comply with Islamic law, had directed the government in 2021 to eliminate interest from the country’s banking system by December 2027. 

In November last year, Dar had said a dedicated wing would soon be established at the State Bank of Pakistan (SBP) to ensure the country’s transformation into an interest-free economy to comply with the FSC ruling. 

On Friday, Dar chaired a meeting to discuss the demand-and-supply-side challenges being faced by the task force in eliminating Riba from the financial system, which deliberated upon various measures to be taken to address those challenges within the timeframe. 

“The Finance Minister also expressed his confidence that under the chairmanship of Governor, State Bank of Pakistan, the Steering Committee will able to complete the task efficiently,” the finance ministry said in a statement. 

“He further instructed all the stakeholders to work with commitment, sincerity and understanding to overcome all the hurdles in the way of implementation of interest free system and making the system feasible and stronger that all citizens would aspire for it.” 

At present, the share of Islamic banking in the overall commercial banking system in Pakistan is around 20 percent. The South Asian country has six full-fledged Islamic banks offering a wide range of products and the annual growth rate of Islamic banks’ assets and deposits has been 25 percent and 22 percent respectively over the last five years, according to central bank data. 

Dar emphasized the commitment of the government to promote Islamic finance and eliminate interest-based system from Pakistan in “true spirit” and assured his ministry’s complete support in achieving the desired objectives.