Editorial: Federal Shar¯ıah Court’s Judgment for Riba¯ Free Pakistan

Abstract

The controversy of whether modern-day commercial interest falls under the purview of riba¯
and, therefore, prohibited or not was resolved globally by the end of the 1980s by resolutions,
fatawa, and reports of various forums and committees. Accordingly, Islamic banking started
evolving, and Pakistan was the pioneer in this regard. Yet, as the Constitution of the Islamic
Republic of Pakistan required elimination of riba¯ from the entire economy, certainly a difficult
task, the controversy was re-initiated when an appeal was preferred by the government against
the judgment of the Federal Shar¯ıat Court (FSC) of Pakistan declared in its of 14th November
1991. The FSC (1991) declared that the Non-Interest Based (NIB) system introduced by the
SBP in 1985 was un-Islamic mainly due to the involvement of ‘Sell and Buy-Back’ and sale
of debts/receivables and ordered that the whole system be Islamised in its true sense by the
end of June 1992.