Pakistan is aiming to phase out interest-based banking (Riba) “as far as practicable by January 1, 2028,” according to a draft constitutional amendment approved by a special parliamentary committee.
The amendment seeks to revise Clause (f) of Article 38 of the Constitution, which addresses the promotion of social and economic welfare. The current wording of the clause calls for the elimination of Riba “as early as possible,” but the proposed change would replace this with the more specific timeline of “by January 1, 2028, as far as practicable.” This adjustment is one of 26 proposed changes to the Constitution, with the amendment originally suggested by Jamiat Ulema-e-Islam.
The move follows a ruling by the Federal Shariat Court on April 28, 2022, which directed the government to eliminate Riba by December 31, 2027, in accordance with Islamic principles. The court, led by a three-judge bench that included Chief Justice Muhammad Noor Meskanzai, Justice Dr. Syed Muhammad Anwer, and Justice Khadim Hussain M Shaikh, deemed interest on government loans—whether domestic or foreign—to be prohibited under Islamic law. The 298-page ruling emphasized that the five-year transition period should be sufficient for converting Pakistan’s economy into one that is equitable, asset-based, and free from interest.
The court also instructed the federal and provincial governments to modify existing laws to align with Islamic injunctions and ensure that future borrowing is conducted through Shariah-compliant means.
