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Consensus at seminar on 'Riba'

SC verdict offers viable

alternative to capitalism

RECORDER REPORT

KARACHI: The Supreme Court's decision regarding interest-free economy has appeared at the most opportune time which provides the country a chance to play a leading role by offering a viable alternative to capitalism.

This was observed in a seminar on the topic of "Riba" organised by the Institute of Bankers Pakistan on Wednesday.

Almost all Scholars expressed their belief that replacement of interest-based economy was definitely possible "if we start with total commitment for the implementation of the interest-free economy."

The speakers, including bankers, fully agreed that whether it is simple interest or compound interest, it is Riba.

"The Supreme Court's decision has ended the debate over what is Riba and what is not," said D.M. Qureshi, Adviser of Islamic Development Bank.

"We will have to continue checking that interest is being replaced and there is no mix-up while introducing new instruments. The mistakes in mark-up should not be repeated," said Qureshi.

He said the court has provided a seven-point structure to build the interest free economy. He observed that asset management and risk management have developed so rapidly that it left the conventional banking far behind.

"Risk management is now the most critical part of the banking. We must identify and assess our assets and use them through asset management," said Qureshi.

Mufti Mohammad Rafi Usmani, discussing mostly the religious part of the decision, urged the government to implement the interest-free system.

"Ulema, economists and the Supreme Court have done their job. It is now the responsibility of the government to take steps for the Islamisation of the economy," said Usmani.

He said the country has the golden chance to lead the Islamic world as well as those who know the cruelty of the capitalism.

He declared that the implementing interest-free banking is the test case for the nation and "if we fail, we cannot imagine the losses we will have to suffer."

He said Pakistan has almost lost its sovereignty just because of interst-based banking.

"We should not implement it half-heartedly. The current banking system took centuries to develop. The new system will also take time but we need full commitment," he said.

Ibrahim Sidat, a chartered accountant, said that the Supreme Court had made it clear that bank interest, whether it is simple or compound, is Riba.

He rejected all arguments that said that Riba was not clear in the beginning of Islam or this Riba is different from that Riba.

"In the pre-Islamic days, interest was used to be charged on borrowing of money. It had been banned," said Sidat.

The fears that were expressed in 1980 about implementation of Islamic banking system, without addressing other problems pertaining to society as a whole, have again been noted and emphasised in the Supreme Court judgment, said Tahir Ali Tayebi, advocate and consultant on banking and finance.

He suggested that the timeframe set by the Supreme Court should, therefore, be utilised by the government to address the problems of default culture, dishonesty and fraud.

"There is a dire need to introduce stringent laws against Gharar as recommended by the Supreme Court without which introduction of a banking system, as envisaged in the Holy Quran, would be a disaster for the economy of Pakistan in general and the banking sector in particular," said Tayebi.

Dr. Shahid Hassan Siddiqui, Chairman, Research Institute of Banking and Finance, raised several question that would emerge after the introduction of interest-free banking system.

"What will happen to Rs 800 billion advanced by the banks on interest rates," asked Siddiqui.

He said there was no concept of borrowing from financial institution in the early days of Islam. The banks will turn into investment houses on the basis of sharing in profit and loss.

Haji Abdul Jabbar Khan, Ex-president of National Bank of Pakistan, addressing on the occasion, defined Riba and endorsed fully the verdict of the Supreme Court.