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Govt to implement SC Riba verdict in letter, spirit: Shaukat

IKRAMUL HAQ

ISLAMABAD: Finance Minister Shaukat Aziz has said that the government would implement the Supreme Court verdict on Riba in letter and spirit, but needs more knowledge to make the transition smooth and sustainable.

Already, three government bodies have been working on the issue while input from experts and private entities, like Institute of Policy Studies (IPS), would be welcome.

The minister, who was addressing the concluding session of one-day seminar on 'Islamic Banking: Issues and Challenges', lauded the efforts of the Institute and its Chairman, Prof Khursheed Ahmed, saying that for bringing about the change the government would "need your input, advice and critique". He also listed a number of unique challenges the country's economy is faced with for implementing the decision.

Prof Khursheed presented the main conclusions of the day-long discussion and a documentary on Tabun Haji, Malaysian agency for helping the people in performance of Haj, 'Savings and Investment', was presented. He also recounted the success story of Islamic Bank of Bangladesh in promoting interest-free economy there.

The finance minister acknowledged that being in Malaysia for a number of years as international banker, he was witness to the inauguration of the Tabun Haji, and praised the impressive work it has done to Malaysian economy and life. He said that several other investment firms there were pursuing similar goals. He also referred to his working in Middle East countries where operations in Islamic banking were gaining popularity.

At the outset, the minister said that following the Supreme Court judgement, a commission had been appointed by the State Bank, a task force was set up by in the finance ministry, and a committee was established in the ministry of law for implementing the order.

But he admitted that more knowledge would be needed as the transition to the new system was a daunting task and the country was facing some unique challenges.

He held that the transition could not take place overnight. The entire legal framework needed to be restructured as the existing system pertains to the conventional economic system.

Moreover, the foremost issue was of government financing, as the government is the biggest borrower. In monetary policy, interest is a basic issue. The heavy burden of domestic debt of Rs 1.5 trillion, and the annual payments of Rs 1,700 billion is a daunting problem.

All these challenges, unique to the country, call for a smooth, gradual and uninterrupted change, the minister observed. For this, he asked the participants of the IPS seminar for their "input, advice and critique".

He said that in this way the change would be sustainable. The government, he said, was taking the issue very seriously which was "uppermost in the government's mind." "But we need to dig deeper into the problem with a high sense of sincerity of purpose," he added.

He said that there should be realistic game-plan for which the court has allowed a time-frame. He conceded that there was no easy answer, as the country's economy was to have global linkages, too.

Prof Khursheed expressed the hope that the government was earnestly opting for a change, as in the past efforts were half-hearted. "The whole process was a miscarriage and not a movement forward. It needs political vision and the task would take time."

He added that the most important work was of creating awareness to dispel the fear of the unknown.

He further suggested that the government should provide legal and judicial framework as a top priority. Further, it would need a regulatory mechanism. He said that the absence of interest did not mean absence of dividend. Moreover, in case of default, the guilty are to be taken to task.

To create confidence in the new system, he suggested that Shariah trained auditors should be in place.

To implement the Supreme Court order, an effective political will and community participation is essential to bring about fundamental change. In the new system equity and welfare are the key principles. If the government failed, a grand opportunity would be lost, he added.