EDITORIAL - Towards a Ribā-Free Pakistan: 26th Constitutional Amendment and the Way-Forward

Oct 3, 2026

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EDITORIAL on Pakistan’s ambition to eliminate ribā (interest) by 2028, linking the 26th Constitutional Amendment to earlier constitutional policy and the Federal Shariat Court’s 2022 judgment. Discusses government and regulator responsibilities for a transition to a ribā-free economy, emphasizing value-based intermediation, urgent legal reforms across banking and capital-market laws, and changes to licensing, ratios, and practices that currently enable interest-based activities. Highlights needs for Sharīʿah-aligned, transparent finance and associated implementation challenges.

LanguageEnglish

CategoryReligion & Spirituality

FormatPDF

Pages3

Reading Time8 min

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Towards a Ribā-Free Pakistan: 26th Constitutional Amendment and the Way-Forward

Elimination of ribā and constitutional timeline

Responsibilities for transition and value-based intermediation

Legal and regulatory overhauls for capital markets

Licensing, digital lending practices, and Shariʿah compliance

Journal of Islamic Business and Management 2024, 14(02), 86-88 [https://doi.org/10.26501/jibm/2024.1402-001](https://doi.org/10.26501/jibm/2024.1402-001) EDITORIAL Towards a Ribā-Free Pakistan: 26th Constitutional Amendment and the Way-Forward Syed Hassan Jamil* Editor, Journal of Islamic Business and Management The elimination of ribā (interest) has been a longstanding aspiration of the people of Pakistan. This goal is rooted in the nation's desire to align its ﬁnancial system with Islamic principles. Earlier, Article 38 (f) of the Constitution provided a policy principle to“eliminate Riba as early possible”. However, the interest-free system could not be adopted despite the passage of 50 years. While the Federal Shariat Court (FSC) reiterated in its judgment of February 2022 that interest is ribā and must be eliminated from the economy by December, 2027, 26th amendment provided a clear timeline mandating the State of Pakistan to eliminate the ribā from the country by January 01, 2028. This landmark amendment in the Constitution requires the government and the regulators of banking and nonbanking business and ﬁnance institutions to take urgent and well-thought-out steps for the transition of the economy toribā-freebases. As highlighted by the Federal Finance Minister Senator Muhammad Aurangzeb in SECP-IsDB-AAOIFI conference on Islamic capital market held at Karachi on 12 December 2024, the government of Pakistan is committed to transforming the ﬁnancial ecosystem of the country in line with Sharīʿah principles. It's heartening to note that he underlined the need for a “system that is not only in line with ourfaith but also capable of inclusive and sustainable economic growth”.“Only then, we will be able to extend the beneﬁts ofall our eﬀorts to the citizens ofPakistan.” Islamic ﬁnance instruments are vital for mobilizing resources for critical sectors, including infrastructure development and poverty alleviation through Islamic socialﬁnance, while maintaining adherence to ethical and transparentprinciples. While planning the transitionalprocess, we must ensure that Islamic ﬁnance is not only rooted in Sharīʿah principles but also practical, transparent, and capable ofmeeting the evolving needsofourpeople,” he added. It requires a paradigm change and puts heavy responsibility on the government, SBP, SECP and the Directorate of National Savings (DNS) in addition to the business and ﬁnance institutions and the ﬁnance practitioners. They need to implement value-based intermediation (VBI) to realize the objectives of Islamic ﬁnance, namely, protection and augmentation of wealth in a halal manner, fair distribution of returns, enhancement of social wellbeing, and lastly, generation of real economic activity. The FSC (2022) could not †Email: [syed.hassanjamil@riphah.edu.pk](syed.hassanjamil@riphah.edu.pk) ; ORCID: 0000 0003 2877 3809 Creative Commons CC BY: This article is distributed under the terms of the Creative Commons Attribution 4.0 License [http://creativecommons.org/licenses/by/4.0/](http://creativecommons.org/licenses/by/4.0/) 2024 Journal of Islamic Business and Management Vol. 14 Issue 02 87 cover many laws and regulations mainly because the same were not challenged before it. There has to be a full-ﬂedged Islamic ﬁnance law to repeal the current conventional law(s) . The recently added chapter to the BCO, 1962 by the SBP does not serve the purpose. The Debt Act 1944, Securities Act of 2015, Securities and Futures Advisers (Licensing and Operations) Regulations 2017, the Futures Market Act of 2016, Mutual Funds Regulations 2008, PSX Single Stock Options Contracts Market Regulations, Public Oﬀering Regulations 2017, Negotiated Deals Market (NDM) rules, Securities (Leveraged Marketsand Pledging) Rules 2011 need to be overhauled. Other laws, rules, and regulations about the Pakistan Stock Exchange, PMEX, CDC, and National Clearing Company (NCCPL) also must be cleansed from ribā and other prohibit

FAQs

What is the document’s main purpose?

It is an editorial outlining Pakistan’s pathway toward eliminating ribā and achieving a ribā-free financial system by 2028 through the 26th Constitutional Amendment.

Why is the 26th Constitutional Amendment emphasized?

It mandates a clear timeline requiring the State to eliminate ribā from Pakistan by January 1, 2028, building on earlier constitutional policy and the Federal Shariat Court’s 2022 judgment.

What major reforms does the editorial call for?

It calls for a paradigm shift and urgent legal and regulatory changes, including overhauling interest-based laws, revising licensing practices, and adjusting financial instruments and criteria to ensure Shariʿah compliance.

Oct 3, 2026

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