KARACHI: State Bank of Pakistan (SBP) Deputy Governor Saleem Ullah has said the government’s borrowing will become fully Shariah-compliant from January 1, 2028, as part of a broader strategy to transition Pakistan’s financial system towards Islamic banking.
Speaking at an event in Karachi, Saleem Ullah said Pakistan had made significant progress in Islamic banking over the past two to three years.
He said around 29 per cent of banks’ deposits are currently held by Islamic banks, while Islamic banks account for around 40 per cent of total bank financing.
The SBP deputy governor said the government had presented a roadmap for the period after 2027 under which government borrowing would be made Shariah-compliant from January 1, 2028.
“Wherever possible, external borrowing will also be obtained through Shariah-compliant modes,” he said.
He clarified that the government would continue servicing its existing conventional debt, but the rollover of conventional loans would be made Shariah-compliant.
Saleem Ullah said the government had also developed a strategy to transform its borrowing into Shariah-compliant financing. He added that amendments to around 40 laws would be completed within the stipulated timeframe to facilitate the transition.
He said all government borrowing would be Shariah-compliant from January 1, 2028, while there was growing demand in the market for interest-free financial services.
According to the deputy governor, local banks would also provide services based on Shariah principles from January 1, 2028.
Mufti Muneeb calls for economic reforms
Speaking at the same event, former Ruet-e-Hilal Committee chairman Mufti Muneeb-ur-Rehman said Pakistan’s economic situation remained challenging, arguing that little was left for provinces after their share of resources and interest payments were accounted for.
He urged the authorities to address major economic issues, including the problems associated with independent power producers (IPPs).
Mufti Muneeb also referred to laws identified by the Federal Shariat Court, saying around 40 laws had been highlighted, while 20 of them restricted the functioning of institutions including the Securities and Exchange Commission of Pakistan and the State Bank.
