Pakistan Unveils Roadmap for Gradual Transition to an Interest-Free Banking System
Islamabad:The Government of Pakistan has announced a comprehensive strategy for the gradual implementation of an **interest-free financial and banking system**, aiming to ensure a smooth transition while safeguarding economic and financial stability.
According to a strategic plan released by the **Ministry of Finance**, the transition will be carried out in phases to minimize disruptions to the country’s financial sector and broader economy.
The ministry’s report, titled **”Strategy for Pakistan’s Financial System Beyond 2027,”** states that the roadmap has been developed in light of the **Federal Shariat Court’s 2022 ruling** directing the elimination of interest-based banking, as well as the **26th Constitutional Amendment**. The government emphasized that the shift will be gradual to avoid adverse economic consequences.
As part of the plan, large-scale training programs have already been launched to help conventional banks align their operations with international standards for Islamic finance and Shariah principles.
The report also states that the **State Bank of Pakistan** is expected to align its monetary policy framework with Shariah-compliant principles after **2027**.
The Ministry of Finance acknowledged that converting the government’s existing conventional public debt into Shariah-compliant financial instruments will be one of the biggest challenges during the transition.
To address this, the strategy includes the establishment of an **Asset Registry Company**, the issuance of new **Sukuk (Islamic bonds)**, and the use of other Islamic financial instruments to support government financing.
The report further notes that amendments to relevant **federal and provincial laws** will be required by **December 2027** to facilitate the transition. It adds that the pace of full implementation after 2027 will depend on market conditions and the government’s ability to manage associated financial risks and operational challenges.
