Pleas against Sharia-compliant banking verdict formally withdrawn.

ISLAMABAD -- The State Bank of Pakistan (SBP) and other commercial banks on Saturday finally withdrew their appeals from the Supreme Court, challenging the Federal Shariat Court's (FSC) directions to the government to make the country's entire banking system completely Sharia-compliant by Dec 2027.

The appeals were taken back in line with a Nov 9 announcement by Finance Minister Ishaq Dar that SBP and the National Bank of Pakistan (NBP) would be withdrawing appeals against the April 28 FSC verdict, which had given the government a five-year deadline to eliminate Riba (interest-based) banking from the country.

Read: Is it possible for Pakistan to shift to an interest-free banking system?

Announced in April by a three-judge FSC bench consisting of Chief Justice Muhammad Noor Meskanzai, Justice Dr Syed Muhammad Anwer and Justice Khadim Hussain M Shaikh, the verdict directed the federal as well as the provincial governments to complete necessary legislative amendments to the relevant laws and bring them into conformity with the injunctions of Islam within five years. The FSC also ordered the government to adopt Sharia-compliant modes while borrowing from domestic or foreign sources in the future.

On Saturday, the banking regulator as well as commercial banks, made an application under Order 33 Rule 6 of the Supreme Court Rules 1980 to withdraw appeals pending adjudication before the apex court in which no date of hearing has been fixed so far.

In its appeal, the SBP had contended that being the custodian and regulator of the financial and monetary framework of Pakistan, the bank was deeply committed to ensuring compliance with the injunctions of Islam while protecting the stability and security of Pakistan's financial sector that functions as part of the global financial system.

However, while Islamic modes of finance are a growing area of interest for foreign providers of finance, the adoption of particular modes of finance with respect to any particular advance is not in the hands of the state of Pakistan and its various instrumentalities.

Funding arrangements with international providers of finance are a matter of negotiations carried out by the designated officials/authorities of the state of Pakistan...