Pakistan’s roadmap to eliminate riba from the financial system by 2028 provides much-needed clarity on how the government plans to implement the Federal Shariat Court’s landmark ruling issued four years ago. The policy direction was effectively finalized when the government incorporated the court’s deadline into the Constitution through the 26th Amendment, a move widely viewed as part of a broader political agreement to secure the backing of religious parties.
For years, uncertainty has surrounded the question of how Pakistan—an economy deeply connected to conventional banking and international financial markets—could realistically manage such a sweeping transformation. By adopting a gradual and contract-respecting approach, the government has committed to honoring all existing financial agreements until they reach maturity. This strategy protects legal certainty, maintains investor confidence, and minimizes the risk of financial instability. Likewise, allowing most foreign-owned banks to continue operating hybrid models that offer both conventional and Islamic banking services reflects a practical understanding that complete uniformity is neither realistic nor necessary.
However, publishing the roadmap is only the first step. Its success will ultimately depend on effective implementation. Although Pakistan’s Islamic finance industry has grown significantly in recent years, it still lacks the depth, product diversity, and liquidity management mechanisms needed to support an economy of this scale. The government’s pledge to issue sukuk regularly across different maturities is an important measure to address one of the sector’s long-standing structural weaknesses.
Another key proposal is the creation of a comprehensive register of federal assets, which would strengthen the foundation for sustained sukuk issuance while reducing dependence on the limited pool of assets currently available for Islamic financing. Achieving this goal will require transparency, accurate asset valuation, and strong governance to preserve the credibility of asset-backed financial instruments.
Despite these positive steps, the roadmap avoids addressing an important debate among Islamic scholars, bankers, and economists over whether modern bank interest should universally be classified as riba. Some experts argue that Islamic teachings prohibit exploitative lending and debt traps rather than every form of interest or return on capital. Others support the Federal Shariat Court’s interpretation that all forms of interest fall under the prohibition.
The continued coexistence of conventional and Islamic banking systems across many Muslim-majority countries—and the relatively limited market share of Islamic banking despite decades of government support—suggests that many consumers value having the freedom to choose between the two systems.
The government’s own policy reflects this reality by permitting foreign-owned banks to continue offering hybrid banking services. It therefore becomes difficult to justify denying the same flexibility to domestically owned banks. Similarly, the government’s commitment to seek Sharia-compliant external financing only where it is “feasible” implicitly acknowledges the importance of practical considerations and consumer choice.
If financial stability and market demand justify maintaining a dual banking system, consumers should be allowed to determine its future through their preferences rather than regulatory compulsion. Ultimately, if the objective is to strengthen confidence in Islamic finance, it will be achieved more effectively through competition, innovation, and performance than through mandatory enforcement.
