Charging interest is against Islam 8212; Pak SC

ISLAMABAD, DECEMBER 24: A shariat bench of the Pakistan Supreme Court has ruled that charging interest is against the teachings of Islam. ...

ISLAMABAD, DECEMBER 24: A shariat bench of the Pakistan Supreme Court has ruled that charging interest is against the teachings of Islam. It is a decision that may lead to sweeping changes in this country8217;s already troubled financial sector, warn financial analysts, but the government has said that there is 8220;no need to panic.8221;

8220;Serious efforts shall be made by the federal government to relieve the burden of foreign debt as soon as possible and to renegotiate the existing loans,8221; the court said. 8220;Serious efforts should also be made to structure future borrowings if necessary on the basis of Islamic modes of financing.8221;Eight specific laws governing interest payments will have to be revoked no later than March 30, 2000. Other laws will have to be changed by June 30, 2000, and still others by June 30, 2001, the court said.

In 18 months, Pakistan8217;s economy should be interest free, according to Pakistan8217;s state-run news agency.

8220;Any amount big or small over the principal in a contract of loan or debtis riba8217; and is prohibited by the Holy Koran,8221; the judgment found, using the Arabic word that is interpreted as interest.

The Supreme Court has been mulling over the question of interest payments since 1991. It was then that Pakistan8217;s Shariat Court, which decides issues pertaining to Islam, ruled that charging interest was against Islamic teachings.

The government, then headed by Prime Minister Nawaz Sharif, challenged the Shariat ruling in the Supreme Court.

The decision said that at least five ordinances pertaining to money-lenders in Pakistan and a section of the Banking Ordinance 1962 will also have to be revised.

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But law minister Aziz Munshi told journalists that people should not panic. 8220;Don8217;t worry, there is no need to panic. The government is looking at the matter closely,8221; said Munshi, who gave little details.

It is expected that the government will appeal against the decision.