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THE roadmap for eliminating riba from Pakistan’s financial system from 2028 offers some clarity on how the government intends to implement the four-year-old Federal Shariat Court ruling. The policy direction itself was settled when the government embraced the court’s verdict by incorporating its deadline into the Constitution through the 26th Amendment, a move seen as part of a political bargain to secure the support of religious parties for the amendment.
Uncertainty has persisted over how an economy deeply integrated with conventional banking and global capital can manage such a profound transition. By opting for a gradual, contract-respecting approach, the government has committed itself to honouring existing obligations until maturity. This preserves legal certainty, protects investor confidence and avoids financial disruption. The decision to allow most foreign-owned banks to continue operating hybrid models offering both conventional and Islamic banking services is also a step in the right direction as complete uniformity is neither practical nor desirable.
The roadmap is only the beginning. The challenge lies in executing it. Pakistan’s Islamic finance sector has expanded rapidly, but still lacks the depth, diversity and liquidity management tools to support an economy of this size. The government’s commitment to regular issuance of sukuk across different maturities addresses a big structural weakness of the sector.
