Fundamental challenges facing the elimination of usury: Governor State Bank Jameel Ahmad

Governor State Bank of Pakistan, Jameel Ahmad, has stated that Islamic banking is growing both globally and locally. However, there are three fundamental challenges in eliminating interest (Riba).

Speaking at an event organized by a private bank under the theme "Islamic Bank of Pakistan," the Governor mentioned that the global volume of Islamic banking has reached $3.7 trillion. To keep pace with this growth, Pakistan needs to accelerate its efforts.

He further stated that the vision is to completely eliminate Riba by 2028, but significant challenges remain. He emphasized that failure to fully adhere to Shariah principles could be detrimental. One major hurdle is transitioning government bonds to Islamic instruments, which requires innovative solutions from Shariah experts. If this issue is not addressed, the growth of Islamic banking could slow down.

The Governor also highlighted the need to establish an interbank market for Islamic banking and explore ways to provide liquidity to Islamic banks. Raising awareness about Islamic banking and preparing skilled human resources are crucial. Employees of Islamic banks must have comprehensive knowledge of Islamic financial products.

He emphasized the importance of developing the local Islamic financial industry alongside global Islamic banking. To promote the rapid growth of Islamic banking, the State Bank has established a high-level steering committee, which includes the government, State Bank, SECP, and financial institutions.

Additionally, he acknowledged the significant role of AAOIFI in setting standards for Islamic finance and stressed the need for collaboration among regulators, academia, and the banking sector to address challenges faced by the local Islamic banking industry.