Research Analysis of the Methodology Adopted by the Council of Islamic Ideology in Formulating Suggestions for Riba Free Banking in Pakistan

Abstract

This article analysis the methodology adopted by the Council of Islamic Ideology in formulating suggestions for Riba-free banking in Pakistan. In March 1963, the Council received a reference from the Ministry of Finance Government of Pakistan, requesting the council to formulate suggestions for Riba-free banking. In this regard, the Islamic Ideology Council presented its final report to the government in 1969, declaring the existing Riba to be Ḥaraam. The Council also suggested to set up a panel of Economists, financial experts and bankers with a task to put forward practical ways for altering the existing interest-based economy into an Islamic Economy. But the government did not take any serious steps to put these suggestions into practice. In 1977, President Zia-Ul-Ḥaq made this council more functional and advised it to reformulate suggestion for the Riba-free banking in three years. Thereupon, the Council established a panel of 15 economists, financial experts and bankers with a task to come up with practical suggestions for the intended alternative Islamic banking model. In this regard, the panel conducted several meetings. Foreign experts were also invited to make their contributions. The Council vigilantly and constantly supervised the task; and finally about two and a quarter years after the establishment of the panel, the council received three reports. The first report discussed the prevailing Zakat system in Pakistan; the second one contained suggestions about how to eradicate Riba from certain financial institutes and bodies; and the third one covered Riba-free banking. The Council of Islamic Ideology deeply considered this report and made appropriate amendments. At last, it finalized the report in a meeting held on June 15, 1980 in Karachi. It is, in fact, a comprehensive report prepared jointly by various schools of Fiqh, economists, financial experts, bankers and international Islamic scholars