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Business Recorder
6 days ago
- Business
- Business Recorder
Interview with Dr Mufti Irshad Ahmad Aijaz, Chairman, Shariah Advisory Committee
'Pakistan has a legacy of leadership in Islamic finance' Dr. Mufti Irshad Ahmad Aijaz is the Chairman of the Shariah Advisory Committee at the Securities and Exchange Commission of Pakistan (SECP) and Chairperson of the Shariah Board at BankIslami. He previously served as Chairman of the State Bank of Pakistan's Shariah Advisory Committee for seven years. He is also a member of the Steering Committee guiding the implementation of the Federal Shariat Court's judgment on Riba and serves on the Governance and Ethics Board of AAOIFI, Bahrain. Renowned for his expertise in Islamic finance, Dr. Mufti Irshad advises regulatory bodies and financial institutions on Shariah-compliant policy and regulation. He also lectures regularly on Islamic economics and finance at leading institutions including the National Institute of Banking and Finance (SBP) and the Centre for Islamic Economics, Jamia Darul Uloom Karachi. He holds a PhD in Islamic Studies with a focus on Islamic Finance from the University of Karachi, an MBA from a leading private university, and advanced Islamic qualifications including Shahadat-ul-Alimiyyah and Takhassus fil-Iftaa. Following are the edited excerpts of a recent conversation BR Research had with him: BR Research: How do you interpret the constitutional amendment to Article 38(f) that mandates the complete elimination of Riba by January 2028? Dr. Mufti Irshad Ahmad Aijaz: The constitutional amendment to Article 38(f) reinforces Pakistan's long-standing commitment—rooted in the 1973 Constitution—to eliminate Riba (interest) from its economic and financial system. This amendment, together with the 2022 Federal Shariat Court ruling, provides a binding legal and constitutional framework for transitioning towards a fully Shariah-compliant system. The Court's ruling, which came three decades after the original petition, has finally brought clarity to a debate that persisted for years. It is a commendable move and has been broadly appreciated, signalling the state's alignment with both constitutional imperatives and Islamic jurisprudence. BRR: What are the immediate regulatory and institutional priorities for Pakistan to meet this constitutional deadline? IAA: The first and most urgent priority is conducting a thorough gap analysis to understand where the system currently stands versus where it needs to be. This includes assessing institutional readiness, legal frameworks, product offerings, and stakeholder alignment. Equally important is identifying 'champions' within key institutions—such as the State Bank, SECP, judiciary, and financial services sector—who can lead and drive this transformation. While certain institutions like the State Bank and SECP have begun this process internally, broader inter-ministerial and governmental engagement remains lacking. Without a fully integrated strategy supported by enabling laws and clear regulatory pathways, meaningful progress will be slow and fragmented. BRR: Do you believe the banking sector is aligned—technically and ideologically—with this transition? What is more needed? IAA: Ideologically, there is growing consensus within the banking sector in favour of this transition. The Shariat Court's decision and the global evolution of Islamic finance have significantly reduced opposition to the idea of eliminating interest. Most banks, including those previously skeptical, now accept the theoretical and moral basis for a Riba-free system. However, the technical and operational alignment still lags. Pakistan lacks the comprehensive legal infrastructure, standardization, and global partnerships necessary for seamless implementation. Many professionals in the sector are concerned about how to practically run operations without conventional tools. Thus, the focus must now shift to creating enabling environments—legal, institutional, and financial—that allow this consensus to materialize in practice. BRR: What role is the State Bank of Pakistan playing in operationalizing this shift to a Riba-free financial system? IAA: The State Bank of Pakistan (SBP) is playing a central and proactive role. After the 2022 ruling by the Federal Shariat Court, the Government of Pakistan established a Steering Committee chaired by the finance minister and convened by the Governor of SBP. This high-level committee formed six working groups, each focusing on a critical area such as legal reform, regulatory supervision, public awareness, implementation roadmaps, fast-track changes, and institutional conversion. These groups brought together stakeholders from across the banking sector, academia, legal profession, and Shariah boards. Over 150 meetings have already taken place, and more than 500 man-hours have been spent drafting technical recommendations. The SBP has also issued updated regulatory guidelines, governance frameworks, and operational rules to support Islamic banking institutions. This signals a serious institutional commitment to the transition. BRR: Canyou elaborate on the work of the SECP and the Shariah Advisory Committees in facilitating this transition across the capital markets and financial services? IAA: The Securities and Exchange Commission of Pakistan (SECP) is playing a parallel role in transforming the non-banking financial sector. It has constituted its own Shariah Advisory Committee and established dedicated departments to ensure Shariah compliance in capital markets and insurance. These bodies are working on developing products such as Islamic mutual funds, sukuk structures, and Takaful models that align with Islamic principles. However, their authority is still bound by current laws, and there is a recognized need for further legislative support. Both SECP and SBP have the expertise and intent, but to go beyond procedural compliance and achieve full-scale transformation, they require more robust legal empowerment and high-level government backing. BRR: Are there any specific models or international benchmarks—like Malaysia or Bahrain—that Pakistan can draw lessons from? IAA: While no major country has fully transitioned to a 100% Shariah-compliant financial system, several have made significant strides. Malaysia and Indonesia have developed world-leading Islamic banking ecosystems with strong regulatory backing, educational infrastructure, and liquidity management instruments. Gulf countries like the UAE and Saudi Arabia have integrated Islamic finance within conventional systems, offering dual windows and supporting innovation. Interestingly, even non-Muslim countries such as the UK, Singapore, Germany, and France have legislated space for Islamic finance based on demand and financial inclusivity. These countries demonstrate that Islamic finance is not only religiously viable but also economically competitive. For Pakistan, these models offer valuable lessons in terms of legislation, central bank tools, education, taxation, and dispute resolution mechanisms. BRR: What are the biggest structural and operational challenges in eliminating Riba from Pakistan's economy? IAA: There are several. Structurally, the absence of a unified legal framework and the lack of coordination between ministries, regulators, and the judiciary are major bottlenecks. Operationally, liquidity management remains a challenge, particularly in the absence of Shariah-compliant monetary policy tools. Taxation policies are not yet aligned with Islamic contracts, and the arbitration infrastructure is underdeveloped. Moreover, as Islamic banking grows—currently making up around 22–23% of the banking sector—so do legal risks and compliance challenges. Larger size leads to more litigation, which requires mature legal defences and regulatory protections. Without systemic reform, these gaps could undermine the momentum toward full Riba elimination. BRR: How do you see Pakistan positioning itself within the global Islamic finance ecosystem by 2028? Can it become a leader in Islamic finance innovation? IAA: Pakistan already has a legacy of leadership in Islamic finance. In the late 1970s and early 1980s, Pakistan was among the first to introduce Islamic banking frameworks and Modaraba-based non-banking financial institutions. The 1982 report by the Islamic Ideology Council is still considered a global reference document for the elimination of interest. Scholars from countries like Malaysia have acknowledged that their early models were inspired by studies conducted in Pakistan. However, Pakistan's inability to institutionalize these innovations and political instability have kept it from maintaining that leadership. If Pakistan can address its internal governance challenges and revive regional collaboration through platforms like the OIC—with support from countries like Türkiye and Malaysia—it can reclaim a leadership role in shaping the future of global Islamic finance. BRR: How do you see the issue of liquidity management evolving under a fully Islamic financial system? IAA: Liquidity management is indeed a cornerstone of a stable Islamic financial system. The challenge lies in ensuring access to Shariah-compliant instruments that provide the same flexibility and control as conventional tools. Globally, this issue has been addressed through instruments like sukuk, commodity Murabaha, and Islamic repos. In Pakistan, sukuk is available, but reforms are needed to make them more usable—particularly around asset-light structures. We need legal clarity, standardized documentation, and a supportive asset registry. The example of the Roshan Digital Account shows that with government backing, innovation can succeed. Going forward, Pakistan must institutionalize Islamic liquidity tools, establish strategic asset companies, and enact structural reforms to fill the gaps. Without this, monetary operations under a fully Islamic system will remain suboptimal.
Arab News
20-05-2025
- Business
- Arab News
Pakistan regulator unveils new measures to strengthen Shariah-compliant market intermediaries
KARACHI: The Securities and Exchange Commission of Pakistan (SECP) is proposing new measures aimed at strengthening the presence and operations of Shariah-compliant intermediaries within the capital market, the regulator said in a statement this week. Pakistan's Federal Shariat Court (FSC) directed the government in April 2022 to eliminate interest and align the country's entire banking system with Islamic principles by 2027. Following the order, the government and the State Bank have taken several measures ranging from changing laws to issuing sukuk bonds to replace interest-based treasury bills and investment bonds. However, documents seen by Arab News earlier this year showed Pakistan's government had failed to achieve a target set by the central bank to increase the share of Islamic banking deposits in the country by 50 percent by January this year. 'The paper proposes a phase-wise approach for Shariah-compliant institutional investors to route their business through Shariah-compliant brokers based on a plan to be prepared by their respective boards of directors,' the SECP said about the latest proposal. 'The paper encourages Islamic financial institutions, including providers of Islamic window services, to utilize Shariah-compliant intermediaries for takaful and investment purposes in situations where they are not obligated to do so.' Other proposed measures include creating a specific category for Shariah-compliant intermediaries for greater visibility on the Centralized Gateway Portal and a dedicated list of Shariah-compliant asset management companies on EMLAAK Financials, Pakistan's first digital mutual fund aggregator. The platform brings together multiple Asset Management Companies (AMCs) and their mutual funds under one roof. It is a venture of ITMinds Limited, a wholly owned subsidiary of the Central Depository Company of Pakistan (CDC). In order to facilitate Roshan Digital Account (RDA) clients, creating a separate category of Shariah-compliant intermediaries on the websites and mobile apps of Islamic banks would also be explored in coordination with relevant stakeholders, the SECP said.
Business Recorder
27-04-2025
- General
- Business Recorder
Divorce and dower payment
EDITORIAL: Divorce almost is always a nasty affair, and can get even nastier where financial obligations are involved. The Nikahnama (marriage contract certificate) contains a column in which the husband can delegate the right to divorce to the wife. Seen as inauspicious, this provision is generally invalidated. The wife has the right to divorce as Khula, however. Entered in the marriage certificate is also the amount of dower money, to be determined according to the husband's means of income, a bulk of which may be deferred payment. It is quite common for the wife or her family to demand a much higher sum as an insurance policy for her financial and marital security. That though, may yet lead to a gruelling legal battle in the event a woman wants to seek Khula. The Lahore High Court has been hearing one such case after a man challenged the decisions of the Sahiwal district courts favouring his former wife. In a substantive ruling on the issue delivered last Saturday, Justice Raheel Kamran upheld a woman's right to recover her full deferred dower even after obtaining a divorce through Khula. Under Islamic law and the Nikahnama, said the learned judge, the husband remains obligated to pay dower unless the wife seeks dissolution of marriage simply because she dislikes him, losing the right to deferred as well as prompt dower. This is only fair. But the mere fact that the wife sought Khula does not automatically nullify this contractual obligation, explains the court verdict, the key consideration to determine the woman's entitlement is the reason for her seeking Khula. If the husband's conduct compels the wife to seek dissolution, she retains her entitlement to the deferred dower. It needs to be said that many women stay in abusive marriages for fear of social stigma. And those opting out in extreme circumstances, more often than not, avoid stating the real reasons that must stand scrutiny in court. In the instant case, however, the wife obtained the decree for dissolution of marriage citing the husband's bad behaviour and disrespectful conduct towards her in nine years of marriage. These unchallenged allegations, observed Justice Kamran, amounted to cruelty and provided a strong justification for the respondent/wife to be entitled to the full amount of her deferred dower in the same way as she would have been in case of divorce pronounced by the petitioner. The same principle applies to return of dower from an ex-wife. In this context, justice Kamran referred to a Federal Shariat Court judgment that also held that where a wife seeks Khula due to fault on the part of the husband by providing reasonable justifications, it is not valid to require from her the return of the dower already received by her. These rights and protections Islam gives Muslim women must be respected by all. Copyright Business Recorder, 2025
Middle East Eye
10-04-2025
- Politics
- Middle East Eye
Mufti Taqi Usmani and top Pakistani scholars say war on Israel 'obligatory'
Mufti Muhammad Taqi Usmani, one of Pakistan's most prominent Islamic scholars and a former judge of the Federal Shariat Court, has declared military "jihad" against Israel is an obligatory duty for all Muslim governments. Speaking at the National Palestine Conference in Islamabad on Thursday, Usmani said Muslim countries had "failed to provide sufficient support to those fighting to protect" Al-Aqsa Mosque in Jerusalem. "What is the use of the armies of Muslim countries if they do not engage in jihad?" he asked. The conference gathered prominent Islamic scholars from across the country, and its official declaration on Thursday echoed Usmani's remarks - concluding that "jihad" against Israel is obligatory for all Muslim countries. In his speech, Usmani also said that Muslims who intended to go on voluntary pilgrimages, such as Umrah, should spend their money on supporting the Palestinian resistance instead. New MEE newsletter: Jerusalem Dispatch Sign up to get the latest insights and analysis on Israel-Palestine, alongside Turkey Unpacked and other MEE newsletters "We have assembled within this very same convention hall one year ago in an act of solidarity for Palestine. Yet, ever since then, we have merely done conferences and not true action." Usmani further referenced Pakistan's first leader, Muhammad Ali Jinnah, saying: "The founder of Pakistan referred to Israel as an illegitimate state, and our stance will not be altered irrespective of how strong Israel may become." Muslim scholars issue 'fatwa' calling for 'jihad' against Israel as strikes pummel Gaza Read More » Pakistan, which was established in 1947 - a year before the founding of Israel - has opposed the creation of the Israeli state and has never recognised its sovereignty. Many scholars at the conference criticised the Pakistani government for not declaring war on Israel. This comes just days after Ali al-Qaradaghi, the secretary general of the International Union Of Muslim Scholars (IUMS), an organisation previously led by Yusuf al-Qaradawi, called on all Muslim countries 'to intervene immediately militarily, economically and politically to stop this genocide and comprehensive destruction, in accordance with their mandate'. His statement, which was also backed by 14 other prominent Muslim scholars, called on all Muslim countries to 'review their peace treaties' with Israel and for Muslims in the United States to pressure President Donald Trump to 'fulfil his election promises to stop the aggression and establish peace'. Opposing the 'fatwa' But Egypt's Grand Mufti Nazir Ayyad this Monday criticised the "fatwa" as "irresponsible". A "fatwa" is a non-binding Islamic legal ruling from a respected religious scholar, usually based on the Quran or the Sunnah - the sayings and practices of the Prophet Muhammad. Ayyad, who is the highest authority for issuing religious opinions in Egypt, rejected the "fatwa" and said that "no individual group or entity has the right to issue fatwas on such delicate and critical matters in violation of Sharia principles and its higher objectives". "Such actions may endanger the security of societies and the stability of Muslim states," he added. Egypt's grand mufti rejects fatwa for jihad against Israel as 'irresponsible' Read More » "Supporting the Palestinian people in their legitimate rights is a religious, humanitarian and moral duty. However, this support must be provided in a way that truly serves the interests of the Palestinian people and not to advance specific agendas or reckless ventures that could lead to further destruction, displacement and disaster for the Palestinians themselves." Ayyad said that the declaration of "jihad" in Islam must be made by a "legitimate authority". "In our current era, this authority is embodied in the recognised state and political leadership, not in statements issued by entities or unions that lack legal authority and do not represent Muslims either religiously or in practice," he said.
Express Tribune
27-03-2025
- Health
- Express Tribune
CII deems K-P transgender bill unIslamic
The Council of Islamic Ideology (CII) on Wednesday said reaffirmed its previous stance that the Khyber-Pakhtunkhwa (K-P) Transgender Bill contains the same unIslamic elements as the Transgender Act of 2018, which had been declared inconsistent with Islamic principles by the council and the Federal Shariat Court. The matter was taken up during a meeting in which the CII members deliberated on a total of 19 agenda items. The session was chaired by CII Chairman Dr Muhammad Raghib Hussain Naeemi. Additionally, the council expressed concerns over the bill's inclusion of the Guru-Chela (mentor-disciple) concept, deeming it unIslamic. The council ruled that granting first wife the right to annul her marriage if her husband remarries without her permission is un-Islamic. Any judicial ruling that permits such annulment contradicts Islamic teachings. It was decided that premarital testing for thalassemia or other contagious diseases can be included in the Nikahnama (marriage contract) as an optional provision. However, the decision to marry will remain solely at the discretion of both parties under Islamic law. The council ruled that organ transplantation, particularly of the kidney and the liver, is permissible as long as the donor's life is not endangered. The council ruled that newly hired employees can be required to participate in the contributory pension system, but existing employees cannot be compelled to join it. Additionally, it stressed that pension funds must be entirely free from interest-based financial systems. The council stressed that Zakat funds should be distributed to deserving individuals without unnecessary delays. However, if administrative procedures cause delays, these funds can be placed in profit-generating Islamic bank accounts. In the event of any financial losses, the government will be responsible for compensating them. In the meeting, four experts from the Sindh Institute of Child and Neonatology were invited to present a briefing on the establishment of a human milk bank. They provided detailed responses to 33 queries raised by the council members. Additional questions from the members were also addressed. The council decided to conduct an in-depth study on the matter and will present its final decision in the next meeting. It was decided that Islamic terms such as Salah (prayer), Ayah (verse), and Masjid (mosque) should be retained in their original Arabic form instead of being translated into English. The council emphasised that scholars and intellectuals should raise awareness at their respective levels regarding the issue of electricity theft.
