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Interest-free Islamic banking a fraud: experts

Interest-free Islamic banking a fraud: experts

 CUSTOMS TODAY REPORT

 KARACHI: Existing so-called interest-free Islamic banking system prevailing in Pakistan is fraud and mockery on the name of Islam as well as worst-exploitive as compared to interest-based banking system existing in modern world.

These views were expressed by noted banking experts during a one-day workshop on the topic of “Law & Practice of Banking in Pakistan” jointly organized by “Law Society —Pakistan” (LSP) and “Corporate & Banking Lawyers Association” (CBLA). They said that modern world, where interest based banking is in operation, the average rate of interest charged is 6% per annum, while in Pakistan the banks are charging 20% per annum average on finances disbursed on the name of non-interest Islamic banking.

Noted banking lawyer and Advocate Supreme Court of Pakistan Saalim Salam Ansari said that in his lecture that in The depositors are getting only 5% profit p.a on their deposits, while the rate of inflation or decrease in the rupee value is more than 5% per annum, which shows that depositors are getting a negative income. Pakistan is the second country in the globe after Columbia, where the spread (difference between deposit’s rate and lending rate) is high. While replying during questions, answers session, Advocate Ansari said that the suo-moto powers given to the Financial Institutions / Banks, under section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 to auction the mortgage properties after sending / serving (3) three notices are violative, inconsistent and contradictory to the Articles 2-A, 8, 10-A, 23, 24 and 25 of the Constitution, 1973 as without determination of liability and judicial verdict passed by any Court of Law, the mortgage property cannot be auctioned, as it’s violates the “right to fair trial” and “protection towards property” guaranteed in the Constitution, 1973.

The Banking Courts especially in Karachi, which are vacant, Presiding Officers / Judges be appointed to expedite the recovery cases. Advocate Ansari suggested. Former Governor of Sindh, Barrister Kamal Azfar, Senior Advocate of Supreme Court of Pakistan, while delivering presidential speech said that there is a great need of conducting of such workshops for the training and awareness of Lawyers, bankers, students and concerned quarters. Advocate Saalim Salam Ansari said that the Section 489-F of the Pakistan Penal Code, 1860 and Section 20, Sub-sections (4), (5), and (6) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, which constitute criminal offence(s) pertaining to dishonored cheques are ambiguous and requires amendments / modifications.