The Council of Islamic Ideology (CII) report of 1980 was the first landmark in Pakistan’s efforts to at least conceptually comprehend the question of riba-elimination and to develop a strategy to achieve that. This report was largely based upon the homework done by two committees of experts on the panel of Bankers and Economists, under the leadership of Dr. Ehsan Rashid, then vice chancellor, Karachi University, and Dr. Ziauddin Ahmad, then deputy governor, State Bank of Pakistan, and another report prepared by the State Bank of Pakistan by a group of bankers under the chairmanship of AGN Qazi, the then governor State Bank of Pakistan. The CII Report has been acknowledged the world over as a contribution to literature on Islamic economics and has won the IDB prize on Islamic banking.The report tells what is riba without going into big controversy. The issue was clarified in clear terms and then it was suggested that riba should be eliminated not merely from the banking and finance but from the economy as such, which covers the public sector, government policy, as well as the financial and business sectors of economy. The idea was that while Islamization of banking institutions at the micro level is neither ruled out nor disregarded, the strategy focused upon starting with the government sector and leading to elimination of riba from the whole economy. The first priority that the report gave was to government and inter-government sectors; the financial system in the country, the economy taken together and then down to micro level of institutions, of instruments, of products, of individual arrangements.Somehow, when the government tried to implement this report, they reversed the order. Instead of following the strategy the report had laid down, the government chose to reform three financial institutions (National Investment Trust, Investment Corporation of Pakistan and House Building Finance Corporation) followed by introduction of an interest free counter, PLS Counter, within the banking system. This was followed by an ‘alleged’ switch over in 1985. The proposed PLS system did not conform to the CII Report. It was a caricature, in fact a departure that ultimately sabotaged and destroyed the whole process. The CII, individual scholars and economists took serious note of that reverse movement and suggested that mere change in nomenclature can not usher in a new system. It represented a change in name and not a change in the substance. And that is how the beginning and the end of the so-called Islamization of financial sector in the 80s took place. It was in this background that a number of appeals were made to the Federal Shariat Court, once the 10 year embargo on consideration of fiscal and monetary matters had ended.In December 1991, the Federal Shariat Court came out with a judgement on this issue. In that
Posted on: Tue, 30 Dec 2014 16:11:01 +0000
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