Pakistan’s roadmap for eliminating riba from its financial system by 2028 provides long‑awaited clarity on how the government intends to implement the Federal Shariat Court’s ruling delivered four years ago. The policy direction was effectively settled when the state embraced the court’s verdict and incorporated its deadline into the Constitution through the 26th Amendment, a move widely seen as part of a political bargain to secure the support of religious parties.

The challenge, however, lies in execution. Pakistan’s economy is deeply integrated with conventional banking and global capital markets, making the transition complex. By opting for a gradual approach that respects existing contracts, the government has committed to honouring obligations until maturity. This preserves legal certainty, protects investor confidence, and avoids abrupt disruption. The decision to allow most foreign‑owned banks to continue operating hybrid models offering both conventional and Islamic services is pragmatic, recognising that complete uniformity is neither practical nor desirable.

Pakistan’s Islamic finance sector has grown rapidly, but it still lacks the depth, diversity, and liquidity management tools required to support an economy of this scale. The government’s pledge to issue sukuk regularly across different maturities addresses a major structural weakness. Equally important is the proposal to develop a comprehensive register of federal assets to sustain sukuk issuance and reduce reliance on the limited pool of assets currently available for Islamic financing. Transparency, accurate valuation, and strong governance will be essential to safeguard the credibility of asset‑backed instruments.

Yet the roadmap sidesteps a critical debate among scholars, bankers, and economists: whether modern bank interest constitutes riba in its entirety. Some argue that what is prohibited is exploitative lending and debt traps, not every form of interest or return on capital. Others fully endorse the Federal Shariat Court’s interpretation. The coexistence of conventional and Islamic banking in many Muslim‑majority countries, and the relatively modest penetration of Islamic banking despite decades of policy support, suggests that many consumers still prefer choice.

The government’s own decision to permit foreign‑owned banks to continue offering hybrid services implicitly acknowledges this reality. Denying similar flexibility to domestically owned banks is difficult to justify. Moreover, the state’s intention to seek Sharia‑compliant external financing only “where feasible” is itself an implicit recognition of market realities and consumer preference. If financial stability and consumer choice warrant a dual system, then market preferences should be allowed to evolve naturally rather than through regulatory compulsion.

If the aim is to build confidence in Islamic finance, competition and performance will prove more effective than compulsion. The roadmap is a step forward, but its success will depend on whether reforms are implemented with transparency, pragmatism, and respect for both investor confidence and consumer choice.

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