Transition to Islamic banking slow, Senate panel told

ISLAMABAD: The Senate Standing Committee on Finance was told on Wednesday that progress on fully implementing Islamic banking under the 26th Amendment was slow.

The committee also took up the problem of fake currency dispensed through ATM.

The committee was informed that multifaceted issues were arising, including skimming (theft of information without the card holder’s information), depriving the customers of hard-earned money.

The bank representative informed the committee that securing the depositors’ money was a costly business, and the banks were investing a huge amount in this regard.

This pressing issue came into the limelight when Senator Manzoor Kakar talked about a young man who received counterfeit bills of Rs5,000 denomination from an ATM in Islamabad. The bank CEO assured the committee that security measures were being taken to address the instant issue. Senator Saleem Mandviwalla chaired the committee meeting at the Parliament House here.

Another important issue discussed was Islamic banking which was raised by Senator Farooq Hamid Naek, who pointed out that Islamic banking was set to be fully implemented by 2027 under the 26th Amendment but the progress in this regard had been slow.

The State Bank deputy governor emphasized the need for continued deliberation on Islamic banking and assured the committee that several banks were actively working towards compliance. A separate meeting will be scheduled to focus on the abolition of interest and provide a detailed briefing on the Islamic banking practices. Key discussions included the contentious 10% levy on transport and businesses across Pakistan and Iran, raised by Senator Manzoor Ahmad Kakar in a Senate session on 9th September 2024.

The committee resolved to report to the House that the issue may be referred to the Standing Committee on Communications, noting that the levy, imposed with federal government approval, did not pertain to the Federal Board of Revenue (FBR).

Senator Kakar raised concern that Pakistani trucks were being unfairly taxed, with over 600 trucks currently parked due to the levy. The committee agreed to forward the matter to the Communications Committee for further deliberation.