Islamic Law on Interest: The 1999 Pakistan Supreme Court Rulings on Riba

Akhtar Hamid

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Islamic Law on Interest: The 1999 Pakistan Supreme Court Rulings on Riba

In: The World Bank Legal Review, Volume 1: Law and Justice for Development

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Akhtar Hamid

Akhtar Hamid
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Type:: Chapter

Pages:: 393–432

DOI:: https://doi.org/10.1163/9789004503014_010

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Abstract

Interest plays a central role in Western financial systems. In contrast, Islamic law generally forbids riba or increases over the principal loan amount. In 1999 the Shariat Appellate Bench of the Supreme Court of Pakistan handed down a land-mark decision through two rulings concerning the prohibition of riba. The Court defined riba in a broad sense, encompassing any gain, however slight, over the principal amount of a loan and regardless of the type or purpose of the loan. After addressing alternative financing models and other related problems, the Court laid out the changes in the legal system needed to comply with the riba prohibition and provided guidelines for the creation of a new sharia-based legal and economic framework.

Considering the length of the opinions in both the principal case (Dr. M. Aslam Khaki and others v. Syed Muhammad Hashim and others), 441 pages, and the companion case (House Building Finance Corporation v. Rana Muhammad Sharif and others), 104 pages, the opinions are not reproduced or excerpted. Instead, the following note provides a comprehensive summary of the rulings, while also giving key historical background and an overview of the principal developments in the implementation of the Court’s decision.

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The World Bank Legal Review, Volume 1: Law and Justice for Development

Series: The World Bank Legal Review, Volume: 1

E-Book ISBN:: 9789004503014

Publisher:: Brill | Nijhoff

Print Publication Date:: 01 Jan 2003

Subjects
- International Law
  - Public International Law
  - International Organizations

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Islamic Law on Interest: The 1999 Pakistan Supreme Court Rulings on Riba

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The World Bank Legal Review, Volume 1: Law and Justice for Development

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