The Supreme Court of Pakistan, in determining the applications and implications of the term “Riba” asked for assistance of religious scholars and other interested people of the country. For this purpose, answers to ten questions were sought. The ninth among these questions was:
If all the transactions are held to be violative of the Islamic injunctions, what will be the treatment of the past transactions and agreements? Especially what procedure should the government adopt with regard to the previous foreign loans?
My Reply to the question follows:
All commitments and agreements with foreign donors – without any exception – shall have to be honored. This would mean that payment of interest on these foreign loans shall be made as agreed upon between the donors and the borrowers at the time of the contract or, if possible, on the basis of any mutual revision of the contract, which in the present circumstances seems very unlikely. The state of Pakistan after passing a legislation for abolishing “Riba” shall refrain from taking interest (Riba) but shall have to pay interest (Riba) to its foreign creditors as per the mutual contract between these creditors and the state of Pakistan. Furthermore, the government of Pakistan should be advised to sincerely feel the moral burden of being an accomplice in an act that God has forbidden and should therefore direct all its efforts in retiring Riba-based loans of foreign creditors and thereby relieve itself from its obligation towards the Lord of the worlds.
As far as domestic loans are concerned, the ideal state will be to stop payment of “Riba” on these loans with immediate effect, as soon as the law is promulgated. However, such an action would essentially require the state of Pakistan to also be in a position to retire these domestic loans immediately. Keeping in view the liquidity position of the state of Pakistan, it is quite obvious that this is not possible. In this situation, while also keeping in mind that an indeterminable number of the securities and certificate holders (creditors) of these loans are people whose lives depend on the income generated by these certificates, it would be imperative that the state of Pakistan should provide a non-Riba based substitute to these certificates and securities and should then convert these certificates and securities to that substitute for all such people who want these certificates converted to the non-Riba based substitute. Till such time the state of Pakistan, while meeting its obligations, should educate its citizens regarding the intensity and gravity of the “crime” of taking Riba in the light of the directives of the Qur’an and thereby discourage people from such a heinous act.