Islamabad, Oct 21 (V7N) — Pakistan is set to transition to an interest-free banking system by amending its constitution. The initiative aims to eliminate interest-based practices and introduce a Sharia-compliant financial structure through the 26th amendment of the constitution, according to a report by the business magazine Profit.

The new system is scheduled to be implemented from January 1, 2028, marking the end of the country's current riba (interest)-based banking model. Pakistan's upper house, the Senate, has already approved the amendment to Article 38(f) of the constitution, which pertains to promoting social and economic welfare.

The existing clause in Article 38(f) calls for the elimination of riba "as soon as possible." With the passage of this amendment, the government has formally set January 1, 2028, as the target date for the full transition to an interest-free banking system.

The shift aligns with Pakistan’s broader efforts to adopt Islamic financial principles and aims to ensure compliance with Sharia law across the country's financial institutions. This move is expected to have significant implications for Pakistan’s economy, as both public and private banks will need to restructure their operations to align with the new regulations.

Further details on the practical steps and policies for the transition are expected to emerge in the coming months as Pakistan prepares to implement this historic shift.

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