Evaluation of Islamization of Economy in Pakistan
In 1979, the government led by Zia-ul-Haq took significant steps to Islamize the laws of
Pakistan. This included efforts to abolish interest from the country's economic system, a
goal that had not been practically pursued before. For the first time, a policy was formulated
to achieve this aim. A panel of economists and experienced bankers was tasked with
developing proposals for the elimination of interest.
In 1979, the panel's interim report led to the elimination of interest in the dealings of the
Investment Corporation of Pakistan (ICP), National Investment Trust (NIT), and House
Building Finance Corporation (HBFC). By 1980, the panel's final report was reviewed and
amended by the Islamic Ideology Council, which then presented it to the government.
An action plan for interest-free banking was established based on the Council's proposals.
As part of this plan, several nationalized banks set up counters to receive deposits on a Profit
and Loss Sharing (PLS) basis. These deposits were to be invested in interest-free commercial
enterprises. the government declared on July 1, 1985, the complete abolition of the interest-
bearing system, requiring all banks to conduct business according to twelve prescribed
modes by the State Bank.
Survey of Economic Islamization
➢ The aim of Pakistan to make the economy follow the economic rule as outlined in the
Quran and Sunnah. Generally, this process is understood to mean eliminating
interest from the banking system. Interest-free banking in Pakistan began about
twenty years ago, with significant governmental actions taken between 1979 and
In 1979, the government led by Zia-ul-Haq took significant steps to Islamize the laws of
Pakistan. This included efforts to abolish interest from the country's economic system, a
goal that had not been practically pursued before. For the first time, a policy was formulated
to achieve this aim. A panel of economists and experienced bankers was tasked with
developing proposals for the elimination of interest.
In 1979, the panel's interim report led to the elimination of interest in the dealings of the
Investment Corporation of Pakistan (ICP), National Investment Trust (NIT), and House
Building Finance Corporation (HBFC). By 1980, the panel's final report was reviewed and
amended by the Islamic Ideology Council, which then presented it to the government.
An action plan for interest-free banking was established based on the Council's proposals.
As part of this plan, several nationalized banks set up counters to receive deposits on a Profit
and Loss Sharing (PLS) basis. These deposits were to be invested in interest-free commercial
enterprises. the government declared on July 1, 1985, the complete abolition of the interest-
bearing system, requiring all banks to conduct business according to twelve prescribed
modes by the State Bank.
Survey of Economic Islamization
➢ The aim of Pakistan to make the economy follow the economic rule as outlined in the
Quran and Sunnah. Generally, this process is understood to mean eliminating
interest from the banking system. Interest-free banking in Pakistan began about
twenty years ago, with significant governmental actions taken between 1979 and
