The Senate Standing Committee on Finance, chaired by Senator Salim Mandviwala has raised serious concerns over the operations of Islamic banks, alleging that the public is being defrauded in the name of ‘Islamic banking’.
During the committee meeting, Chairman Salim Mandviwala stated that Islamic banks, which claim to be interest-free, are actually charging significantly higher rates.
He revealed that these banks impose interest rates ranging from 25 to 30 percent on borrowing, which is substantially higher than the 20 percent interest rate typically charged by conventional banks.
"The people are being deceived under the guise of Islamic banking," Mandviwala asserted, highlighting that the State Bank of Pakistan (SBP) appears to have little control over these institutions. "Islamic banks are operating without adequate oversight, and those who can take advantage are doing so freely," he added.
Mandviwala also mentioned that he has received numerous complaints from the public regarding the high interest rates charged by Islamic banks. In response to these concerns, the Standing Committee has requested a detailed briefing from the State Bank on the matter of Islamic banking.
The committee’s revelations have sparked a call for greater transparency and regulation in the Islamic banking sector to protect consumers from potential exploitation.
