The Senate Standing Committee on Finance, led by Senator Salim Mandviwala, has expressed serious concerns about the practices of Islamic banks, accusing them of misleading the public under the guise of ‘Islamic banking.’
During a recent committee session, Chairman Mandviwala criticized Islamic banks for charging significantly higher rates than their conventional counterparts. Despite claiming to be interest-free, these banks are reportedly imposing interest rates between 25 to 30 percent on loans, compared to the 20 percent rate typical of traditional banks.
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Mandviwala denounced these practices as deceptive, asserting that Islamic banks are exploiting their claim of being interest-free to justify exorbitant rates. He criticized the State Bank of Pakistan (SBP) for its apparent lack of effective oversight over these institutions, allowing them to operate with insufficient regulation.
He also reported numerous public complaints about the high interest rates charged by Islamic banks and has requested a comprehensive briefing from the State Bank regarding the regulation and oversight of Islamic banking.
The committee’s findings have ignited demands for increased transparency and stricter regulation in the Islamic banking sector to safeguard consumers from potential exploitation.
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