Islamic Banks in Pakistan Under Fire for High Interest Rates: Mandviwala
Senate Committee Highlights Concerns Over Islamic Banking Practices
The Senate Standing Committee on Finance, led by Chairman Senator Salim Mandviwala, has raised alarm about the practices of Islamic banks in Pakistan. During a recent meeting, Mandviwala accused these banks of defrauding the public under the pretense of being ‘interest-free’.
Shockingly High Interest Rates Revealed
Mandviwala disclosed that, contrary to their claim of being interest-free, Islamic banks are charging interest rates between 25% and 30% on loans. This is notably higher than the 20% rate typically levied by conventional banks.
“The people are being deceived under the guise of Islamic banking,” Mandviwala stated, emphasizing that the State Bank of Pakistan (SBP) seems to have inadequate control over these institutions. He expressed concerns that Islamic banks are operating with insufficient oversight, allowing them to exploit the system.
Action Requested from the State Bank of Pakistan
In response to the widespread complaints from the public about exorbitant interest rates, the committee has demanded a comprehensive briefing from the State Bank of Pakistan. The Standing Committee aims to address these issues and ensure greater transparency and regulation within the Islamic banking sector.
