Senate Committee Criticizes Islamic Banks for Charging 25-30% Interest, Demands State Bank Intervention

The Senate Standing Committee on Finance, under the leadership of Senator Salim Mandviwala, has expressed serious concerns about the practices of Islamic banks in Pakistan. During a recent committee meeting, Mandviwala revealed that these banks, despite their claims of being interest-free, are charging interest rates as high as 25-30% on loans.

This is significantly higher than the average 20% interest rate typically charged by conventional banks. Mandviwala argued that the public is being misled under the pretext of Islamic banking, where institutions are allegedly exploiting consumers by charging exorbitant rates.

“The people are being deceived under the guise of Islamic banking,” Mandviwala stated, pointing out the apparent lack of control by the State Bank of Pakistan (SBP) over these banks. He highlighted the need for stricter regulation and transparency in the Islamic banking sector to safeguard the interests of the consumers.

The committee has received numerous complaints from the public regarding these high-interest rates and has requested a comprehensive briefing from the SBP to address the issue. Mandviwala called for immediate action to prevent further exploitation and ensure that Islamic banking operates within the true principles of Shariah.