I. Background (BG)

1. We also refer to earlier BFQC including 322 of 7.9.25 about Summary of Shariat Court Decision against Interest, increase with Implementation Deadlines etc. with  Related Booklet with proper content (Attachment 322.1)

2. This refers to the related Important QCs in trail, blue, italic and double line (a) BFIC350 of 3.1.26 about AAOIFI Shariah Standards Gap Analysis & Effective Implementation Workshop on 20.1.26 & Multiplication (b) BFIC340 of 3.12.25 about Managing Market, Credit & Liquidity Risk in Islamic Treasury (c) BFQC150 of 23.12.22 about Summary of Shariat Court Decision against Interest, etc.

3. We also refer to several Other QCs including (a) BFIC329 of 16.9.25 about All Institutional Investors to be Shariah Compliant in 3 phases and KC Views & Recommendations (b) BFIC276 of 27.7.24 about AAOIFI Shariah, Governance and Ethics Standards 

II. Updated Commentary

A. General

1. Further to KQU 3757 of 26.1.26, being an important matter, we would inform you about The nomenclature and concept of banking, in itself, are not against the principles of Islam or Shariah (Attachment 357.1) in the ensuing paragraph, with emphasis in bold & Underline for quick reading.

2. The nomenclature and concept of banking, in itself, are not against the principles of Islam or Shariah. Permissibility is not determined merely by terminology.

3. Islamic Banking does not represent a system of “paisay se paisay kamaana" earning purely through lending  money. Rather, it is based on genuine transactions conducted under Shariah-compliant modes of financing and investment, in accordance with Islamic principles.

4. In Islamic Banking, deposits are mobilized through Shariah-compliant Islamic modes, and these funds are deployed for financing and investment exclusively through approved Islamic contracts and structures, instead of interest-based lending. All products, processes, and operations are governed and supervised by qualified Shariah scholars and Shariah Board members.

5. Moreover, Islamic banks operate within robust Shariah governance frameworks, encompassing pre-execution Shariah approval and post-execution Shariah review. These frameworks are reinforced through internal Shariah compliance functions, independent external Shariah audits, and regulatory oversight by the State Bank of Pakistan.

6. Accordingly, the use of the word “bank” does not imply interest-based dealings. In Islamic finance, permissibility depends on how responsibilities are fulfilled, how funds are utilized, and how Shariah principles are implemented in both substance and spirit—not merely on nomenclature.

7. Islamic Banking, therefore, represents a Shariah-guided financial intermediation system, and not a prohibited or “no-go” concept, when conducted in full alignment with Islamic principles.

III. Multiplication

Although all the Commentaries are to the extent of the Subscribed IDs only, however, your Goodself is allowed to share this QC to Impart Knowledge to the maximum Employees, Relatives, Groups, etc.

IV. Further Details & Services

Should you require any clarification or explanations in respect of the above or otherwise, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com.