SC rules Riba un-Islamic
The Supreme Court on Thursday outlawed 'interest' in every form and
called by whatever name and laid down elaborate guidelines for a completely interest-free
economy by June 2001, after dismissing government and bank appeals against a 1992 Federal
Shariat Court judgment.
The transactions declared un-Islamic and, therefore, unconstitutional
include mark-up, murabaha, bai' muajjal (deferred sale) and any so-called interest-free
modes insofar as elements of Riba (usury and interest) have crept into them.
Any amount, big or small, over and above the principal in a loan or
barter transaction, whether obtained for consumption or for commercial or productive
activity, is prohibited by the Holy Quran, a Shariat Appellate Bench of the Supreme Court
comprising Justices Khalilur Rehman Khan, Munir A. Sheikh, Wajihuddin Ahmed and Maulana
Muhammad Taqi Usmani (member) held unanimously.
Justice Ahmed, however, expressed his reservations in a separate
98-page note about some of the findings and conclusions of the 716-page majority judgment
authored by Justice Khan and concurred with by Justices Sheikh and Usmani (who also wrote
a 277- page elaborative note). The order of the court is spread over 106 pages.
The domestic inter-government borrowings as well as the borrowings of
the federal government from the State Bank shall be interest free. By January 24, 2000,
the federal finance ministry will form a task force to find out ways to convert the
domestic borrowings into project-related financing and to establish a mutual fund that may
finance the government on that basis.
The units of the mutual fund may be purchased by the public and they
will be tradable in the secondary market on the basis of net asset value. The certificates
of the existing bonds and savings schemes shall be converted into the units of the
proposed mutual fund.
The Central Board of Revenue (CBR) asked the tax-payers to deposit
their taxes by December 30, as the banks will remain closed on December 31, 1999.
Five companies selling assets
Is the spate of notices being published in newspapers to sell fixed
assets by listed companies connected with the current campaign to recover defaulted loans?
capital market observers here wonder.
Within this month, they noted, as many as five companies have declared
their "intention" to dispose of their fixed assets through notices of
A common denominator in these notices is that the companies do not
specify the assets to be thus disposed of. Do any such assets exist at all or were these
shown only on documents in order to show expanditure of loans in collusion with the bank
of ficials? these observers ask. SECP has already directed these companies not to move the
proposed resolutions until it is decided whether the proposed sale of assets is justified
and, if so, whether a liquidator should be appointed as required under Section 305 of the
Companies Ordinance, 1984 (CO).
Rules for buy-back of shares notified
Securities & Exchange Commission of Pakistan (SECP) on Wednesday
notified two new sets of rules under Sec 506 of the Companies Ordinance, '84, providing
for buyback of shares of listed companies and for securitisation of assets by companies
against their receivables.
In the works for quite some time past, the provisions had been deemed
necessary to liven up the long dormant stock market in Pakistan. The two provisions are
expected also to broaden the stock market.
In this context, the permission to buy back shares by the listed
companies is particularly helpful in respect of the companies whose shares witnessed a
slump in their demand over the past three or four years.
Another IPP cuts tariff
Yet another private power company Messrs Davis Energen has reduced its
power tariff from 5.57 cents to 3.29 cents per unit.
The company's chief executive Miss Ummay Kulsoom signed a memorandum of
understanding (MoU) with WAPDA chairman Lt Gen Zulfiqar Ali Khan at WAPDA House here on
Monday. The 10.5mw thermal power plant will use flared gas near Pindi Gheb and will be
commissioned by December 2002.
No cash margin on imports: SBP
The State Bank has clarified to all the banks that letters of credit
for the import of industrial raw material can be opened without any cash margin.
The clarification has come in the form a letter issued to all banks on
Tuesday. The letter says the State Bank has learnt that some banks are asking commercial
importers to provide 35 per cent cash margin on LCs of industrial raw material. It says
demanding cash margin on LCs of industrial raw material was in violation of the State Bank
circulars on the subject.
Pay taxes, we will cut rates, CE
The Chief Executive of Pakistan General Pervez Musharraf has called
upon the business community to perform their patriotic duty by paying the taxes and said:
"If you pay taxes, we will reduce tax rates."
Speaking at a meeting with a combined delegation of FPCCI and Karachi
Chamber of Commerce and Industry (KCCI) here on Monday at Governor House, CE called upon
the business community to play the same role which they had played at the time of the
creation of Pakistan.
"I agree that the tax rates are high by every count and it was so
because of narrow tax base." He assured that tax rates can be brought down by
expanding the tax base.