Islamabad: The Senate Standing Committee on Finance, led by Chairman Senator Salim Mandviwala, has expressed serious concerns over the operations of Islamic banks in Pakistan, accusing them of misleading the public by charging exorbitant interest rates under the guise of ‘Islamic banking.’
During a committee meeting, Mandviwala revealed that Islamic banks, which claim to offer interest-free services, are actually imposing interest rates as high as 25% to 30% on borrowings. This is significantly higher than the 20% interest rate typically charged by conventional banks, raising alarms about the authenticity of these so-called Islamic financial practices.
“The public is being deceived under the banner of Islamic banking,” Mandviwala stated, pointing out that the State Bank of Pakistan (SBP) appears to have insufficient control over these institutions. He criticized the lack of oversight, noting that Islamic banks are operating freely without adequate regulation, allowing them to exploit consumers.
Mandviwala further disclosed that he has received numerous complaints from citizens regarding the steep interest rates charged by Islamic banks. In light of these grievances, the Standing Committee has called for a detailed briefing from the SBP on the operations and regulations of Islamic banking in the country.
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