KARACHI, June 14: State Bank Governor Dr Ishrat Hussain on Friday said the interest-based prevailing system and Riba-free banking mode would run parallel, leaving the onus of elimination of interest-based system on the people.

He was talking to newsmen after inaugurating “Easy Access- online Banking facility” of Habib Bank at the HBL Plaza here.

The SBP governor said both the systems would work side by side and those depositors who wanted interest-free banking, would go for Riba-free Islamic products, and those who wanted certain fixed amount of interest on their deposits would avail the prevailing banking mode.

Replying to a question, Dr. Ishrat said the government and the SBP had been working sincerely for the last two years to implement the decision of the Supreme Court to switch the interest-based system into Riba-free Islamic system within stipulated period. But there existed certain problems, which the government could not handle at present.

However, he said the banks had been allowed to bring forward the Islamic products and Shariah compliant banking system to ensure the availability of Islamic banking products for the people.

Dr. Ishrat said it was not possible for the government to change the system overnight. It had formed a commission, a task force and several committees to devise ways and procedures to switch the banking system into Islamic one during the last two years but failed to remove hurdles absolutely.

The government has only informed the apex court that in the existing set-up, it was difficult to completely switch to Islamic mode and the arguments were on in the court, he responded to a query. Whatever the decision is made by the court will be binding on the government and the SBP, he added.

The SBP chief said the government and the central bank had sent experts to different countries to study the Islamic banking system and found that there was not a single country where the Islamic banking system was in practice ‘completely’. However, he asserted that there was no pressure from any side, including the IMF and World Bank, on the issue of switching of the system.

He also maintained that the government and the SBP will continue to support efforts of the banks to initiate/launch Islamic products and offering Shariah compliant products.

Earlier, speaking at the inaugural ceremony the SBP governor said the tough competition in banking would force them to minimize the mediatory costs, reduce the processing time and provide better and prompt service to the clients to make feasible business in future.

The governor, appreciating the HBL initiative in this regard said the facility should have been offered much earlier. He said the HBL through this initiative would have the premium as the banks following this course, will face tremendous competition in the coming times.

He said the businessmen would not have time to visit the branches of the banks for transactions and would prefer to do it from their offices. He said the SBP and the government were encouraging the e-banking and e-commerce.—APP