ISLAMABAD: The government’s newly announced Rs3.2 trillion housing finance initiative has a serious constitutional flaw for continuing interest-based lending despite a binding deadline to eliminate riba from Pakistan’s financial system by January 1, 2028.
Official sources told The News that the contradiction becomes evident when the structure and timeline of the scheme are examined against the constitutional requirement.
The government has announced a five-year financing plan, with Rs321 billion allocated in the first year to support 50,000 housing units, and a total outlay of Rs3.2 trillion over five years. This means fresh interest-based loans will continue to be issued well beyond 2028, directly crossing the constitutional deadline set for the elimination of riba.
Moreover, each loan under the scheme carries a 20-year repayment period. This implies that even loans issued close to or after the 2028 deadline would remain tied to interest-based repayments for decades thereafter. In effect, the scheme institutionalises interest-based financing far beyond the cutoff date, raising serious questions about compliance with both the letter and spirit of the Constitution.
The issue is further compounded by the scheme’s structure, which applies a fixed 5% markup for the first 10 years, followed by market-based rates. This not only continues but expands the role of interest-based banking at a time when the state is constitutionally obligated to phase it out.
The sources believe that this highly important matter pertaining to the housing loan scheme was not considered. The Information Minister Attaullah Tarrar was contacted by The News on this matter, but he was not available for his comment.
Prime Minister Shehbaz Sharif on Thursday launched the “Apna Ghar Programme”, a five-year plan to finance 500,000 housing units nationwide. The scheme offers loans of up to Rs10 million, repayable over 20 years.
The programme is aimed at enabling low-income citizens to construct houses on plots of up to 10 marlas, while also stimulating economic activity in the construction sector and generating employment.
Addressing the launch ceremony, attended by senior officials including Ishaq Dar, bankers and industry representatives, the prime minister described the initiative as a “sacred obligation” and a driver of economic growth.
He said the scheme would be implemented across all provinces, as well as Azad Jammu and Kashmir and Gilgit-Baltistan. Sources, however, said that unless such programmes are restructured on interest-free or Shariah-compliant models, the continuation of long-term interest-based lending by the state could face serious constitutional challenges as the 2028 deadline approaches.
Originally published in The News
