Is Islamic Banking in Pakistan Compliant with the Sharia Law?

Abstract

The paper seeks to find out whether Islamic banks in Pakistan are truly following the Sharia law through qualitative analysis. The author collected evidence from a variety of sources. The author researched direct Quranic verses and Ahadith ( sayings and traditions of the Prophet Muhammad) to discover what Islam has to say about Sharia compliant financing. He then researched the various modes of Islamic finance that modern Islamic Banks are currently using. He also explored existing research on Islamic banks in Pakistan and other countries. Lastly, the author interviewed banking professionals in Pakistan to understand whether Islamic banks are truly following the Sharia law or not. Through his qualitative research and analysis, the paper comes to the conclusion that Islamic banks are not truly following the Sharia law and operating just as conventional banks do.