Reframing Islamic Banking through Maqasid al-Shari'ah: Financial Inclusion and Sustainable Finance in the Pakistani Context

الملخص

Background: Pakistan's Islamic banking sector has entered a period of unprecedented regulatory and structural transformation, driven by the Federal Shariat Court's April 2022 judgment declaring all forms of interest (riba) repugnant to the injunctions of Islam and mandating a fully Shariah-compliant financial system by December 2027. Simultaneously, Islamic banking institutions have achieved record market share, while the State Bank of Pakistan pursues ambitious national financial inclusion and green banking agendas. These parallel developments have not, however, been systematically evaluated against the classical juristic framework that is meant to give Islamic finance its ethical and legal legitimacy: maqasid al-Shari'ah, the higher objectives of Islamic law.

Purpose: This article reframes the evaluation of Pakistan's Islamic banking transformation through a maqasid al-Shari'ah lens, moving beyond narrow contractual (fiqhi form) compliance to assess the sector's contribution to two objectives of growing global and national salience: financial inclusion and environmentally sustainable finance. Method: The study employs qualitative, library-based conceptual and policy analysis, integrating classical and contemporary maqasid al-Shari'ah literature with current regulatory documentation and sector data from the State Bank of Pakistan and related sources. Findings: The analysis shows that while Pakistan's Islamic banking sector has achieved substantial quantitative growth and a historic regulatory mandate for full transformation, its institutional practice remains oriented predominantly toward contractual form-compliance rather than the substantive objectives of wealth circulation, protection of the vulnerable, and environmental stewardship that maqasid al-Shari'ah is meant to secure. Financial inclusion and green finance initiatives, though significant, remain only loosely integrated with the Shariah-governance architecture of Islamic banks. Implications: The article proposes an integrated Maqasid-Based Evaluative Framework (MBEF) for assessing Pakistani Islamic banking performance and offers specific policy recommendations for the State Bank of Pakistan, Shariah advisory boards, and Islamic banking institutions as the sector approaches the 2027 transformation deadline.