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Title Non Sharia Compliant Financial Transactions in Pakistan and Its Socio-Economic Impact on the Society.

Author(s) Mr. Zeeshan Rais Khattak

Abstract The main objectives of the study is to examine the socio economic effectiveness of nonShariah complaint financial transaction prevailing in the country, Pakistan. These NonShari’ah financial transaction include Riba, Gharar and Maysir, which are involved in different financial and economic activities with complexity. This study has been an attempt to identify the prohibited elements in the current circumstances and it explored the aftermaths of these practices in the society. The study is qualitative in nature. A comprehensive survey has been conducted to collect the first hand data from the relevant unit of analysis (individuals) and findings of the research are derived on the basis of their responses. The probability sampling design has been used whereas simple random sampling technique is used to obtain the empirical results of the research. The responses of the respondents have been gathered with the help of likert scale. The study setting was non-contrived. The result show that upsurge in debt servicing deplete the resources to be spent on the development projects for the society. Also inability to pay ribawi payments forces local industries shutdown. The bailout plan based on Riba leave the adverse impact on the society. It is because of the fact that this type of transaction is incurred where the economy as debt based. Therefore Rescheduling and Rearranging of the debt can have an impact on the economy, particularly in business and trade. Production, logistical, and supply chain delays can result from rapid schedule changes. This may lead to higher expenses, lost revenue, and possibly harmful impacts on the economy as a whole. It also creates International dependency which restrict to design conducive policies. Traces of Gharar is found in many transactions like crypto currency, benami, prize bonds, Patwari system, Unilateral and by lateral contracts, documentation of legal paper etc. Also Failure to fulfill Contractual obligations in a business/service contracts causing financial losses creating Al Gharar Al fahish: Undervalue Registration, Pending cases, in the courts, ease of Doing Business, Fraud, Misleading information are also causes of Gharar found in the financial transactions. Hence, Gharar is a major problem of our society that is disturbing the socio-economic activities. Obsession in the gambling create mental disorders and other psychological diseases. Individuals who participate in gambling activities may experience additional. Hence, Government should establish an Islamic Central Board which may be designated the responsibilities to ensure compliance of the Islamic financial products and services launched by the financial institutions. Further legislation is required to put further checks over the financial system of the country to ensure that it is Ribā, Gharar and Maysir free. All the alternatives like Islamic Banking against Conventional Banking, Takaful against insurance, Sukuk bonds at the treasury side and other alternatives must implement in letter and spirit and replace completely its counterpart so that the Sharīʿah Compliance is observed. The Educational institutions need to educate and develop the conceptualization regarding the Non-Shariah compliant elements as Riba, Gharar and Maysir by offering courses that are properly designed for the cause

Type Thesis/Dissertation PhD

Faculty Social Sciences

Department Islamic thought & Culture

Language English

Publication Date 2024-01-15

Subject Islamic Studies

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