In accordance with the Sindh Prohibition of Interest on Private Loans Act, 2023, violators face a ten-year prison sentence and a one million rupee fine.
The following is from the Bill’s preamble: The Holy Quran and the Sunnah, Islam’s teachings, expressly and unambiguously forbid charging interest on loans and declare war on those who do so.
It further expresses that it is convenient to make an extensive regulation regarding the matter, for covering every one of the parts of the wickedness of private cash loaning by denying the business and practices of private cash loaning and propelling credits and exchanges in Sindh, and to accommodate matters subordinate thereto.
The law defines “interest” as any amount over the principal in a loan or debt contract, regardless of whether the loan is used for consumption or production, whether it is charged or sought to be recovered specifically through interest or otherwise, or determined to be recoverable by a competent court.
In accordance with the newly enacted law, no individual or group of individuals may lend money for cars or any other purpose or advance loan to any person with the intention of receiving interest thereon, nor may they engage in an interest-based transaction in Sindh.
Penalties Anyone who violates these rules in any way—directly or indirectly—is subject to a fine of up to Rs. 1 million and a term of imprisonment that can range from three years to ten years and may not be less than three years.
Those who willfully and knowingly aid, engage, assist, or aid the money lender face the same penalties.
Resolution of complaints According to the Bill, a “Justice of Peace” shall order the local police to register a case against the individual or group within three days of receiving any application or complaint regarding the commission of an offense.
However, a violation of this law may only be tried by a First Class judicial magistrate.
Recoveries The court may order the amount to be recovered by selling the person’s assets if the money lender’s penalty or the amount ordered to be returned are not paid.