islamic banking_is it really islamic

8/19/2019 Islamic Banking_Is It Really Islamic

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Worldwide interest is developing in Islamic Banking

and more such banks are being established even in

countries where Muslims live as minorities for the

reason of their being more resilient to Economic

meltdown. This type of banking is also considered

as ethical in comparison to eploitative

conventional !riba based" banks which have lead to

large scale disparities in wealth. #ome

conventional banks too are establishing Islamicwindows for conducting #ha$ri$ah compliant

business separate from their conventional

business.

%owever a &uestion is being asked from many

&uarters whether these banks are really conducting

their business on #ha$ri$ah principles or this is 'ust

name change. #ome of our scholars opine that real

Islamic Banking does not eist in present world(

'ust as there can)t be an Islamic wine shop so there

can)t be an Islamic Bank. Islam not only prohibits

riba but also prohibits *ambling( #peculations and

investing in %araam activities( these all have to be

taken into account. Muraba+ah !cost plus" isparticularly under attack and it is the instrument which

is presently most common in comparison to other

instruments of Islamic banking. Mudharabah !,ro-t

sharing" and Musharakah !oint venture" are not much

in vogue( owing to social set up and values. These

ventures are more feasible at the community level for


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micro/-nancing small scale and cottage industries.

0nother vehement type of criticism comes from those

who have vested interests in present riba basedeconomy( whose businesses thrive on this eploitative

Economic system. bviously they might be using the

services of epert economists to put forth their agenda

and propagate it.

There are people who have taken etreme

positions on the sub'ect. While some regard it as%araam as a conventional Bank and others think

that it is completely #ha$ri$ah compliant and some

ultra/modernists regard the 2onventional Banking

as permissible. These are etreme views and it is

lack of understanding of the mechanism and

operation of these banks which makes one toregard both as similar.

It can)t be denied that no form of 3Islamic

Banking4 is at present completely based on

#ha)ri)ah ,rinciples. #ome forms of aversion are

based on genuine points. Theoretically there is

compliance with #ha$ri$ah( but in practice there aresome deviances. There are problems in the -eld to

implement all the ideals. The trouble arises when

these banks have to deal with conventional banks 5

they deposit etra li&uidity or borrow from these

banks when they are in need 5 which involves 6iba.


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2ompletely #ha)ri)ah based banking is only

possible when whole of the Economy is #ha$ri$ah

based. The transactions occurring within an Economy(which is not fully #ha$ri$ah based( can)t meet all the

basic criterion of the #ha)ri)ah. ,resently whole of the

world economy is integrated and on top is the IM7 and

world bank( which are there to safeguard and promote

the interests of the capitalists. It is unthinkable that

these banks shall not be a8ected by the policies of

these bodies when even the sovereign nations are not

free from their in9uence. The economic policies of a

sovereign state are a8ected by these world bodies.

0nyway if these Banks are not performing

completely as per #ha$ri$ah( so why should not they be

closed down: Why should people invest;deposit in them

having illusions of their permissibility: This however isnot the whole truth.


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liberalism and socialism -rst started 'ust as ideas

and theories but slowly were put into practice.

These Banks or the Islamic windows are headed

by #ha)ri)ah board( which consists of ulema who

are well aware of these transactions. They have to

take care to ensure that the business doesn)t foray

into the domain of impermissible. >otwithstanding

all this( the present Instruments of Islamic bankinghave been devised by the urists of repute and

they regard them as permissible. 0nyway( it would

provide an alternative to the eisting conventional

Banking which is eclusively interest based.

therwise a person would have no choice but to

get his saved money deposited in a conventional

bank. Even if he does not take interest( still hismoney is used for the purpose of riba based

transactions. n the contrary he has to take loans

from a conventional bank in case he is in need.

Islam does not advocate concentration of

wealth in a few hands( but wants it to be put intocirculation so that ine&ualities end and the bene-ts

of wealth percolate to lower rungs of the social

ladder. In today)s world every person who has

surplus wealth is not in a position to put the same

in business. This role has to be played by banks? to


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collect the surplus capital and to use it where it can

be utili=ed. To put the money in circulation.

%ere I would like to add a precautionary note(

that all those claiming to be based on Islamic

,rinciples are not really so. There are some

companies which( in the name of Islamic banking(

do fraudulent deeds and their aim is nothing but to

attract investments in the name of IslamicBanking. ne has to be cautious here and not

believe everyone who claims to be doing such

businesses. ne should also be careful about as towho is on the #ha$ri$ah board of that bank. It is not easy

to understand the working of these banks and to

discern whether or not a particular product has some

prohibited element in it or not. 7or that purpose wehave to rely on ulema to guide us in these matters

We should not discourage Islamic Banks(

even if they do not fully serve our purpose. We

have to learn new ways and techni&ues to Islami=e

the process of Banking and in phased manner

weed out undesired elements. The Islamic bankingand -nance would only blossom in a society which

has imbibed Islamic values? where there is no

greed( no sel-shness and no etravagance. ,eople

live simple( unassuming and unpretentious lives.

0bove all people have an eagerness to help each


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islamic banking_is it really islamic

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