How much Islamic are Islamic Bank ?
I have written on the Dubai's debacle before also. Today I am going more the pracyices adopted by Islamic Bank's and financial institutions and they are not Islamic, or does not comply with basic principles of Shariah. This is very important issue.
Islamic Bank and Financial Institutions needs cleaning , from its practices and peoples who themselves does not have enough trust in their own system. I am writting with my experience and due diligence I did while acquisition process or otherwise and public information available on these companies from stock markets.
- The myth about Islamic Funds ( offshore / private equity) - Only the contract remains Islamic and Shariah board has responsibility only. I have seen after that they are indulging in all Kinds of activities, investment in hotels which serves alcohol,financing conventional, and conventional leveraging more than value of fund itself. When I asked them these are funds and funds are Islmic and investment has nothing to do with investment they are making. There is not a single person who understands shariah and can look after the interest of the investor. Unfortunately this is the story and it is very sad.
- The most important diffrence is moral values and transparency. _ The moral's are equally bad may be more. When I look through the balance sheet and it is equally manupulative. The industry need to understand they need people who belive and has trust in the Islamic Banking and has very high moral standards. ( Taqawa ). Shariah Scholar and Promoter must understand the diffrence, if they are coming just to make money they Dubai is waiting for such people, the debacle. The leadership of such companies should be shariah compliants.
- The funds, investments and all value chain must remain clean andshariah compliant, otherwise there is no difference.
- The muslims come to the Islamic Finance the most important reason is religion, they want halal income. They do not want to go to the Fire ( Jahannam ) for eating haram in this life. This is sole reason, profit is always secondary, two things investor expect from them is Good Service and Halal Profit. ( If islamic finance can not give halal return then there is no need of it.) I personally know thousands people who leave their interest in banks and give in writting to bank please do not pay us interest.
- Juridiction - (فَلَا وَرَبِّكَ لَا يُؤْمِنُونَ حَتَّى يُحَكِّمُوكَ فِيمَا شَجَرَ بَيْنَهُمْ ثُمَّ لَا يَجِدُوا فِي أَنْفُسِهِمْ حَرَجًا مِمَّا قَضَيْتَ وَيُسَلِّمُوا تَسْلِيمًا ﴿4:65﴾
(4:65) But no, by your Lord, they cannot become true be-lievers until they seek your arbitration in all matters on which they disagree among themselves, and then find not the least vexation in their hearts over what you have decided, and accept it in willing submission. *95.The application of the injunction embodied in this verse is not confined to the life-time of the Prophet (peace be on him). It will remain in force until the Day of Judgement. The guidance the Prophet (peace be on him) proclaimed on God's behalf, and the manner in which he followed God's direction and inspiration, will for ever remain the universal touchstone for Muslims. In fact, recognition of that guidance as the final authority is the criterion of true belief. This principle was pronounced by the Prophet (peace be on him) in the following words: 'None of you can become a believer until his desires become subservient to what I have brought (i.e. my teachings).' (Cited by al-Nawawi in al-Arba'in, see the tradition no. 41, transmitted on their authority of Abu al-Qasim Isma'il b. Muhammad al-Isfahani, Kitab al-Hujjah with the opinion that it is a 'good' and 'sound' tradition, with a sound chain of transmission - Ed.)
Those who do not want to follow Islamic Principles they go and fight cases in secular courts even if their own Shariah Baoard is advising them otherwise. Such companies has ill intensions in their heart and they do not want to pay their investors.
- The practices of Islamic Banking - Tawwaruk and Murabah must comply Shariah. They are allowed but in practice how much shariah compliant they are. Secondly Wkalah contract is ISlamic, but what happens after that must be Islamic. The practices and procedures must comply Shariah.
- New Products - Islamic Finance do not need to compete with conventional product. Virtual products has no place in Ilamic Finace - Any kind of derivatives or derivatives based product are not needed. The scholras and industry who are trying to develop such thing must restrain themselves and sought guidance from Allah ( Istekhara). What Islamic Finance needed is people who believe and trust and work with Guidance from Allah. Allah will ( Insha Allah) will guide them to right product development and best practices.
- The product must satisfy following requirement.
o Maqasid al Shariaho
Conditions of contract
Islamic Economic SystemIslamic economics is based on the Shariah. The basic objectives are to ensure general human well-being and socio-economic justice.
THE DISTINCTION BETWEEN CONVENTIONAL AND ISLAMIC THEORIES
The Role of Moral Values
While conventional economics generally considers the behavior, tastes and preferences of individuals as given, Islamic economics does not do so. It places great emphasis on individual and social reforms through moral uplift.
The Importance of the Hereafter
The Hereafter is a concept which is completely ignored by conventional economics, but it is one which is greatly emphasized by Islam. Because of their innate goodness, human beings do not always try to serve their self-interest.
MAQASID E SHARIAH- the Objectives of Shari'ah
Maqasid al-Shari'ah that is, the objectives of Shari'ah can be defined as below:· Maqasid al-Shari'ah comprises those benefits/welfare/advantages for which Allah has revealed His Shari'ah.· Maqasid al-Shari'ah aims at the attainment of good, welfare, advantage, benefits, etcetera, and warding off evil, injury, loss, etcetera, for the creatures. (All this in Arabic terminology can be stated as Masalih al-'Ibad.)
Let us All of us introspect and ask for guidance and success is for those who chose right path. ( Sirat e Mustkim).
وَقُلْ جَاءَ الْحَقُّ وَزَهَقَ الْبَاطِلُ إِنَّ الْبَاطِلَ كَانَ زَهُوقًا ﴿17:81﴾
17:81) And declare, "The Truth has come and falsehood has vanished: for falsehood is a thing that must by its nature vanish."
At the time of this declaration, the persecution of the Muslims was at its height. A large number of them had emigrated to Habash, and those who had remained behind were suffering from untold hardships at Makkah and its suburbs: so much so that the life of the Holy Prophet himself was always in danger. Therefore, to all appearances, falsehood was prevailing everywhere and there was no sign to show that the truth would ever overpower falsehood. That is why the disbelievers took it for a boastful talk and scoffed at it when this declaration was trade. But this prophecy of victory did come out true in less than a decade when the Holy Prophet entered the same city of Makkah as a conqueror, and entered the Ka'abah where he made the same declaration while he was breaking the three hundred and sixty idols. According to a Tradition of Bukhari, related by Hadrat 'Abdullah bin Mas`ud, "On the day of the conquest of Makkah the Holy Prophet went on striking idols and uttering these words: `The Truth has come and falsehood has vanished; for falsehood is a thing that must by its nature vanish. The Truth has come and falsehood will never reappear nor return' . "