Customer Satisfaction in Islamic Banking

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Challenges Facing Islamic Finance:
Research Areas
Sayyid Tahir ♦
Islamic banking started in earnest in the 1970s with personal initiative of the concerned Muslims to address the problem for riba. The pioneers included committed and resourceful individuals, professional bankers, Islamic economists and religious scholars. There was no initial working model to act upon, except the belief that interest-based banking might be replaced by banking on the basis of profit-andloss sharing. Situation has changed considerably since then both at the practical and the theoretical levels.

The difference in the working of the Islamic banks and the interest-based banks is becoming thin by the day. The existing Islamic banking model carries the risk of being called “banking under Shari’ah supervisory” or, perhaps, “banking for the Muslims by the Muslims (and some others too) with clearance by the Shari’ah scholars”.

“Islamic economics” is already facing an identity crisis, and is being seen as “economics with moral and ethical values”. Islamic banking is growing as “assetbacked” banking that is somewhat at variance with asset-based banking. If the trends continue, perhaps Islamic finance too may come to be viewed as “finance with emphasis on Islamic values”.

There is urgent need for serious research on several fronts.

1. The Need for a Common Fiqh
This is essential for two reasons:
1. In the global perspective, banking based on a particular school of thought is inconceivable.
2. Everything in Islamic banking and finance depends on clarity on the Shari’ah matters.
At present, an equivalent of Church and the State (Ibadaat versus Mu’amalat) separation exists in the Islamic scholarship: the Shari’ah matters are supposed to fall in the domain of the Shari’ah scholars, and the dunia matters for experts in the respective fields. The Shari’ah scholars, on their part, do base their conclusions on some principles, but those principles or reasons are seldom made explicit. Many a time, the Shari’ah solutions are no more than Shari’ah-fixes.



Professor of Economics, International Institute of Islamic Economics, International Islamic University, Islamabad.

This discussion paper is for supplementing the lecture on the above topic in the Distance Learning Program in Islamic Finance, sponsored by Islamic Research and Training Institute of the Islamic Development Bank, Jeddah. The date of the lecture is 23 November 2004 (Tuesday).

DLP - Research Areas, 23 Nov 2004

2

The current state of the fiqh:
The Methodology:
— Committee Framework. Answers to the various issues are sought from amongst the options available in different fiqh streams
— No change in the methodology of the fiqh (usul al-fiqh) enunciated in the past
The same old notion of ijtehad: The focus is on literal interpretation of the Divine Texts with the help of ‫( إﲨﺎع‬Ijma’), ‫( ﻗﻴﺎس‬Qiyas), ‫( إﺳﺘﺤﺴﺎن‬Istehsan), ‫( ﻣﺼﻠﺤﺔ ﻣﺮﺳﻠﺔ‬Maslahah Mursalah), ‫( إﺳﺘﺼﺤﺎب‬Isteshab), ‫( ﺳّ ذرﻳﻌﺔ‬Sadde ‫ﺪ‬

Dhari’ah), ‫( ﻗﻮل ﺻﺤﺎﺑﻲ‬Qaol-e-Sahabi) and ‫( ﺷﺮع ﻣﻦ ﻗﺒﻠﻨﺎ‬Shar’a mann Qablona). Lately, there are some refinements in the form of ‫ﻣﻘﺎﺻﺪ اﻟﺸﺮﻳﻌﺔ‬ (Maqasid Al-Shari’ah). But, by and large, there is no change in the methodology developed a thousand years ago.

Problems have been further compounded in the modern age with the growing emphasis on Qawaed Al-Fiqhiyyah, notably Al-Abahato Aslunn, AlMuslimoona ‘Ala Shurutehimm, Al-Kharajo bid-Daman and Al-Ghunum bi AlGhurum. On the Need for a New Methodology for Fiqh:

Rationale
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Need for recognition of Internal consistency in the Qur’an and the Sunnah
Invitation of the Qur’an on the coverage of all conceivable cases in it
The Hadith that calls upon the Muslims to always uphold the
Qur’an and the Sunnah
Formal compilation of the Hadith in the 3rd Century Hijrah
Quest for unification of the fiqh and bringing all the Muslims to one platform

The Approach in Respect of the Qur’an
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A...
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