ISLAMIC BANKING: IS IT REALLY “ISLAMIC”?
By: Omar Mustafa Ansari & Faizan Ahmed Memon
Is it really Islamic? …. In this era of development and growth in Islamic finance and banking, this is a question being raised at every forum by various quarters. All those who raise this question, are undoubtedly well-wishers of Islam, Islamic economic system and Muslim Ummah. Accordingly, while we celebrate the achievements of Islamic banking on one hand, we should not be ignoring the issues and objections being raised by such quarters in order to ensure that we lay the foundations of this industry on strong, straight and acceptable-to-all footings.
Objectives Of Islamic Banking
Before discussing various objections raised on the present day Islamic banking, we should first try to understand the objectives of Islamic banking, which are as follows:
1. To provide Shariah compliant and prudent banking opportunities; hence providing an opportunity to Muslims to do their banking transactions – a Halal way: In other words, this is just an effort to avoid Riba and other prohibited elements from commercial and banking transactions, in order to ensure that we do “Nothing-Haram”; and
2. Achieving the goals and objectives of an Islamic economic system.
We all can agree that, given the circumstances, the Islamic banking industry is making all efforts to ensure the first objective, while the second objective, although no-less important, is not the prime objective of current-day Islamic banking.
History Of Islamic Banking
Modern banking system was introduced in Muslim countries at a time when they were politically and economically slave to the western world. The main banks of the western world established their branches and subsidiaries in the Muslim countries and territories to fulfill requirements of foreign business. The Muslim community generally avoided the foreign banks for religious reasons but with