Islamic Banking System:

Possibilities and apprehensions

The Islamic banking system opens up many possibilities, with a few apprehensions, and
is slowly gaining acceptance in some parts of the world. In various Asian and European
countries, the banking system has been successfully started according to Islamic shariah
by some banks. Just a few years ago the modern economists could not imagine the
possibility of an interest-free banking system and financial welfare based on profit and
loss. But now they are estimating that the investment of one billion dollars can be
undertaken under the same system by 2010. However the opening of interest- free
banking system by the Reliance industry, Infosys, UTI, DLF, and State Bank of India
(SBI), is another step forward coupled with an Islamic Index for shariah compliant
investments looking for investment opportunities beyond the taint of interest.
Particularly, it is a ray of hope for the poor and backward communities and farmers.
As far as it considered that the Islamic banking system is not being fully
appreciated, though it is a fact that Islam is not only merely a religion of nature and truth
but it is a complete way of life. Its laws and solutions are universally beneficial for all.
Islam guides us in all aspects of day-to-day life. Business, education, agriculture,
economic, politics all are part and parcel of Islam. It is a practicable system of life for all
humanity. So whatever economic, social, political and other aspects are being
accomplished according to Islamic law, success is assured. So is the case with Islamic
banking.
But two important facts are to be noted. Success in this field depends on capable
mangers who manage funds with financial acumen as well as a close personal knowledge
of the shariah guidance in business and investment. In short, such banking changes
should not merely be cosmetic but correspond to the true laws that can provide benefit to
all. Seeing the acceptance of Islamic banking system it is quite feasible in all the sectors
of finance and investment like share market, stock market which can all be started under
Islamic shariah. This is because the development of finance and economy has a great
importance in Islam. The books of ahadith and fiqh are full of financial and economic
principles. Such a system of shariah which consists of details of speculation, partnership,
agency, bail, mortgage etc in business makes it easy to run interest- free banking, share
market investments that offer instruments based on profit and loss such as musharaka,
mudarabah etc.
It is also to be noted that not only interest based dealing but also dealing in pork,
alcohol, gambling and other unislamic agreements can only be vetted by a scholar well
versed in the shariah. There is the time to awaken, as well as the time to guide those
systems properly.
It is a moral and religious obligation on the part of the ulama to persuade the
Muslim ummah to gain welfare by such activities and save them from the harms of the
present economic system which leads to peril both in this world and the hereafter.
Without any delay, ulama should give attention to it. For, they can provide correct
guidance and solutions whenever they will be asked by common people about taking part
in these Islamic banking processes.
They might save themselves by the virtue of knowledge about it from committing
a mistake of making something lawful as unlawful and an unlawful as lawful. Besides
these, those companies which want to run this system must present the details of their
master plan before Muslim scholars and muftis and should obtain their trust from those
who are competent in revealing the nuances of shariah. In addition, they should nominate
some pious persons with piety, righteousness, free from greed of collecting money and
wealth, as well expert scholars and muftis well acquainted in both religion and economy-
in their advisory boards. Then they can render advice through their decrees based on
shariah. Otherwise it would be quite impossible to continue the system for a long period
in this sub- continent at least.
There are many companies who want to take advantage of the billions lying
unused among devout Muslims who have some qualms about investing in improper
companies. In their eagerness to invest, some Muslims get their fingers burnt. Investing
in some shadowy companies, some of the members ask muftis about taking share in those
companies, muftis probe into them and observe their financial behaviour. Some may be
shariah-compliant while others may not be so. And they are perfectly obliged to issue a
decree against them, so all their efforts and hopes go in vain. Till date well- informed
Muslim avoid shares in most of the companies. It is time to engage them with
authenticated knowledge.
One must properly consider, with all precautions, for an Islamic banking system
in India engagement of Arabs and non- Arab Muslims will be vital to gain wider
acceptability not only among Muslims but also among non- Muslims as in Malaysia.

MuftiAsadullahQasmi
asadullahqasmi@ymail.com