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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
exploitative
conventional (riba based) banks which have lead to
large
scale
disparities
in
wealth.
Some
conventional banks too are establishing Islamic
windows for conducting Sha'ri'ah compliant
business
separate
from
their
conventional
business.
However a question is being asked from many
quarters whether these banks are really conducting
their business on Sha'ri'ah principles or this is just
name change. Some of our scholars opine that real
Islamic Banking does not exist in present world,
just as there cant be an Islamic wine shop so there
cant be an Islamic Bank. Islam not only prohibits
riba but also prohibits Gambling, Speculations and
investing in Haraam activities, these all have to be
taken into account. Murabaah (cost plus) is
particularly under attack and it is the instrument which
is presently most common in comparison to other
instruments of Islamic banking. Mudharabah (Profit
sharing) and Musharakah (Joint venture) are not much
in vogue, owing to social set up and values. These
ventures are more feasible at the community level for

micro-financing small scale and cottage industries.

Another vehement type of criticism comes from those
who have vested interests in present riba based
economy, whose businesses thrive on this exploitative
Economic system. Obviously they might be using the
services of expert economists to put forth their agenda
and propagate it.

There are people who have taken extreme

positions on the subject. While some regard it as
Haraam as a conventional Bank and others think
that it is completely Sha'ri'ah compliant and some
ultra-modernists regard the Conventional Banking
as permissible. These are extreme views and it is
lack of understanding of the mechanism and
operation of these banks which makes one to
regard both as similar.
It cant be denied that no form of Islamic
Banking is at present completely based on
Shariah Principles. Some forms of aversion are
based on genuine points. Theoretically there is
compliance with Sha'ri'ah, but in practice there are
some deviances. There are problems in the field to
implement all the ideals. The trouble arises when
these banks have to deal with conventional banks
they deposit extra liquidity or borrow from these
banks when they are in need which involves Riba.

Completely Shariah based banking is only

possible when whole of the Economy is Sha'ri'ah
based. The transactions occurring within an Economy,
which is not fully Sha'ri'ah based, cant meet all the
basic criterion of the Shariah. Presently whole of the
world economy is integrated and on top is the IMF and
world bank, which are there to safeguard and promote
the interests of the capitalists. It is unthinkable that
these banks shall not be affected by the policies of
these bodies when even the sovereign nations are not
free from their influence. The economic policies of a
sovereign state are affected by these world bodies.
Anyway if these Banks are not performing
completely as per Sha'ri'ah, so why should not they be
closed down? Why should people invest/deposit in them
having illusions of their permissibility? This however is
not the whole truth. Despite shortcomings, these banks
perform important tasks. We cant say that these banks
are fully Islamic, but it has to be admitted that these
banks are not same as the conventional riba based
Banks. It is an option available to us, an alternative.

In future this type of banking is going to be more

refined and the element of the objectionable and
doubtful transactions can be and are slowly
minimized and in phases can be eliminated
completely. If there is no start, how can there be
any progress. The principles of democracy,

liberalism and socialism first started just as ideas

and theories but slowly were put into practice.
These Banks or the Islamic windows are headed
by Shariah board, which consists of ulema who
are well aware of these transactions. They have to
take care to ensure that the business doesnt foray
into the domain of impermissible. Notwithstanding
all this, the present Instruments of Islamic banking
have been devised by the Jurists of repute and
they regard them as permissible. Anyway, it would
provide an alternative to the existing conventional
Banking which is exclusively interest based.
Otherwise 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 his
money is used for the purpose of riba based
transactions. On 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 into
circulation so that inequalities end and the benefits
of wealth percolate to lower rungs of the social
ladder. In todays 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

collect the surplus capital and to use it where it can

be utilized. To put the money in circulation.
Here I would like to add a precautionary note,
that all those claiming to be based on Islamic
Principles 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 Islamic
Banking. One has to be cautious here and not
believe everyone who claims to be doing such
businesses. One should also be careful about as to
who is on the Sha'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. For that purpose we
have 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 techniques to Islamize
the process of Banking and in phased manner
weed out undesired elements. The Islamic banking
and finance would only blossom in a society which
has imbibed Islamic values: where there is no
greed, no selfishness and no extravagance. People
live simple, unassuming and unpretentious lives.
Above all people have an eagerness to help each

other and not to thrive on others compulsions and

helplessness. Not only this at individual levels we
have to change our lifestyles and make it Islamic.
We cant, on one hand be extravagant and waste,
and on the other hand go to an Islamic banks for
loan.
Islamic Banks are in their infancy, they need
some time to get refined. In the current set up, we
should avoid banks as far as possible, but when it
is unavoidable is it not better to opt for Islamic
Banks which, even though have elements of
impermissibility, still are not outright Riba based.
One has to understand the process to some extent
before dealing with these types of banks and deal
in such transactions which are not doubtful. It is
incumbent upon those who have specialized
knowledge to disseminate knowledge about it and
to show us as to how we shall deal with our
economic problems.
Mail: mubashir_07@rediffmail.com
Mobile No. 9419924672