Islamic bankers, caught between scholars and ordinary people, spend much of their time educating the often skeptical public about the authenticity of their products. Nice time gone by. The facilitative effects of ridding the Islamic financial sector of suitors (and there are many) at the hands of the educated consumer are clear. However, more often than not, this educational process is long in theory and short of practical significance.
Perhaps the easiest way to determine if Islamic banking is in accordance with the Qur’an, Sunnah and the client is to see how it actually works. The Islamic banking discussed here is the same that enjoys the unanimity of the leading scholars in the field of traditional schools of law. And despite the presence of rogue banks, increased market regulation and customer sophistication ensures that Sharia-compliant Islamic banks lead the industry. By learning the basics of these banks, people will be better able to defend themselves when non-Islamic bankers promote incompatible instruments in the name of Islam.
However, from the outset it is necessary to emphasize two important points. First, the fact that an Islamic product is identical to a traditional one does not make the Islamic product unacceptable. As clear as it sounds, it is an argument often used by critics to discredit Islamic banking. The vast majority of Islamic financial instruments are very similar to their conventional counterparts, particularly those that are stock-based (see In Your Interest, Islamica, Winter 2003). What distinguishes it from traditional tools is usually nothing more than a set of operations, which leads to the second point.
In Islam, the difference between whether something is forbidden, offensive, permissible, recommended, or obligatory usually depends on the validation process. Two spouses, one married and the other single, may be alike, but a simple marriage contract makes one valid and the other not. Two types of burgers, one that uses legitimately slaughtered meat and one that doesn’t, may look alike, but a simple process makes one right. Also, two financial products, one Islamic and one not, can be distinguished by a set of steps: ostensibly cosmetic, Islamically defensible masters in Islamic banking and finance.
Here are some of the most frequently asked questions from new customers in Islamic banking (in order of complexity).
There was no Islamic bank in the time of the Prophet, may God bless him and grant him peace, so how is there an Islamic bank now? It looks like a fad
Chips, potato chips, and Islamic banks are examples of what is permissible. The Messenger, may God bless him and grant him peace, did not give us specific directions. Instead, it has prevented us from engaging in hateful innovations (bid’ah) that go against Islamic law, rather than new things that do not carry intrinsic guilt. The heresy is in guilt, not in novelty.
It is true that some Islamic banks carry out unauthorized transactions, but this does not mean that the entire field of Islamic banking is no more than the sins of a few Muslims that condemn the entire Islamic community.