ISLAMIC BANKING AND FINANCE - SOCIAL FAILURE?

One thought-provoking article written by a professor in political economy from Durham University in the UK on Islamic banking and finance - social failure caught my attention, He wrote that among others, Islamic banking and finance (IBF) has failed to share the aspirations of Islamic moral economy (IME), which value system centred on human-centred economic development and social justice.

The author further elaborated on the philosophies that IBF should adhere to e.g., tawhid (unity), al-’adl wa’l-ihsan (justice and equilibrium), ikhtiyar (free will), fard (responsibility), rububiyyah (divine arrangement), tazkiyah (growth with purification) and khilafah (vicegerency).

Reality check – See around you!!!! Unfortunately, what the author wrote is true. What happens now is that the IBF is becoming more and more similar to their conventional counterpart. Some practitioners blamed it on the need to innovate and compete with conventional banking and finance, the easy way out is to replicate the features on the conventional products and just eliminate the word “interest” – that is Shariah compliant already.

Despite all the criticisms, I still harbour the hope that one day IBF will return to its Islamic roots and philosophies. I can guarantee that the Muslim world (or the whole world at large) will be a better place – sacrifices need to be made for the public interest and social justice. Lastly, I remembered a phrase uttered by Prof Zubair Hasan – “To each is due”. Despite the inequalities of distribution of income, Islam recognizes the need for the rich to help the poor, the sick and the needy (economic justice). In essence, his definition of Islamic economics says it all – Islamic economics is a study of human wants in the face of scarcity of resources with a view to maximize human falah.