When a common person tries to form an opinion about Islamic banking, he hears cliché sayings about Islamic banking, such as ‘Currently, Islamic banking and finance are not truly Islamic’, ‘It is only changing of conventional terms into Islamic terms’ and ‘Islamic banking is an oxymoron as banking cannot be Islamic’. This brief article discusses some points that will help in better understanding Islamic finance and Islamic banking in particular.
Islamic Economics Project
RESEARCH ON ISLAMIC ECONOMICS AND FINANCE AND ROLE OF FAITH IN MARKETS AND SOCIETY IN POST MODERN SCIENTIFIC AGE
Divine Economics framework provides an empirical basis of behavioural comparison between religious and non-religious agents with regards to their economic and non-economic choices. It incorporates the methodological framework of mainstream economics for the study of religion and economics in each other’s perspective. It looks at religious behaviour from the lens of ‘economic good’ and ‘economic behaviour’ in markets where the choice has economic considerations, such as relative prices, opportunity cost of time, income effect and substitution effect. However, reliance on stated preferences, overlap between religious and non-religious activities, inability to observe the motivation and intention behind choices and to judge the quality of religious activities are some of the challenges in this research framework.
In Islamic Ijarah and Diminishing Musharakah based contracts, Islamic bank charges rent for the use of asset in its ownership and risk, charges these rents after the asset has been provided to the client in usable condition and only till the asset remains in usable condition during the lease period. These differences also ensure strong links with the real economy and productive sector and limit credit creation other than for genuine value creating economic activities in the real economy.
Those scientists who believe in Scientism and hold that the experimental method is the only arbiter in all matters of life need to look no further than the field of economics where the tools and concepts of physics are applied. Even though science cannot be arbiter in morals, defining motives, public policy and politics, but it cannot even be a perfect and sufficient tool in explaining economic behaviour by taking the analogy of animal behaviour which is based on self-interest and survival instincts.
If the government wishes to align the government finances in a way that converges with IFI principles, the government may need to work to eliminate conventional debt and adopt raising funds using productive investments only.
Inclusivity, equitable distribution of resources and socio-economic mobility do not determine Shari’ah compliance or validity. However, these visionary goals are the aspirations of many people in academics and public at large. The realists contend that the visionary objectives of equitable distribution of income will be taken care of in the long run by Islamic social finance institutions, such as Zakat and Waqf. Islamic banks as one part of Islamic finance ecosystem will continue to serve the short term financing requirements of clients and for which debt based Islamic modes of financing are the suitable options.
Islamic economics principles discourage excessive spending and encourage sharing resources with wider community through Sadqa, Waqf and Riba-free Qard. This can provide more resources at the disposal of poor and needy and for the social causes which are working for the educational and health related needs of poor and needy. Therefore, this can help in tackling poverty, hunger, low levels of schooling and under-provision of health services.
Corona Virus has affected millions of people and killed hundreds and thousands of people already in more than 200 countries and territories of the world. Almost all routines of life have been affected. Our tremendous journey in scientific, technological, industrial and economic advances has come to a pause for a while in the last few months. As we ponder over origin of Corona Virus, it is high time to also reflect and think over origin of everything. This short book engages and invites readers to together seek answers from science, philosophy, and spirituality.
If the virus had been growing at a linear rate, it would not have been that much dangerous. It is the exponential increase in the Corona Virus spread which makes it become uncontrollable and create havoc in the society. Compound interest in the financial system is such a Corona Virus. Interest accrued but unpaid increases interest in the future periods ahead at an exponential rate.
In the Godless worldview, the battle of survival ends with destruction eventually for Corona Virus, bacteria, unicellular organisms, animals and humans the same way. Humans having consciousness and conscience may define their personal meaning of life by themselves as to how best to spend few million breaths under the sun in maximizing self-pleasure. But, the life ends without due justice for many people who are killed, robbed and discriminated against and it ends without due punishment for many people who cause these crimes. Some are lucky and some are unlucky in the mortal game of survival of the fittest.