Friday, 22 October 2010

Is Islamic banking Islamic?

Today, Islamic commercial banks indulge in money creation just as much as conventional commercial banks. This single sin is sufficient on its own to conclude that Islamic banking isn't Islamic but, as the earlier example demonstrates, it is a sin that requires interest-based lending in order to make it profitable. Though Islamic bankers may not realize it, the business model of interest-based banking is forced upon them and it is putting true profit sharing beyond their reach.

....... There will of course be much resistance to such a change, and the lobby that presently benefits from the interest-based monetary system will spend heavily in order to protect its future. The payment of money by banking organisations to Shariah scholars must be scrutinized for precisely this reason. If a bank asks 100 scholars whether its latest product is Halal, and 98 of them say "no", should we be suspicious if the bank gives a consulting contract to the two who said "yes"? Would some of the 98 become a little more flexible next time round, if they saw the other two earning large incomes from their work?

Full article here