In my Introduction post, I said that I find little or no sense in the Islamic Banking System, I admit
I should have been more specific but like they say its never too late.
My argument was more around the fact that Islam wants to bring a rather Islamic Financial System instead of just Islamic Banking itself. Islamic Banking is just a part of the whole umbrella of Islamic Financial System. Lets analyze it:
1. Islam, as its obvious from its teachings categorically rejects the Interest. No matter what they call it, Yusuri, Ribba, Interest or Hakunamatata we dont care really. The bottom line is that they believe that God doesnt like Interest and has prohibited them from charging or paying Interest. Its a different debate that there is a great dispute between Muslim Scholars themselves where the Quranists say that Quran although talks about Yusuri but does not really define what it is and leave a room for people to interpret the meanings of it based on current conditions people are living in. The hardcore Mullah scholars have a different view, they like to refer to Hadith where for example Prophet told them that even Money Exchange is an evil thing unless it is done directly, the words used are "hand to hand".
2. We need to understand the different elements of Islamic Financial System, based on what I explained above the Islam basically discourages the role of a Broker or Agent. For some reason, Islam thinks that when Money is being exchanged there must be no room for a third-party facilitator i.e. a Broker. Quite ironically, typical to the Islamic nature of teachings, Prophet forgot to put an end to the Broker Dealing when you're buying Fruits, Meat, Cars, Tickets or any other thing in life. Question arises what made him to stop people from using Brokers when it comes to the Money Exchange. The answer is Jews (thats a different story that Jews themselves had restrictions for Interest in Torah but they were slightly different) ...
3. Islam also failed to recognize the significant force when it comes to the Money Market and that is the Inflation. Interestingly, its not because Inflation did not exist in Pagan Arabian Society or the civilizations that lived before them but rather it was caused of lack of knowledge of things really worked in the Money Market at that time. Hatred towards money and prosperity perhaps started right from the day one when Jews rejected Mohammad as the Prophet and he started hating everything that Jews were good at. Knowledge and Eduction are the other two things besides money.
4. Zakat as a concept fails horribly in the modern times, no state or Govt can run their Financial System based on this concept of 2.5% Tax. Mohammad also failed to think about Money in Transaction and decided to put Zakat on the Assets which are possible to be cashed and are with you right now. This is was a nice idea at that time because the Prophet himself ans his companions were suffering from a severe poverty and were seriously short on money. Zakat was started more as a kinf of Helping Hand or Welfare system but then it turned into a solution which should be implemented by the state or Govt.
Mudarba or whatever they call it, hasn't been able to come up with an alternate solution to the Inflation. Some scholars assumed that Islam is basically rejecting the Fixed Interest so they came up with Islamic Banking where the Interest is dynamic and depends on the market conditions. However, thats still not a solution.
Another school of thought in Muslims believe that the one of the reasons why Islamic Banking hasnt been able to fly yet is because there is no true Islamic state (yes, they dont even consider Saudia true Islamic State) at present in this modern world. They believe that Islamic Banking can not be implemented in isolation and it has to get a support from Shariah Law such as a total ban on Pork, Alcohol, Gambling Products and other things Islam considers as evil.
Please feel free to float your ideas ...
Topic: Islamic Financial System