Islamic finance system lacks a comprehensive law
March 29, 2011Mauritius launches its first Islamic bank
March 31, 2011India/Islam-finance: India may get its 1st foreign Islamic Bank in Bank Asya
By IINA Available at: http://iina.me/wp_en/?p=1002034
NEW DELHI,23 Rabi 2/March 28 (IINA)-India may soon get its first foreign Islamic bank with the Reserve Bank of India (RBI) seeking government approval to allow Turkey’s Bank Asya to offer Shariah-compliant lending in the country. Shariah, or the Islamic law, bans interest on financing. Bank Asya is keen to start its Indian operations through a representative office in Mumbai. “So far the bank has only sought permission to open a representative office,” a finance ministry official said.”We are considering their application.”
RBI has requested the government to consider the Turkish bank’s application within 45 days. Launched in 1996, Bank Asya aims to develop interest-free banking products, according to its charter. It has 179 branches in Turkey. The current statutory and regulatory framework in India does not allow banks to undertake Islamic banking activities. But the Committee on Financial Sector Reforms, constituted by the Planning Commission, had in a report in 2008 recommended delivery of interest-free finance on a larger scale, including through the banking system. Last year during a visit to Indonesia, the country with the world’s largest Muslim population, Prime Minister Manmohan Singh had said that he would ask RBI to look into the demand for establishing Islamic banking in India.
Bank Asya had in 2009 received clearance from Turkey’s banking regulator to open a representative office in India. Its proposal has been pending with RBI for over a year. “After the global economic crisis, RBI has been stringent with allowing foreign banks in the country,” the finance ministry official said. “As a part of its liberalised policy for foreign banks, it has now granted permission to Bank Asya.” Global financial centers, such as Singapore, Hong Kong, Geneva, Zurich and London, have made changes in their regulations to accommodate Islamic finance industry that is now worth about $1 trillion.
The case for Islamic banking got a boost in India last month when the Kerala high court dismissed writ petitions challenging the government sanction for starting a nonbanking finance company by the Kerala State Industrial Development Corporation, based on the Shariah. The petitioners had argued that the government sanction amounted to favouring Islam, and that setting up such a company with co-ownership of the state was antithetical to equal treatment for all religions. But the court said the petitioners could not demonstrate how the sanction had the effect of directly promoting a particular religion. India had committed to the World Trade Organization in 1997 to issue 12 new branch licenses to foreign banks every year, a number it has exceeded almost every year since. The finance ministry has said that there are 18 foreign banks, which are looking to set up their branches or representative offices in the country and their applications are at various stages of progress. At present, there are 32 foreign banks in the country.
Regards
ZULKIFLI HASAN
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Respected Teachers.
As Salaamo ilaikum va Rahmatulah va Barkatahu
Bank and poverty are closely related , India suffers the most because Islamic banks have not started in India, would Islamic bank in future replace the conventional bank ,
Banking and Islam
(The bank and banking is view as a business organization working on interest .
Since interest is haram in Islam the entire set up of bank and banking and employee working in a bank is considered Haram by Islamic Scholars.
Riba (taking interest) A muslim is not allowed to take or give money on interest.
Riba is one of the seven major sin in Islam and unforgivable in nature.
The Ayat in regard to Riba came after Hijri to Yathrib , before this Ayat many Shahabis including the prophet had taken money on interest from the Jew money lenders.
The Institute of Money lending business are harmful for those who take money from
this money lenders who lend money on very heavy interest rate and are very strict and unreasonable this money lenders give money on mortgage of land , gold and other
valuable items . Where as law of Allah is based on mercy for his mankind Allah has made all the thing Haram to man which is harmful for him and all thing Hallal which is good for him in this world and hereafter .
During Prophet time it was common observation that those who had took loan from
these money lenders had to suffered miserably in hadiths it was said that the muslims should not become as cruel as this moneylender and should not give or take money on loan on interest Riba . Taking money on interest was very harmful for all muslim. It bought suffering to them and they would never rise up from poverty and debt .
Is Modern Banking and Money lenders business of earlier time same or they are different ?
Banking have one principle which is very common with Money lenders business is lending money on interest The Institution of banking in modern time is vast and very much different than the money lenders of earlier time or during the time of Prophet.
Banking Institution in modern time is an financial organization supported by the government and has been legalized and under the control of RBI .
Banking Institution has help the society at large in development in many field , unlike money lenders business who use to charge heavy interest rate and were detrimental to the society at large . Banking help to eradicate poverty unlike Money lender business which let people die in poverty.
Modern Banks accept deposit from their client and pay them interest while the money lenders does not accept deposit they work with their own capital . If a person accept to kept his deposit with bank he also has choice of not taking any interest or profit on it .
The word Bank mean to bank on or depend only or trusthworthy , while money lender cannot be trust upon.
Why bank is so important ?
The prime reason why most of the people all over the world keep money in bank is because their money are in safe custody and are protected against robbery or other calamities.
Many people have to save money for future they find in more convenient to save in bank . Keeping money in bank is like keeping our money and valuable in the hand of people with whom it is safe and on whom they can depend upon .Saving money in bank for protection is the main reason why people keep money in bank while the Money lenders does not takes deposit nor they guarantee or are trustworthy so they can not be bank upon .
The objective of bank are to alleviate the level of poverty to promote growth , bank are not profit making organization what ever excess fund or money it receive at the end of the year it is use to give relief to the poor section of the society . World bank help poor countries to stand on their own feet . Expert of Banks and Islam as said conventional bank are not totally impermissible some transition are fair while some are not .. Now that we know that some of the transaction of conventional banks are permissible an are necessary for us to search for Shariah complaint alternatives for such transaction should be permissible and the impermissible . This is law of Shariah ,(www.islamicbankingconcepts.com/misunderstanding .html
QUESTION ASKED TO THE ULEMAS
A. If a person want to keep money in conventional bank for safekeeping and not to earn interest on it , is it still haram if he keeps the money in the bank and does not take interest on it ?
Bank is a legalized body and govern by the government of that country . Banking is also an International body and respected by Government of all the countries .Most of the business through out the world are conducted through banking and every one has trust in the bank . Those who are in business of import and export find it more convenient to do their business with bank .
Businessman all over the world find it convenient to make payment to their party through cheque, the bank accept cheque an transfer the amount of the depositor into the amount of whom the cheque is issued.. We can also obtain money through traveling cheque or through ATM , one can do shopping without paying cash through credit or debit card .
Banking help a person to book his tickets on line saving time , trouble and money . A old and sick person can also take help of telephone banking .
On other hand the amount of Interest involved in banking is very small compared to the interest charged by the money lenders plus money lenders does not provide all the facilities which a modern bank provides. If we can just consider that the low interest rate is not an interest but a service charge in compare to the great services rendered . Bank is non profitable organization although it have some profit at the end of the year which are used to help underdeveloped countries lower the interest rate for poor section etc even banks are not very sure that the word interest in bank are either interest or profit or service charges let it be given to expert for their opinion .
Banks give money to three class of people on loan , it give loan to the government , to business organization and to individual for personal need like housing , marriage , medical , education etc . It is found that many who had taken loan are able to get benefit from this loan .
Can it be possible that the word interest for us is misleading can we viewed it has services charges by the bank , since the interest charges are so low .
Islamic Scholars have no issue over the functioning on conventional bank and the principle of bank except toward Riba as such banks and banking is acceptable that is why Muslim financial institution are called Islamic Bank with similar function but difference in basic principle.
Islamic bank are profit /loss sharing method ( Mushraka ) secondly Profit mark up sale or rental method ( Ijara , Murabaha , B-Maujjol). In Islamic bank the customer is a partner to the bank and give right to the bank to do business on their behalf on their amount of deposit the business is subject to loss and profit which the depositor has to bear the bank take care to do business in such a way to insecure security and profit to the depositor.
The Mutual fund banking by conventional bank are now more closer to the principle of Islam the money of the depositor is invested in mutual fund subject to market risk , some invest into most reliable and ethical companies and the profit or loss is shared. In mutual fund there is no interest involved it is free from riba . Most of the Scholars accept buying and selling shares , equity share with ethical business organization is hallal.
Since in India Islamic Bank facilities are not available and Muslims has to keep their account in conventional banks for save custody , or to carry out their business . It is found that many muslim are having account in conventional banks at the same time keeping with the law of sharia many muslims do not take interest from the bank.
Muslim Bank Employees .
Since most of the functioning of conventional bank is not impermissible except for few related to Riba which muslim decline to except it themselves What about those person who is working in a bank who follow Islam , does not take interest on his own earning , does his job honestly do not cheat , offers namaj 5 time a day and is not directly doing illegal things neither is slave of the money lender who give interest to make himself rich they are servant of the legitimate Government of that country . There are many muslim working in bank through out the world some bank are muslim bank , should we still consider working in bank a great sin. When million of muslim have accounts in banks and this employees does services to them , In a hotel if there is thousand of Item and only one dish which is bad and this dish is neither serve or made my these people still he should not work in that hotel , if there is very few job and the question of survival is high should we still not take that job how he would go about and If one has already taken it where he would go know.
Ill-treatment rendered to muslim bank employees by other muslim brothers
It is found that many muslim do not treat employees of bank as muslim but openly avoid them and ill treat them is it fair ? No one had ever told the bank employees in the beginning that they should not join the bank it is un Islamic , now since they have already given up half of their life they are told to quit their job or face social boycott .
In India where employment is so rare where muslim are denied job everywhere , where would this people go only if they could find some better alternative or other supportive job they would .
Very few people or business organization are doing fair business in fact many business organization have taken loan or loan on interest if dishonesty is every where why just target bank employee because you know there is interest and in other business you do not know .
Question to Ulemas
Should we boycott and illtreat muslim who are working in bank ?
Who are we to punish for any crime or sin accept the legal authority it is only Allah who can punish us for all the wrong we have done against him or he may even forgive me .
We all know that hallal and haram is the citerior put on human being for test and trail of Allah the act of eating forbidden fruit by Eva and Adam was symbolic of not obeying Allah in fact there was nothing wrong in the fruit in it self . Allah has forbidden many thing to muslim as haram but in case of emergency or for survival this haram or certain category of haram becomes hallal.
There are many Muslim all over the world who have insurance for their car and have medical insurance if they do not have them they are subjected to punishment from the law of that country it is helpless condition and they are living in Non muslim countries .
We all are waking up to the modern needs of muslim we are going to have Islamic bank and Islamic Insurance till then when this facilities have not reach every where in every country should we not have some solution . Prophet Mohammad (S.A.W.) has said there is coming time people would face complicated and complex problem find solution to them .
Can existting conventional bank can be converted to Islaic bank in function if Islamic bank is not allowed or succesful
Respected Islamic Scholar and Wel wisher of muslim in both the world
Salaamu alaikum va Rahmatullah wa barkatayhu
Question in regard to Insurance and other financial problem of muslim and problem arising in modern time.
Institute of Insurance is new to Islam , but the principle of Insurance in any way does not violate the Islamic principle , It is designed to give protection to a person for his property valuable or life against unforeseen sudden calamity , disaster ,accident or event . Thus Insurance give protection on two things life and property.
It is common understanding that human being are subjected to many risk both man made and natural calamity , sudden loss of life and property can be a great set back . Is risk and gamble or gambling same ?
There are three ways through which one can come out of the calamity that hit him .
A) If a person is alive he can still struggle once again from build up to its original status
B) Another way is that he can get help physically and financially from other people or he or she may get aid or compensation from the government .
C) Through Insurance if he had insured his good or property and had paid regular premium the Institute like Insurance would have paid him the looses of the amount which he had insured thus save him from the impact of calamity , in case of loosing life of the bread winner his family would have depend on others or he have to accept charity which is not honourable thing to do as such Life insurance comes to their aid.
The Functioning of Institute of Insurance although good in principle is totally not legitimate according to Sharia because it involves Riba ,Gambling and Gharar .
Insurance institute in order to give maximum relief to the victim of disaster , accident and death invest the money paid of the client in two ways either it give their money on interest Riba which is not acceptable to Islam or they invest the money in equity share which is legitimate and not haram in Islam this type of Insurance are called unit link insurance which are subject to profit and loss as per the market and some companies offer combination of both which is again not acceptable to Islam , so if muslim choice right kind of policy in which interest is not involved than it become acceptable regarding risk factor and gambling the subject is still debatable and expert like Ulemas and Islamic Financial Scholar can still probe more into it.
Late Qazi Mujahidul Islam Qasmi declared a historic resolution on the permission of Insurance on the occasion of Islamic Scholars Annual Meet.
In the 4th annual meet held at Hyderabad on 9th to 12th Aug 1991 it was agreed in principle to the resolution of accepting life insurance policy but it was declared only in the next annual session hold on 20th November 1992 at Jamia Rassgad in Azangarh UP.
Earlier in the year 1965 Majis –e-Tahqeeqat shariah , Lucknow had approved the Fatwa in permitting insurance. During recent riots in Mumbai and Gujarat the Islamic Scholar and Ulema Council also started thinking on this subject seriously .
In the 5th annual session at Azamgarh in 1992 studied the two earlier Fatwas in depth . Seventeen senior scholars were assigned to study all the available details pertaining to insurance policy and give their recommendation in favor or against what so ever the conclusion reach.
In India we have large population of muslim most of them are living below poverty line ,
when ever a muslim makes progress financially there is scheme of the miscreant to destroy the financial power of muslim , this was done by the organized groups thorough riots in Biwandi , Gujarat (Surat , Ahmedabad, and muslim businessman ) . Muslim have no protection against life and property the police does not come to help property once loss mean much time to be on the feet again . The doors of taking loan from the bank and getting benefit from Insurance is close because in India we do not have Islamic Financial Institute or Islamic bank.
Bajaj and Tata Finance Institute have understood the need of muslim , not only muslim there are other religion like Jainism also who does not want interest or invest in companies like entertainment , hotel, wine etc as such it is need of time to find solution to the financial problem of muslim .
In Bank and in Insurance company there are mixture of good and bad there are thing which are halal there are thing which are haram now cant we select what is halal and refuse what is haram , cannot we pressurized to Government to have illigimate policies and scheme in bank and Insurance company . Most of the private Insurance companies are willingly to accept the principle of muslim and ethical investment what is require is effort .
The result of seventeen Islamic scholars are it made insurance permissible on ground of
“Azzarooorat Taba’al khatoorat, Rafa Zarar , Dafa al Harj, and Tahaffuze Jaan wo Mall but after 1991 now in 2010 and 2010 most of the private Insurance company are willing to accept the version of the ulemas in framing policies which are Hallal .
To read the name of those scholars which are more than 55 in numbers please turn to
http:///li .allemkhandfalaki.com/chapters/islami-fiqh-academy-al-manma-al-fiqha-al-islami.
Dr. Gulam Mohd Chinchwalker (Qadri)
assalamualaikum i am a graduate student i would like to study post graduat i want monye for higher study without intrest will you help me?………..
There is no meaning of sharia banking and it’s all like clinging to some old & crap ideologies! show me one islamic bank which does charity !!
every bank charges interest for paying its staff. otherwise who will pay the guys? islamic bank squeezes out your pocket by terming as an exchange service fee.. blah blah instead of mentioning it as interest!
whatever Dr. Gulam says, it’s all fantasizing and do not hold any meaning to today’s life.
I dont know how an islamic bank can change the banking of India!!!! only erudites like Dr. Gulam know it….
moreover tagging religion to every walk of life is very scary!!!
let us not make it a talibani country
i want to know about micro finance ,what Islam say about it.if its un Islamic than what is the Islamic way of doing business as micro finance self group in islam
Assalamuallikum va Rahmtullah, I am from India. I want some loan in order to start my school based on islamic concept. From where I can get the help?