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ISRA-IRTI-Durham University Strategic Roundtable Discussion “Maqasid al-Shariah and Islamic Finance: Current Status and

ISRA-IRTI-Durham University Strategic Roundtable Discussion “Maqasid al-Shariah and Islamic Finance: Current Status and Future Directions”. “Islamic Finance Ideals vs. Realities” Abdulazeem Abozaid. The Ideals. Islamic banks uphold social responsibility

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ISRA-IRTI-Durham University Strategic Roundtable Discussion “Maqasid al-Shariah and Islamic Finance: Current Status and

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  1. ISRA-IRTI-Durham University Strategic Roundtable Discussion“Maqasid al-Shariah and Islamic Finance: Current Status and Future Directions” “Islamic Finance Ideals vs. Realities” Abdulazeem Abozaid

  2. The Ideals • Islamic banks uphold social responsibility • Apply investment contracts for the overall welfare of the society • Avoid the evils of Riba and gambling • Uphold the spirit of Islam and so promote the religion • Gradually supersede conventional banks at least in the Muslim world

  3. The Reality • Seldom did Islamic banks observe the social responsibilities in their products and dealings • Investment contracts have been twisted to function purely as financing instruments. • Evils of Riba and gambling are manifested in many current “Islamic” banking products (Eina, Tawarruq, debt trading). • The current version of Islamic finance gives a distorted impression about the religion of Islam, placing a big question mark on the very rationality of the religion.

  4. Reality Even Worse More controversies are invading the industry (“Islamic” Derivatives) Some are designed to replace the highly- criticized old ones. Differences limited to the technicalities followed therein. Ex. Salam, Investment Murabaha as substitutes to Tawarruq-based personal financing.

  5. Cont’d Ongoing attempts to Islamize all conventional products, even the un-Islamizable Hundreds of unfruitful conferences and discussions. Turning a deaf ear to the increasing public’s criticism A state of despair has stricken diligent observers

  6. Reason for the bad reality Unlimited authority of Shariah scholars, assuming the role of policy makers and the lawgiver. No commitment to Fiqh Academy resolutions. Irregular opinions are deemed as strong-grounded scholarly opinions No accreditation of Shariah advisors. Weak and ineffective governance of Shariah boards. (the direct relationship between bankers and Shariah scholars).

  7. Cont’d • The short sight of some Shariah advisors, misuse of Shariah principles (Maslaha) and twisted interpretations of Juristic statements. • No submission to higher legislative and monitoring authorities. • No sound and successful example in Islamic banks to follow in governance and operation.

  8. The Future In the absence of real reform, a complete loss of trust in Islamic bank is inevitable. Islamic banking is no longer the bright side of the longed-for application of Islam in contemporary life. Having been equaled with conventional, Islamic banks will lose to conventional. Once credibility is tainted, it is difficult to restore.

  9. Driving Forces to Perception Change Deterioration of Shariah scholars’ credibility due to proven irregularities. The tsunami of reform sweeping the Arab world, which will leave its impact on all sectors of life. The new generation of Muslim youth who spares nothing from reasoning and judges things against their merits. (liberal minds) Only the voice of reason will prevail

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