How Islamic is Islamic Finance Industry?

by Almir Colan  

The entrepreneurial nature of Islamic finance is often compromised in the product development phase, where Islamic financial products have been frequently designed to look and feel like conventional ones.

The question that we need to analyse is whether the current Islamic finance industry is moving closer towards the objectives of the Shariah (Islamic Law); or, working against its ability to develop truly alternative products for the future.

For many professionals who enter into Islamic finance industry, there is a pressure to accept situation as it is. To interpret what they see and know in a self-serving manner. Many have become complacent instead of broadening perspective and seeing the bigger picture. And many more just conform to what Industry is today and not what it can become tomorrow.

Islamic finance encourages mutual cooperation, generosity and risk sharing. Instead of charging interest, Islamic banks derive their profit by engaging in entrepreneurial activities with underlying ethical principles and practices. Islamic finance should connect people, ideas and resources in a fair and ethical way.

As such Islamic Finance contributes to the welfare of society and reduces the possibility of injustice and exploitation. In its core, it is the Growth Engine of Islamic economy. It promises to deliver real value and benefits without involving itself in prohibited or fake transaction. And finally, it promises to eliminate injustice and various financial diseases like Riba, and Restore Economic Integrity.

The question is how much of this promise is fulfilled today?

And how Islamic is Islamic finance industry?

I am preparing the new master class to deal with this difficult and controversial topic. Unfortunately, this is the discussion we need to have if we want Islamic finance to live up to its promises. To do this I need something from you.

What I want to hear from you is what are your frustrations with the industry? Is there something you would like to know, ask or learn about? I am working on these issues through a new project. You may find new information at https://www.islamicfinanceclinic.com and keep yourself updated with this exciting project.

 

 The Autor is Director Australian Centre for Islamic Finance (AUSCIF).