Transcript ideal v. reality - Abdulazeem Abozaid

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
1
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
2
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.
3
Reality Even Worse
 More controversies are invading the industry
(“Islamic” Derivatives)
 Some are designed to replace the highlycriticized old ones.
 Differences limited to the technicalities
followed therein.
 Ex. Salam, Investment Murabaha as
substitutes to Tawarruq-based personal
financing.
4
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
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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 stronggrounded scholarly opinions
 No accreditation of Shariah advisors.
 Weak and ineffective governance of Shariah
boards. (the direct relationship between
bankers and Shariah scholars).
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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.
7
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.
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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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