[Serereids]

OPINION by Fadeel Hassen - As an ex banker of 20 years, my core concern was always that we advertise our banking products as "100% Shariah compliant". I felt this to be misleading as I cannot comprehend how any product linked to the SA Reserve Bank (which all banks in SA must comply with as law), with its core commodity of trade being INTEREST, can ever be 100% Shariah compliant? It was for this same reason, over twenty years ago, leading to my inauguration speech as Vice President of SASBO-the finance union in South Africa, which I had said the current compound interest banks are going to collapse one day.

Less than five years later, Bearings Bank in England was the first to fold, much to the dismay to those bigots who challenged my prophecy, which simply stemmed from the spirit of the Quran. Moreover, often 'profit' is a term replaced by interest and as such "Islamic Banks" are virtually owned by riba banks such as, for example, Absa and FNB. These profits equate closely to compound interest....and so it is comparable to a drop of urine in a litre of zam zam water, isn’t it?

If these "Shariah compliant" banks had made a concerted effort to use their networking position of strength to develop their own infrastructure, devoid from being a part of the common commercial banks, its systems and the affiliation to the Reserve Bank, I would fully support its endeavours. But seemingly this did not happen during a period of over a decade.


There were no further endeavours to seek 100% purity in its financial and economic structures. Complacency in a comfort zone have misguided all attempts to claim they STRIVE to be 100% Shariah compliant, which would have been more reasonable than an imprudent attempt to claim “100% Shariah compliancy” in a system devoid of Islam (Darul Garb or even Darus Salaam/democracy).


In my humble opinion, Islamic banking, in the SA context, can never be 100% Shariah compliant, or even least 'Islamic', for as long as the current banking systems are governed by what I call a 'plastic' economy, based on paper money of exchange (promissory notes). How does one justify what one owes when what one owes is intangible? This system of securitisation cannot be made Islamic!


The chickens have now come home to roost with the only benefit being that 49million South Africans have been exposed to the fact that Islam has an economic plan in its belief system. Let’s hope our religious/spiritual "leaders" and economic "pioneers" have the visionary leadership to advance the cause of Islamic banking to the next level. A good start is to develop indigenous Islamic systems and infrastructure by restructuring loan advances on what we own and not what we claim to own on paper, i.e. on REAL MONEY. Do we have the vision? Only time will judge our legacy of history again.

We will also watch with bated breath how banks will collapse one by one, since the start of Bearing Bank in the time of a flourishing economy. Riba operated Banks WILL collapse sooner or later, if we claim the Quran to be a faultless Furqaan. Now ponder on Surah 2, verse 275. “Those who eat Ribâ (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitân (Satan) leading him to insanity. That is because they say: "Trading is only like Ribâ (usury)," whereas Allâh has permitted trading and forbidden Ribâ (usury).

So whosoever receives an admonition from his Lord and stops eating Ribâ (usury) shall not be punished for the past; his case is for Allâh (to judge); but whoever returns [to Ribâ (usury)], such are the dwellers of the Fire - they will abide therein”. Meanwhile, we pray for guidance and forgiveness from Allah for declaring war with Him, in justifying riba as a halaal commodity of trade in a boiling volcanic pot of haraam.

[attackDoold]

The following response by Maulana Tauha Karaan of the Muslim Judicial Council's Fatwa Committee and expert on Islamic Finance is a response to Fadeel Hassen's opinion piece, Banks bound to collapse.

OPINION by Maulana Tauha Karaan - Fadeel Hassen’s comment contains aspects which are commendable and others that are less praiseworthy. The inveterate opposition to riba, which is the leitmotif of his piece, is most certainly worthy of admiration; But one cannot help wondering why this particularly pronounced animadversion only sprung into full bloom after a 20 year career in conventional banking.

Less impressive than the above, however, is his characterization of what happened at FNB as a “collapse”. Nothing within the FNB saga gives the impression of a collapse—and most certainly not a collapse along the lines of Barings. All that happened was that a retiring CEO was replaced by a new appointee, and an old Shari’ah Board was supplanted by a new interim oversight committee.

That a banking system founded on riba is bound to collapse probably goes without saying: the evidence is simply too conspicuous. But to describe what happened at FNB as a collapse is an imprudent stretch of credulity, which could have been avoided by even a cursory investigation. As powerful as the desire for the collapse of riba might be, that desire alone does not legitimize the misrepresentation of fact.

Like many others, Mr Hassen makes the mistake of reducing the robustness of Islam’s commercial regulations to the simplicity of an analogy: “These profits equate closely to compound interest.” This is probably the oldest argument in the book, and more importantly, it is an argument which Allah Himself refuted in the very ayah which Mr Hassen asks us to ponder. Does the fact that profits quantitatively approximate interest mean that there is no difference between them? Not at all.

Fine line

It is not through quantitative approximation that an excess is determined to be riba, but through the contractual mechanism that generated it. A very fine line, some may contend. But it is that very same fine line which the usurers of Arabia were also unable to appreciate, and it is on the basis of that very same fine line that Allah declared the permissibility of the one and unlawfulness of the other. Mistakes like these, while regrettable, are bound to be made when complex matters of Islamic law are subjected to amateur speculation.

Another favourite analogy that is that of the drop of urine. It reveals the inability to appreciate the dynamic realism inherent in the Shari’ah, and the proclivity to fill the void of unawareness with what passes for common sense. The contamination of water was always a looming possibility, and for this reason the Shari’ah instituted a rule, enshrined in the Sunnah, that renders contamination inconsequential provided the water reaches a certain volume. Thus, much as this might irk the squeamish ones among us, a certain quantity of zamzam containing a minute droplet of urine would be both usable and potable.

Discussions around Shari’ah compliance almost invariably involve “the bigger picture”: the world economy, the nature of money, social justice the eradication of poverty. Each of these is an objective worthy of high praise, and that they regularly feature on the agenda in Muslim discussions is something to be proud of. In this respect Mr Hassen’s article is no exception. But what tends often to be sacrificed in our passion for bigger-picture issues is a few simple realities.

Set aside for the moment the financing side of banking (i.e. the purchasing of houses and cars) and focus just upon transactional banking (which is where we operate savings and current accounts). Does my passion for revolutionizing the present riba-based economy mean that I need not have any care about the fact that I am involved in a blatantly riba transaction with a bank (because that is exactly what a conventional banking account is)? Does a zeal for social justice and eradicating poverty legitimize involvement (even if only contractually so) in unmitigated riba?


Contemporary banking

What does contemporary Islamic banking offer? It does not—and indeed cannot—claim to be the answer to the prayers of those who seek to revolutionize the world’s economy, revert to bi-metallic currency or eradicate poverty. But while it makes no claims of the macro-economic sort, it certainly does offer the conscientious Muslim the opportunity to bring at least some of his contractual dealings into line with Shari’ah.

The avoidance of interest is undeniably the most important cornerstone of our commercial law, but to imagine that it stops right there would be an act of self-deception. Each and every commercial contract—be it a taxi fare, operating a bank account, purchasing a house, or selling insurance—is governed by the Shari’ah, and it is only our ignorance that makes us oblivious to this fact. That so many of us persist in maintaining riba-based banking accounts, immaterial of whether we take the interest or not, speaks eloquently of this ignorance.

The stark paradox formed between this inveterate opposition to riba on the one hand, and the mindless persistence in usurious contracts (such as maintaining a conventional banking account, purchasing assets through a bank conventionally, and taking out conventional insurance) on the other, is probably symbolic of the confusion which the present day Muslim experiences between the ideals of his religion and the conventions of life as he finds it.


Balance
The balance that he needs to strike is to some so elusive that they simply give up and indulge with abandon. Others theorize and conjecture, but often fail to realize their own indulgence, albeit only partial. And where they do realize it they more often than not justify it by pleading a compliance degree of only 98% and not 100%.

To reiterate, contemporary Islamic banking is not going to give you the higher ideals of economic overhaul and monetary reform, and most certainly not overnight. But failure to realize those lofty ideals in the short term does not absolve anyone from bringing into line with Shari’ah all those aspects of his commercial life that are under his control.

Our Deen has a mission, and part of that mission is to bring economic betterment to the world. While the frequency with which the refrain of resistance to riba recurs is reassuring, it is perhaps also time that a few steps be taken in the right direction. The macro-economic objectives will continue to loom on the horizon for now, but our collective journey towards realizing them might perhaps begin by taking a few right steps in the desired direction. What is on offer in contemporary Islamic banking is not those higher ideals themselves, but a few simple steps through which that much vaunted journey might eventually begin. VOC