Assalamualikum
A few months ago, my sister, who is also my accountant, came to me asking, "Can we move all our bank accounts to an Islamic Bank?". I responded, "Why? Islamic Banks, in substance, are the same as conventional banks". I relented because she pleaded, "Humour me. They say it's Islamic and the authorities (Ulamas) don't say otherwise. As a Muslim, I feel obliged to choose the Islamic alternative since it's available".
I know many of us would take the same stand as my sister. As for me, I just can't shut my brain. I can state categorically that all Islamic Banking products, in substance, mimic Conventional Banking. For instance, for housing loans, they say that they do it on a buying and selling basis i.e. the bank buys the house from the developer and sells it to the purchaser/borrower at a profit. The profit amount is being computed in exactly the same manner as you would compute interest on a term loan in conventional banking. The buying and selling is of course, pseudo, because it doesn't attract stamp duty or taxes. In a nutshell, in prevailing Islamic Banking practices, they change the term, "interest", to "profit", and they give the product an Arabic name and they call it Islamic. To me it's a blatant lie!
I am citing this as an example of the inadequacies of Ulamas to "guide us on all matters". As argued in the book "Crisis in the Muslim Mind", the role of the Ulama has been reduced to matters of Fiqh and familial matters. Not enough emphasis has been placed on coming out with genuine Islamic knowledge in the areas of social sciences and muamalat.
And, dare I say, our minds have been atrophied due to disuse?
The Islamic Banking concept of Murabaha is predicated on the Quranic/Hadith postulation that "Riba is prohibited but trade (buying & selling) is encouraged". Sure, we have a "willing-buyer willing-seller" situation and the fact that the profit earned by the bank is the same as it would if he were to charge interest is a mere coincidence. But who are we trying to kid? Aren't we perpetuating the institution of interest? In fact, interest is not the most harmful element in contemporary banking. We should be more concerned about the practice of fractional reserve banking, which religious texts do not specifically address, which makes the quantity of money in the system to be arbitrary.
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