Recently, the FDH bank Plc disclosed that it needs to introduce Islamic banking services in the country this year, 2023. Muslims in Malawi welcomed the idea saying it has come timely.
Lawyer, Silvester Ayyuba James commended FDH Bank for the gesture.
“… but I will have to migrate to FDH if this happens. As a Muslim, I have always felt discriminated that, in a secular state, I cannot access Islamic banking because some capitalists think the banking system is a threat to their selfish profit-making interests,” James says.
Meanwhile, Ayyuba James urged Muslims to support the bank for championing Islamic banking services in the country.
“I would also urge all fellow Muslims to support this initiative by FDH bank by migrating there and get their loans, as long the conditions indeed conform to Islamic banking norms,” the Lawyer wrote on his Facebook wall today.
WHAT IS ISLAMIC BANKING?
According to State Bank of Pakistan, Islamic banking is defined as banking system which is in consonance with the spirit, ethos and value system of Islam and governed by the principles laid down by Islamic Shariah.
“Interest free banking is a narrow concept denoting a number of banking instruments or operations which avoid interest. Islamic banking, the more general term, is based not only to avoid interest-based transactions prohibited in Islamic Shariah but also to avoid unethical and un-social practices,”
“In practical sense, Islamic Banking is the transformation of conventional money lending into transactions based on tangible assets and real services. The model of Islamic banking system leads towards the achievement of a system which helps achieve economic Prosperity,” says the bank.
WHAT IS THE PHILOSOPHY OF ISLAMIC BANKING ?
The State Bank of Pakistan says the philosophy of Islamic banking takes the lead from Islamic Shariah. According to Islamic Shariah, Islamic banking cannot deal in transactions involving interest/riba (an increase stipulated or sought over the principal of a loan or debt).
“Further, they cannot deal in the transactions having the element of Gharar or Maiser. Moreover, they cannot deal in any transaction, the subject matter of which is invalid (haram in the eyes of Islam). Islamic banks focus on generating returns through investment tools which are Shariah compliant as well,”
“Islamic Shariah links the gain on capital with its performance. Operating within the ambit of Shariah, the operations of Islamic banking are based on sharing the risk which may arise through trading and investment activities using contracts of various Islamic modes of finance,” says the bank.
WHAT ARE THE ADVANTAGES OF ISLAMIC BANKING?
According to Emirates Islamic, the following are some of the advantages of Islamic Banking:
(1) Justice and Fairness
The foundation of the Islamic Banking model is based on a profit-sharing principle, whereby the risk is shared by the bank and the customer. This system of financial intermediation contributes to a more equitable distribution of income and wealth.
(2) Banking for All
Although based on Shariah principles, Islamic Banking is not restricted to Muslims only and is available to non-Muslims as well.
Islamic Banking is about conducting business in a fair and transparent manner. Guiding you through to ensure full understanding of risks and costs associated with the products and services is the utmost prerogative.
(4) Ethical and Moral Dimensions
The strong ethical and moral dimensions of doing business and selecting business activities to be financed play an important role in promoting socially desirable investments and better individual or corporate behaviour.
(5) Discouraging Speculation
Speculative transactions are sources of instability and by nature is misallocation of capital. Islamic Banks are prohibited from carrying out such activities, rather focusing in deployment of capital to the real economy, to promote socio economic justice.