Why we have need to use the word Islamic as prefix before Economics, Business, Banking, Finance, Marketing, Management etc.? The answer is that unfortunately the Muslim Ummah turned from the long slumber of centuries due to the international downfall. Over the period of few centuries, the secular and western theories and practices were formulated and imposed upon the world in wise manner.
Due to the brutal behavior of Church in the West, the people raise the voice against the Church and Enlightenment Movement of the seventeenth and eighteenth centuries refused any religious interference in the management of human affairs. When the religious guidelines were rejected, the management of human affairs was controlled by the persons who have monetary and political influence into the society. Therefore, like all other social sectors, the economic sector and its policies were also controlled by these persons. The banking is a part of conventional economic framework and follows the conventional economic principles and rules.
We must see the condition and overview of Islamic World at the same time when Enlightenment Movement and banking industry were being flourished in the West. Unfortunately Muslim Ummah was taking the last breath of sovereignty and held by the West along with their socio-economic policies.
When the Muslim Ummah will regain power in the mid of twentieth century, the Muslims think to implement socio-economic system of Islam but unfortunately, the interest based economic and banking system was deeply rooted in the world that could not be removed overnight. The Muslims have been striving to get rid of interest based system and now we see the result of these struggles in the form of modern Islamic banking and finance practices.
When we talk, discuss and use the terms and concepts of Islamic Economics, Banking, Business & Finance, the people generally seem and think that we are talking about something new into the present socio-economic scenario and seem unusual and unnatural concepts, methods, procedures and policies.
The reality is absolutely different. These are not the new and strange concepts in a real sense but these are the methods and modes that we are using in our daily and routine life but when we are applying these modes and methods in prevalent economics, banking and finance field, we feel that these are new concepts. We do sale, rental and partnership based transactions but when we move to the practices of monetary management, money supply, banking and finance, the people seem these practices as strange concepts.
The reason of this thinking is that we are used to this interest-based banking and financial system. The interest has become the norm of the present day financial system. That is why, when Islamic banking and finance system is presented before us, we feel that this is strange system.
To evaluate the practices of the secular socio-economic system to consider as right or wrong, we must think about two matters as below:
First, being a Muslim, we must know and understand the Islamic teachings about economics. It is mandatory for any Muslim to know these teachings while making transactions with each other. Otherwise, one can easily involve in prohibited transactions because we are living in the world in which the socio-economic practices are almost prohibited from Islamic posture. When we know the Islamic teachings, we would clear about what is right and what is wrong. The conventional banks have its foundation on secular economics and thought that has not any concern from the revelation or religion. The western secular thought has a view that the religion must not be interfered in socio-economic matters. Being a Muslim, we cannot follow the guidelines and system other than the guidelines and system as ordered by Almighty Allah. When conventional banking is based upon manmade principles and not on revelation, the transactions and mechanisms are formulated that are prohibited in Islam. Therefore, Muslims cannot do and follow the transactions and mechanisms in this respect as these are repugnant to Islam like interest based transactions, gambling etc.
Second, we must think about the objectives of the society. We can easily think that the best socio-economic policy is the one that leads to social welfare and equitable distribution of wealth. When we evaluate the system whether it is capable to achieve the certain objectives, we may easily come to the point that the whole socio-economic system is favorable for the particular segment of the society i.e. capitalists because it is the system in which the capitalist earns more and more money from the weapon of interest by unfair and unnatural means. When conventional economics rejects revelation, it is a general phenomenon that the policy makers formulate policies and mechanism keeping in view their vested interests. On the other hand, Islamic economics, banking and finance system is based upon the rules and principles as given and ordered by Almighty Allah keeping in view the interest of the whole society without extending undue benefit to the particular segment of the society. Islam closes and bans all ways that lead to exploitation to anybody into the society. Therefore, if we want to establish socio-economic welfare state, we must opt for Islamic socio-economic system in the real sense.
When we think in this respect as mentioned above, we can clear our concepts and mind and adopt the best that Islam teaches us.
[box type=”note” align=”” class=”” width=””]The writer is Team Leader-Training & Development Unit, Shariah Compliance Department, National Bank of Pakistan[/box]