Reflections on the philosophy of Islamic banking

Islamic investment or sharia-acquiescent economics (Biancone & Radwan, 2014) is bankrolling economic activity that acts in accordance with Islamic ruling and its applied submission through the development of nature and significance of Islamic economics. Mudarabah (allocation of profits and manner of losses), Wadiah (security), Musharaka (cooperative speculation), Ijara (renting), and Murabahah (cost-plus) are some of the styles of Islamic banking. The prohibition of interest is an essential attribute of Islamic banking which set it poles apart from the conventional mode of banking (Lewis & Algaoud., 2001). Islamic law or Sharia rule connotes a law that is by heart and spirit religious constituent of our Islamic belief. It is an offshoot of our religious canons, especially Quran and Hadith. In Arabic terminology, it points towards Allah’s immutable divine law which is contrasted with Fiqh (Esposito, 2009). History is witness to the fact that in order to prevent un-Islamic deeds and Islamic identity, it has been functional in changing amounts as far as Muslim or Islamic world is concerned.

The pedigree of Islamic identity lies in all those giant aspects which form the basis of Islam and Islamic behavior together with most important mechanisms by which the outlook or conviction of a Muslim towards his creator, himself, environment, and society are governed. Ever since the genesis of history, these gigantic characteristics empower a Muslim devotee to react, retort and provide a solution to the most essential animate and lively inquiries which perplex or baffle the human mind coupled with inaugurating new-fangled empires of our mind which rise above material human life. Additionally, the uncovering of the existential queries such as who are we? What is our drive in life? Where we are going? etc. ease the sickening souls, the impoverished, the deprived, the parted ones who are guaranteed that life here is not the end and only a means to eternal life (hereafter). As part of the revitalization and retreat of Islamic identity, in contemporary times, many Islamic financial institutions were fashioned to spread over ideologies and canons of renaissance and evacuation of Islamic character to private or semi-private marketable institutes within the Muslim society. There are hundreds of banks and mutual funds everywhere acting in accordance with the main beliefs of Islam. Determined in the Gulf countries, Sharia-obedient financial institutions characterized almost 1% of total world assets (Towe et al, 2015). Even though Islamic banking is a very insignificant portion of the banking assets of Muslims, meanwhile its commencement the graph has been continuously on the rise, and is anticipated to remain so.

Conclusion

Islamic banking has been singing the praises of investments in accordance with Islamic ruling and glorified for going back to the track of heavenly leadership and rebuffing the radical and economic ascendency of the Western part of the world (Usmani, 1998). In addition, it is well-known as the utmost noticeable spot or blot of Islamic renaissance and Islamic revivalism (Omar, 2009). The theorists and passionate supporters demand and assure at the same time stability in macroeconomic variables with no price rises, no corruption, no parallel or black economy, no unemployment, and no poverty as soon as it is completely applied (Khan, 2015). But, that does not mean it has not faced any eccentric point of view or criticism for not generating more ethical and all-inclusive approaches of investment (Akram, 2013). Why Islamic banking has not attracted much of the world? It is because of the fact that Muslims failed to understand the basic philosophy underlying Islamic banking. The need of the hour is henceforth an inquiry into the nature, causes, and significance of Islamic banking.

Binish Qadri is ICSSR Doctoral Fellow, Department of Economics, Central University of Kashmir, Guest Faculty, NIFT, Srinagar.