Reflections on the philosophy of Islamic banking

There are hundreds of banks and mutual funds everywhere acting in accordance with the main beliefs of Islam
Reflections on the philosophy of Islamic banking
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Islamic investment or sharia-acquiescent economics (Biancone& Radwan, 2014) is bankrolling economic activity that acts in accordancewith Islamic ruling and its applied submission through the development ofnature and significance of Islamic economics. Mudarabah (allocation of profitsand manner of losses), Wadiah (security), Musharaka (cooperative speculation),Ijara (renting), and Murabahah (cost-plus) are some of the styles of Islamicbanking. The prohibition of interest is an essential attribute of Islamicbanking which set it poles apart from the conventional mode of banking (Lewis& Algaoud., 2001). Islamic law or Sharia rule connotes a law that is byheart and spirit religious constituent of our Islamic belief. It is an offshootof our religious canons, especially Quran and Hadith. In Arabic terminology, itpoints towards Allah's immutable divine law which is contrasted with Fiqh(Esposito, 2009). History is witness to the fact that in order to preventun-Islamic deeds and Islamic identity, it has been functional in changingamounts as far as Muslim or Islamic world is concerned.

The pedigree of Islamic identity lies in all those giantaspects which form the basis of Islam and Islamic behavior together with mostimportant mechanisms by which the outlook or conviction of a Muslim towards hiscreator, himself, environment, and society are governed. Ever since the genesisof history, these gigantic characteristics empower a Muslim devotee to react,retort and provide a solution to the most essential animate and livelyinquiries which perplex or baffle the human mind coupled with inauguratingnew-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 lifehere is not the end and only a means to eternal life (hereafter). As part ofthe revitalization and retreat of Islamic identity, in contemporary times, manyIslamic financial institutions were fashioned to spread over ideologies andcanons of renaissance and evacuation of Islamic character to private orsemi-private marketable institutes within the Muslim society. There are hundredsof banks and mutual funds everywhere acting in accordance with the main beliefsof Islam. Determined in the Gulf countries, Sharia-obedient financialinstitutions characterized almost 1% of total world assets (Towe et al, 2015).Even though Islamic banking is a very insignificant portion of the bankingassets of Muslims, meanwhile its commencement the graph has been continuouslyon the rise, and is anticipated to remain so.

Conclusion

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

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

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