Introduction to Islamic Banking and Finance. M Kabir Hassan

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СКАЧАТЬ Table 10.3.Simulation of wealth redistribution under the Zakat system

       Table 10.4.Simulation of wealth redistribution under Zakat with growth

       Table 10.5.Proposed poverty alleviation framework

       Table 12.1.Credit services by financial sector and banks in OIC

       Table 12.2.Savings–investment gap in selected OIC countries

       Table 12.3.Account penetration in selected OIC countries

PART I

Chapter 1

       Introduction to Islamic Finance

       1.1Normative Foundations of Productive Enterprise in Islam

       1.1.1Emphasis on economic pursuits

      We start with a discussion on how Islamic teachings guide in the quest to earn a livelihood. Islamic principles inspire individuals to make an effort for Halal means of earning as long as they refrain from the prohibited means and ways of earning, such as Riba (interest),¹ bribery,² fraud,³ Maysir (gambling),⁴ theft,⁵ the trade of intoxicants,⁶ and prostitution.⁷ In general, excluding the above and similar modes of earning incomes, the Qur’an permits mutually beneficial and voluntary exchange.⁸ As per Islamic principles, endowments granted by Allah are to be used for personal use as well as for societal causes to earn Falah (welfare in this world and hereafter). Prophet Muhammad (pbuh) said, The truthful and trustworthy businessman will be in the company of Prophets, saints and martyrs on the Day of Judgment.⁹

      Islamic teachings compel one to avoid idleness and dependence on others without becoming part of the labour force or engaging in entrepreneurship. Prophet Muhammad (pbuh) said, For one of you to go out early to gather firewood and carry it on his back so that he can give charity from it and be free of need from the people, is better for him than to ask a man who may give that to him or refuse. Indeed, the upper hand (giving) is more virtuous than the lower hand (receiving), and begin with (those who are) your dependents.¹⁰ In yet another Hadith, Prophet Muhammad (pbuh) explained, The upper hand is better than the lower hand, and the upper hand is the one that spends, and the lower hand is the one that asks.¹¹ Prophet Muhammad (pbuh) said that begging is not allowed for the physically fit and rich persons except for those who are facing extreme poverty or indebtedness.¹²

       1.1.2Filter of Halal (permissible) and Haram (impermissible) in productive enterprise

      This section discusses the Islamic guidelines for the consumption behaviour of individuals. These teachings are also relevant for firms to ensure that their product offerings, marketing strategies and sales promotions are consistent with Islamic teachings. Islamic teachings make a distinction between allowable (Halal) and non-allowable (Haram) goods and services. The Qur’an says . . . Eat of that which is lawful and good on the earth . . .¹³ Therefore, the consumer would only make a choice among Halal consumption goods and Halal investment products. For instance, Islam forbids intoxicants like alcohol or drugs.¹⁴ In financial services, Islam forbids Riba (interest)¹⁵ and Maysir (gambling),¹⁶ for instance.

      Islamic juristic experts have classified needs in a hierarchical structure. Al-Raysuni states that Imam Al-Shatibi has classified needs into three categories, i.e. (i) Necessities (Dharuriyah), (ii) Conveniences (Hajiyah), and (iii) Refinements (Tahsiniyah).¹⁷ In the hierarchical structure of needs espoused by Imam Al-Shatibi, necessities include such things and activities that are vital to safeguard (i) Faith (Iman), (ii) Life (Nafs), (iii) Wealth (Mal), (iv) Intellect (Aqal), and (v) Progeny (Nasl).¹⁸

       1.1.3Islamic teachings governing conduct of producer

      In the Islamic social framework, wealth inequality does not imply that one segment of the population has any superiority over the other segment of the population. Wealth inequality is only meant to test gratitude, forbearance and fairness in socio-economic relations and exchanges. The Qur’an says: Is it they who would portion out the Mercy of your Lord? It is We Who portion out between them their livelihood in this world, and We raised some of them above others in ranks, so that some may employ others in their work. But the Mercy (Paradise) of your Lord (O Muhammad — PBUH) is better than the (wealth of this world) which they amass.¹⁹

      Islam permits trade, but warns people to refrain from exploitation, unfairness and deceit. The Qur’an says: Do not devour one another’s property wrongfully, nor throw it before the judges in order to devour a portion of other’s property sinfully and knowingly.²⁰ In another verse, the Qur’an says: Do not devour another’s property wrongfully — unless it is by trade based on mutual consent.²¹

      Islamic teachings on commercial trade strongly prescribe observing fairness in economic exchange. The Qur’an says: And measure full when you measure. And weigh with an even balance. This is better and its end is good.²² In another verse, the Qur’an says: Woe to those that deal in fraud, those who, when they have to receive by measure from men, exact full measure, but, when they have to give by measure or weight to men, give less than due. Do they not think that they will be called to account?²³ Moreover, Islam stresses on completing terms of the contracts in letter and spirit in commercial contracts. The Qur’an says: O you who believe! Fulfil [your] obligations.²⁴

      Islam permits the motive to earn profit and using the earned profits for consumption and investment. Nonetheless, Islamic teachings discourage wealth accumulation. The Qur’an says: They who hoard up gold and silver and spend it not in the way of Allah, unto them give tidings (O Muhammad) of a painful doom.²⁵

      Islamic teachings on commercial trade condemn taking false oaths in order to deceive people. The Qur’an says: You resort to oaths as instruments of mutual deceit, so that a person might take greater advantage than another; although, Allah puts you to the test through this. Surely, on the Day of Resurrection, He will make clear the truth concerning the matters over which you differed.²⁶

      In intertemporal trade and commerce, Islam encourages recording the terms of the contract in order to diminish the risk of ambiguity, conflicts and misunderstandings. The Qur’an says: O Believers! Whenever you lend money for a particular period, write and someone among you must write it justly. And the one who can write must not refuse.²⁷

      Islamic principles of commercial trade permit transactions on credit, but denounce reneging on debt obligations. Prophet Muhammad (pbuh) said: Any, who takes out a loan, having resolved not to pay it back, will meet Allah as a thief. ²⁸

      Islamic principles of trade allow competitive bidding and bargaining, but suggest softness and gentleness in executing trade deals in order to avoid exploitation and undue advantage or disadvantage to others. Prophet Muhammad (pbuh) said: May Allah’s mercy be on him who is lenient in his buying, selling, and in demanding back his money [or debts].²⁹

      While selling goods, СКАЧАТЬ