Islamic banking aims at meeting needs of faithful: Abu Ghuda

Zainab Al Ansariah

MUSCAT The Islamic banking system is an attempt to return to the Islamic civilisation, which still has its impact in all fields in the western and eastern countries, according to Sheikh Dr Abdulsatar Abu Ghuda, who is specialised in the field of jurisprudence as the chairman of legitimacy monitoring in a number of financial Islamic authorities.

Abu Ghuda, who works at Makased Company for Islamic Financial consultations, said in an Oman Tribue interview that money is not the goal but it is a means to a better life. “The Islamic banking system is a national product that comes from the civilisation of Muslims and meets the requirements of people,” he said.

Islamic banking is not replacing the expression ‘interest’ with another expression but it has its own rules and principles according to the Sharia and everyone should understand that it is not a matter of expression or title but a matter of content and rules. The Islamic bank is not a bank, which raises the title of Islamic bank, but a bank, which follows the legal regulations, he said.

The traditional banks charge ‘interest’ when a customer takes a loan, but in that loan the bank does not take a risk while the person who takes the loan has to pay additional amount in case of delay in making payments. Therefore, in this case, the bank takes more than what is worth, he said.

In the Islamic banking system, the profit is known before sanctioning a loan, and no additional payments will be added once the loan deal is signed. Thus, it is clear to everyone that the traditional bank charges progressive interest for the loan, while in the Islamic system the relation between the bank and the customer is a partnership, which follows the system of ‘profitability’.

Sheikh Abdulsatar Al Qatan, director-general of Shura Company for legitimated consultations in Kuwait and a member of Fatwa and legal supervision in number of Islamic financial companies and institutions, gave another example for the Islamic banking system to clear people’s doubt on the issue.

“When a person applies for a loan from a bank to buy or rent a house, the bank has an option to buy the house and sell it to that person and ask him to pay in instalments as per the profitability system.”

Al Qatan added that in this transaction the customer knows all the financial details and knows the interest figure. Also the bank can sell the house through ‘renting system’ in which it rents the house to the customer for a certain period of time, which will be ended by transferring the ownership to the customer.

In the above example of Islamic banking deals, there is a commodity, the house. Its price is known and so are the instalments for the two parties, thus making it a profitable deal.

The Islamic bank also offers many services, for example, if a company requires finance to meet its capital, the bank enters into a partnership deal with the company in which the bank finances the company with known amount of money, and gains a portion of profit from the company while the additional profits will go to the company itself.

MMU To Explore Islamic Banking In Kashmir

Srinagar, Dec 27: Islamic scholars and clerics of Jammu and Kashmir Tuesday decided to organize a united and collective response to the problems facing the community in the Muslim majority state. Decision to the effect was taken at an extraordinary meeting of the newly formed Muttahida Majlis-e-Ulema (United Council of Scholars) presided over by Mirwaiz Umar Farooq at Mirwaiz Manzil here.

As a first major step towards protection of faith against various onslaughts, a website, was launched by the Mirwaiz. Making use of modern technology, the website will boost the efforts to counter anti-Islamic activities, particularly those aimed at induced conversions.

Speaking at the meeting, Mirwaiz underscored the need to utilize technology and modern means of communication to “counter conversion attempts”. However, he made it clear that the movement for protection of faith was not against any minority community.

It may be recalled that a pastor was arrested recently on charges of converting seven Kashmiri youths to Christianity after its video clip went viral on social networking sites.

Mirwaiz said while the Islamic system of Baitul Maal (community financial institution) needed to be strengthened, earnest efforts were urgently required to be made to introduce Islamic banking in Kashmir. He urged the Reserve Bank of India and those associated with the banking system to play a positive role in removing various impediments in having the Islamic banking system here.

He said committees of financial experts would be formed to explore the possibilities of introducing Islamic banking in Muslim majority Jammu and Kashmir.

“The economic crisis in the United States and several European countries are because of the unbridled spending which has increased their debt liabilities. This has led economists all over the world revisit their financing systems and they have realized that Islamic system was the best for mankind,” Mirwaiz said.

Mirwaiz, who is also the chairman of his faction of Hurriyat Conference, expressed concern over the activities of Christian missionaries. “We should strive for creating Baitul Maal, to help the needy among us,” he said,

Expressing serious concern over the conspiracies to promote liquor sale in the valley, Mirwaiz demanded immediate cancellation of the licenses issued to some vendors either openly or clandestinely. “We will initiate steps under the Right to Information Act to identity such elements and liquor dealers,” he said.

He also appealed to religious scholars and preachers to play part in religious teachings and creating awareness about the fundamental tenets of Islam based on the Qur’an and the sayings of holy Prophet Muhammad (pbuh).

Darul Uloom Raheemiah proctor, Maulana Rahmatullah, urged the entire Muslim community to make a joint effort to counter the anti-Islamic and anti-Muslim activities of various elements. He voiced concern over the statement of a Minority Commission team after its visit to the valley recently, adding the MMU efforts were not against any minority community in the state.

Speakers at the meeting were unanimous in their resolve to unite the Muslim community on the basis of the commonality of faith. All the religious, social, charitable, educational and welfare organizations would pool their energies for the purpose.

Those present in the meeting included Sheikh-ul-Hadees, Darul Uloom Raheemiah, Mufti Nazir Ahmad Qasmi, Ittehadul Muslimeen patron, Maulana Muhammad Abbas Ansari, Jama’at-e-Islami’s advocate Zahid Ali, Jami’at-e-Ahli Hadees general-secretary, Abdur Rahman Bhat, Karvani Islami chief, Ghulam Rasool Hami, besides scholars, clerics and delegates from Jammu, Doda, Poonch, Rajouri, Banihal, and other areas of the region, and from all the valley districts.

CWG, Infosys unveil next-generation banking software

ONE of the software solutions providers in the country, Computer Warehouse Group in collaboration with Infosys, have introduced the Finacle version 10, the next-generation solution for banking transformation.

However, Finacle 10 is a universal banking solution that addresses the core banking, customer relationship management, treasury, wealth management, consumer and corporate e-banking, mobile banking, financial inclusion and Islamic banking requirements of universal, retail and corporate banks globally.

According to Infosys, , the solution which is currently being used by about 14 financial institutions in the country, goes beyond technology enablement to empowering bankers with a holistic and integrated methodology to develop improved capabilities and build a stronger and more resilient business organisation.

Meanwhile, the Managing Director of Computer Warehouse Group, Mr Austin Okere while speaking to IT Journalists during a press conference last week in Lagos said that : “Finacle core banking solution is a comprehensive, integrated yet modular business solution that effectively addresses the strategic day-to-day challenges faced by banks.

It is highly parameterisable providing that much-needed flexibility to innovate and adapt to a dynamic environment.

According to him, “With Finacle core banking solution, banks can meet the challenges of managing change, competition, compliance and customer demands effectively. The solution provides banking customers real time access to banking services across channels making it a true multi-channel solution.”

Also speaking, the Vice President and Global Head, Client Services at Infosys, Mr Sanat Rao said for financial inclusion in much of the emerging market economies to become reality, a lot of banks need to change their core banking systems, adding that technology will be the greatest differentiator in this.

“The way people leverage technology has changed massively; any bank that doesn’t realise this will be left behind. Globally, the number of mobile phones and tablets sold locally are more than the number of PCs” he said .

“This tells us that the whole means of communication and doing business has changed both in advanced and emerging markets. While many people may not have access to banking facilities, the fact that they own mobile phones, they can perform banking transactions.”

Oman: Islamic banks eye 20pc share

MUSCAT — Economist and academic researcher Dr Nasser al Mawali expects that Islamic banks — that are expected to start their activity for the first time in the Sultanate at the beginning of next year — will acquire about 20 per cent of the domestic market of the banking sector in the Sultanate during the next three years.

He pointed out that the rate of growth of the assets of Islamic banks in the Sultanate is expected to range between 15 to 20 per cent annually, which is in line with the global rates. Dr Al Mawali, Assistant Professor in International Economics at SQU and Secretary of Omani Economic Association, said that some commercial banks in the Sultanate are excepted to be transferred to Islamic banks entirely if they get the necessary permits as happened in some neighbouring countries.

He emphasised that the presence of Islamic and traditional banks in the domestic market promotes competition among them and contribute in finding alternatives and multiple options of financing and customer service especially for small businesses that suffer from poor funding.

Dr Al Mawali monitored many challenges Islamic banking faces globally like competition from traditional banks, the shallowness of capital market, limited areas of investment and weaknesses in qualified human resources capable of developing the jurisprudence of transactions.

Dr Al Mawali said the presence of Islamic banks in the Sultanate is a promising opportunity for the growing Omani economy. So His Majesty ordered establishment of Islamic banks as well as allowing commercial banks to open windows in response to the requirements of the current phase of the banking industry and to keep pace with the challenges of globalisation and requirements.

Islamic banks in the Sultanate will have significant added value to the banking sector as it will open up broad prospects for financing that is different from the traditional way, and gives banks the opportunity to offer new tools and products compatible with the Islamic law.

An Islamic bank follows the Islamic law in all the banking transactions that are based on loss and gain. Some may look at Islamic banks as charity associations but in fact they are profit institutions that deal with tools and products compatible to the Islamic law.

The idea of Islamic banks appeared in 1941 in Malaysia when the government issued simple bonds that do not apply interests in its system.

In 1950 fund savings appeared in Pakistan following the same way, and then Dr Ahmed al Najar founded a saving bank in Egypt in 1963 followed by the establishment of Nasir Social Bank, that was founded by the late Egyptian leader Jamal Abdel Nasir, which was intended to help the needy students and others.

During the following years the idea developed to establish the Islamic Development Bank under the guidance of the foreign ministers of Muslim countries in 1974 that aim to finance government development projects in Muslim countries.

The Sultanate has instinctive elements to embrace Islamic banking, if the proper environment was harnessed to this service. The environment is represented in the government, banks and individuals.

The government has the biggest role in creating appropriate legal and regulatory environment to ensure full compliance by all Islamic banks in the Sultanate of the regulations of Islamic banking.

The government has also to ensure that all banks applying the International Islamic Fiqh Academy standards and the standards of the Accounting and Auditing Organisation in financial institutions.

The Islamic banks can overcome fierce competition from traditional banks and they can keep pace with the needs and legitimate financial innovations. The founders of these banks have to believe that the ultimate goal of these banks is to achieve the purposes of the law and not just profit, and these institutions must involve in the global banking system such as Basel 2

Iran's Finance Minister World Economy Should Shift To Islamic Finance

WASHINGTON (Dow Jones)–The international economy should shift toward new models like Islamic finance to avoid periods of instability like the European debt crisis, Iranian Foreign Minister Seyed Shamseddin Hosseini said Friday at an International Monetary Fund meeting in Washington.

“The current architecture of the world’s economy, due to inconsistency between the financial and the real sectors, creates unavoidable periodical instabilities,” Hosseini said.

Hosseini also criticized sanctions against Iran as unfair and said the IMF only “pursues the political will of some certain shareholders.”

Hosseini also said Iran is making changes to foster greater economic productivity including changing its constitution to give the private sector and non-governmental organizations a greater role. Iran is also making changes to customs rules, taxes, currency denominations and the banking system, Hosseini said.

–By Jamila Trindle, Dow Jones Newswires; 202-862-6684; [email protected]