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.