Ash-Shaikh H. Abdul Nazar

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SPEECH MADE BY ASH-SHAIKH H. ABDUL NAZAR,
GENERAL SECRETARY OF ALL CEYLON JAMIYYATHUL ULAMA
ON THE OCCASION OF THE LAUNCH OF
BARAKAH ISLAMIC FINANCIAL SERVICES
AT HOTEL GALADARI ON 18.07.2007



In this very fine evening on the occasion of launching the Barakah Islamic Financial Services, which has assembled people from different walks of life who play central roles in terms of religion, culture, education, economy, trade, banking, etc., it is with pleasure and honour that I associate myself with you especially to share my views and thoughts on “Islamic Economics and Banking”.

It is a well-known fact that Islamic Economics started developing just after World War II when a large number of Muslim countries gained independence from colonial rule. Muslims who were under imperialism were indeed unable to carry out their business activities, standing within the ambit of Islamic Shari’ah. The usury-based economic theory was imposed on Muslims as on others. Muslims, who were free to observe worship properly, were finding it extremely difficult to follow Islamic rules and values in trade and transaction. The whole scenario drove the Muslims who got freedom from the colonists to contemplate independent Islamic Economics.

Al-Qur’an and As-Sunnah had spelled out the basics of economics and the scholars who interpreted them, propounded various economic theories. The celebrated Islamic Jurists put forward numerous economic theories; each separately. When they segmented Islamic Jurisprudence into four; namely worships (Ibaadaat), transactions (Muamalaat), marriages (Munaakahaat) and crimes (Jinaayaat), they gave the second place to Islamic Economics. Trade, barter, sale for deferred payment, buying in advance, pawning, lending, loan, partnership, cost + profit, investment, leasing, crop sharing - a list of topics as long as Chinese Great Wall has taken an enormous space in Islamic Jurisprudence treatises. Nevertheless, they were not known as an independent discipline in the name of Islamic Economics due to the fact that there was no need for this during their period.

The world that keeps on modernizing sees new theories in academic fields too. As a result, a branch of a science in the past has now emerged as a separate discipline. In the same vein, economics; a subsection of Islamic Jurisprudence (Fiqh) at one time became an independent science under the name of Islamic Economics.

In order to reconstruct themselves, the nations that encountered huge loss and severe setback economically in World War II, began to seriously ponder on investments. At this time the Muslim scholars of that era showed a great deal of interest in introducing to the Muslim countries that had just cast off the chain of slavery, the mode of investment in the form of partnership on the basis of sharing the profit and loss in proportion to the percentage of the shared capital each partner put up, thereby introducing an interest-free joint venture to the conventional banks based on interest. The well-known scholars Anwar Quraishi, Nayeem Siddeeqi, Mahmood Ahmad and Muhammad Hameedullah were the first to deal with the subject in late 1940s. In 1950s Moulana Abul A’la Al-Moudoodi advocated this concept. The contribution of the eminent scholar Muhammad Hameedullah in this respect is very great. In 1944, 1955, 1957 and 1962 he generously wrote on this subject. The first book exclusively on this subject was authored by Muhammad Uzair in 1955. This was followed by another set of works written by Abdullah Al-Arabi, Najaatullah Siddeeqi, An-Najjar and Baqir As-Sadr in late1960s and early 1970s.

1970s is the period during which Islamic Economics which had been so far an individual idea of scholars was institutionalized. The Conference of Finance Ministers of the Islamic Countries was held in Karachi in 1970 in this respect. Interestingly the First International Conference on Islamic Economics took place in Holy Makkah in 1976 and this conference was attended by over 200 economists, scholars and social scientists from all over the globe. It is recorded that this First International Conference which was a turning-point paved the way for further talks and writings and high level discussions on the concept of Islamic Economics at a more professional level. This was followed by the International Economic Conference held in London in 1977.

All these mammoth efforts never fizzled out. In fact they were the spadework as a result of which, the concept of Islamic Economics materialized and Islamic Banks were established. Nasir Social Bank was the first of such banks formed in 1972 in Egypt. Then followed Dubai Islamic Bank in 1975. Thereafter Faisal Islamic Bank was set up in Egypt and Sudan in 1977 and in the same year the Government of Kuwait founded Kuwait Finance House. At present the number of Islamic Banking and financial institutions has exceeded 200. Most of them are based in Muslim countries and some are found in Western European countries such as Denmark, Luxemburg, Switzerland and the U.K. In 1981 the Governments of Pakistan and Iran introduced non-interest banking system by legislation.

The Asian countries also gave thought to Islamic Banking and Finance. In consequence, there also institutions of this nature are on the increase. The perfect example is our beloved motherland wherein you can easily find about 6 - 7 institutions. Today a new member is joining the Islamic banking industry in Sri Lanka but in the world with high spirit and good intention of providing Islamic banking and financial services.

We are indeed very grateful to the present and past governments of Sri Lanka for having brought necessary amendment to the Banking Act, enabling individuals to form institutions offering Islamic banking and financial services. But still they cannot operate as banks. Therefore, we all earnestly appeal to His Excellency the President, the Cabinet and Parliament to bring legislation for these institutions to run as banks. The present Islamic banking institutions have already proved to the Government that the Islamic banking industry is highly practicable in all aspects, particularly in terms of economy, banking and investment opportunities. If necessary, the Central Bank of Sri Lanka can do a survey to compile a report with evaluation on such Islamic banking institutions in existence in Sri Lanka.

It should be borne in mind that the Islamic Banking is nascent not only in Sri Lanka but also all over the world. It, therefore, needs further studies and discussions with analytical and practical views in a manner that would make Islamic economics more comprehensible and interesting for the ordinary educated since Islamic economics is a common discipline for all human beings. It also requires intellectuals and researchers conversant with the Shari’ah Sciences to make concerted endeavours to keep on examining the material relevant to Islamic economics found in the sources of Islam.

Let me conclude by warmly wishing Barakah Islamic Financial Services all success and Barakah.

Thank you.

 

 

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