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.
