|slamic Banking & Finance with new Islamic Fatwas
ALLAH in the name of, the Most Affectionate, the Merciful.
‘Issues and problems in Islamic Banking’,
Kingston University of London,UK
Supervisor: Yiannies Anagnostopoulos’
Hafiz Muhammad Abubakr
‘Declaration’ I hereby solemnly declare that this dissertation has been carried out by me during the year 2010-2011 under the guidance and supervisor of ‘Yiannies Anagnostopoulos’’. The work itself is satisfactory and has not been previously submitted to any other institutes for any degree level or other qualifications to best knowledge and I provide all references at the end of my work.
Over the past several decades, Islamic Banking System has been steadily growing, as well as the importance of the Islamic Banking system for the economy of many countries. Recently, the attention given to the importance of Islamic Banking system in economic growth has significantly increased. Therefore, it is essential that this industry is managed through parameters that will help the stakeholders understand and plan for a better Islamic Banking development. This dissertation attempts to understand the issues and problems that Islamic Banking is facing in becoming a successful Banking industry. Moreover, this dissertation also investigates the issues and problems and impact of the rules of Islamic banking system, structure and activities focusing on banking supervision issues. It points out and discusses these issues within paradigm version of Islamic banking, as in frames that lie between paradigm version and traditional banking. The case of Islamic banks operating in a conventional system was also investigated. A careful consideration has been given specifically to the cooperation between public and private sectors in Islamic Law related matters. The study is supported by literature review related to Islamic background, Islamic Banking in Muslims and western countries.
First of all, I would like to say thanks to our Allah (Azwajallah) and Prophet Muhammad (Peace be upon him).
There are those close to home who contribute to the completion of a dissertation putting the author in a position to start, sustain and finish the dissertation. For this reason I would like to dedicate this dissertation to my Wife: Mrs Hafiz and Son: Mohammad Abdullah Attari who have supported me throughout the entire journey. Also, a huge respect goes to my family back home who have supported me morally especially to my Father and Mother who did not spare anything in offering the right support in the right time. I will never be able to thank you enough for the support you have given to me since the first day of my study.
My sincere appreciation also goes to my Saint Muhammad Ilyas Attar Qadri Rizvi and Mufti Ishfaq Ahmad Qadri Rizvi and His son, Imam Hafiz Jamel who have always been there for me in helping me in issuing Fatwas with the study and all others professionals who spent some extra time for me to give interviews and fill questionnaires.
Finally, I am very grateful I had as my project supervisor ‘Yiannies Anagnostopoulos’and I really enjoyed working with him, he sure did a great job of supervision to enable me get through with this project. When I told him about my project topic he liked it and his interest in it made the whole process easier than I ever imagined. Top of all is the advice and support she gave me which kept me on the right path all the way.
Front page & Declaration 0
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This is the first chapter of my dissertation topic ‘Issues and problems in Islamic Banking system’. In this chapter, we look at the objective, research question and structure of dissertation. Later on also look at some basic definitions of a term’ Islamic banking’ and the history of Islamic banking according to different researchers or writers and also discuss the main section in details which consist of ‘issues and problems in Islamic banking’. This chapter will further examine the growth of Islamic Banking system in the United Kingdom and in some other countries and also discuss issues surrounding Islamic Banking System.
This study aims to examine the ‘Issues and problems’ that Islamic banking is facing in becoming a successful banking sector, with a focus on the planning for Islamic banking development and on the cooperation between public and private sectors on Islamic banking matters.
This is achieved through the following objectives:
v Conducting primary research to examine community involvement (means Islamic scholars and professionals etc.) and using Quran and Hades in Islamic banking planning, and the level of awareness in community and taking government initiatives in increasing awareness regarding Islamic banking industry in all around the world.
v Undertaking primary research targeting Islamic banking industry stakeholders by face to face interviews and also uses some other techniques which I will discuss in chapter No.3in order to find out the level of the communication between the sectors and its importance in banking sector.
v Reviewing secondary literature such as journal articles, books, newspapers, government documents, websites from relevant and reputable bodies, and other secondary sources related to the Islamic baking development in the whole world.
v Focusing on the literature that is based particularly on co-operation between private and public sector regarding to solve ‘issues and problems in Islamic banking’ system.
v Develop an understanding on the challenges that Islamic banking system is facing in becoming a successful banking destination by analysing the primary research with secondary research in order to reach the conclusion and be able to make recommendations.
This dissertation will address the following research questions:
· What are the issues and problems that Islamic banking system is facing in developing a successful banking industry?
· Government’s role towards public and private cooperation in the banking related sector?
This report presents four chapters.
1. First chapter gives the background of the research project and contents included in the dissertation followed by aims and objectives of the research, the research questions and the approach used in carrying out the research.
2. Second chapter examines relevant literature on the Islamic banking system and also about different Islamic law.
3. Third chapter, in dissertation will use the detail approach and research methodologies applied to execute this dissertation. Furthermore, the researcher will also look at the research design; an understanding of the research approach and data analysis. A justification has been given for each approach supporting it by literature.
4. Last chapter provides the conclusion which is specifically related to the aims of the research and it provides guidelines and recommendations for a successful Islamic banking system in different parts of the world and improvements in cooperation between banking sectors.
1.5 Definitions of Islamic Banking
Islamic banking, financial innovation has come to be regarded as the most ‘visible’ aspect of Islamization. Whether it is new, has made significant progress, as measured by the speed with it was adopted in the Muslim countries as well as in Non-Muslims countries in a relative short period. At this point of the chapter, I am going to discuss different definitions of ‘Islamic Banking system’. ‘A banking system which works or functions according to Quran and hades guidelines provided and gives or provides benefits to Muslims and Non-Muslims’ (Mufti Ishfaq Ahmad Rizvi , UK ,2011 ). ‘Islamic banking system provides interest free products and helps the community in financial problems’ (Imam Hafiz Jamel, UK, 2011). ‘Islamic banking system should be informed with a serious knowledge of the ethical objectives of the Islamic economic system, the truth, which can only be based on the quality of social justice and leadership that meets the needs of the underclass. If Islamic banking is leaving the economic consequences, and still is based on ‘pure’ process, it will wither on the vine public apathy, even in disagreement’ (Nawab Haider Naqvi, 2000 vol.8, p41-70).
‘The idea of an interest free Islamic banking system under the legal concept musharakah (partnership) and mudarabah (profit sharing), has gradually developed over the past thirty years’(Monzeer Khaf, the Islamic Economy, op.cit, p72). According to (Abdul, 2007)’ Islamic banking system has to be followed two main principles; sharing profit and loss (P&L) and, ominously, the prohibition of the payment and collection of Riba(Interest)’. ‘‘Islamic banking system is the best banking system, which is based on justice and welfare for Muslims and Non-Muslims’’ (Sanosi, President Central Bank of Nigeria, 2011). From all above definitions i find five key Characteristic of Islamic banking system;
If we go back in a history to find out about interest free banking system duration,’’ It is not surprising for us to know that the first documented interest free bank ‘Agibi Bank’ was established (circa 700 BC), in Babylonia, and functioned exclusively on an equity basis’’(Baron, 1952). To support this above history of interest free banking system, in chapter two i will discuss about ‘Riba’ which was not allowed in old time as well. Therefore, i also find some references from old testaments. But if we look in 19the century, in 1963 Egypt introduced interest free accounts only in some conventional banks. ‘Islamic finance rose to popularity during the Islamic golden age which ranged from the 8th to the 11th century. It was a time when many skilled people from architects, engineer’s scholars, artist, and sciences etc., contributed directly and indirectly to the rest of the world’ (Turner, 1997).
However the Islamic influence of finance fell and western conventional banking took control; this is because Islamic empires lost control to invasion and the control of the British Empire across Asia and northern Africa.) A great revolution started in Islamic banking system in the early 1970s after the first international conference held in king Abdul Aziz university in Kingdom of Saudi Arabia, city ‘Makkah’ on Islamic Economics. In that important conference participants agreed to establish first real Islamic Bank. In 1975, United Arabia Emirates (UAE) government established first ‘Islamic Commercial Bank’ in the world, ‘Dubai Islamic Bank’. After this but in same year ‘Saudi Arabian government also established ‘Islamic Development Bank’, in city of Jeddah. After 1970s a series of Islamic banks came into the market which names are as follows; Islamic finance house, Luxembourg; Faisal Islamic Bank of Sudan, Egypt; IBU of United Bank of Kuwait; Meezan Bank, Pakistan; ANZ First ANZ International Murabah Ltd; HSBC Amanah Fund.
"The leading growth right now is in Islamic consumer banking and investment products" (Mohsin Nathani 4 -03-2008). ‘Islamic Banking and finance system has multiplied substantial global exposure over the past some decades and has changed from an industry with a limited geographic reach to one that is now prevalent across key Islamic markets in the Middle East and Asia Pacific. If we talk about globally, total global Islamic Banking assets have witnessed extraordinary growth from US$137 billion in 1996 to $895 billion in 2010. Assuming the current trajectory, total industry assets are likely to surpass $1.0 trillion by 2012’ (Yakub Bobat and Romy Buchari, 2010).
Recent times have shown a revival of Islamic finance not only in Muslim countries but also in the UK. It is known that many countries such as Pakistan, Malaysia and other Arab countries such as Bahrain are fully compliant Sharia based economies based around Islamic finance. However due to events such as the financial crisis and other factors such as Oil rich nations, Islamic banking has become popular to Non-Muslim countries that have large number of Muslims. As I discussed above, it was after the establishments of the Islamic Development Bank in Jeddah that enlightened the rest of the Muslim nations to spur on an increase in Islamic banking, products such as Sukuk were introduced which is a Islamic bond but with no interest which proved to be revolutionary.
According to the International Monetary Fund (IMF), ‘Islamic banking assets have grown 15-20% annually with more than 300 institutions established since 2000’. For example, In United Kingdom 2004 the government permitted its first fully Sharia compliant bank to be established known as the Islamic Bank of Britain. Investment was carried out by investors from the UK and the Gulf region. Subsequently conventional banks have also started offering Islamic products in the UK. HSBC has offered Islamic pension schemes and ‘Halal’ stockbroking services, other banks have followed suit such as Royal Bank of Scotland (RBS) and Lloyds banking Group. With its great success is has landed a stock market listing on the London stock exchange.
Islamic banking in the United Kingdom is now in fact larger than that of Pakistan according to a report by the International Financial Services (IFS). It was Gordon Brown who promoted Britain to become global hub for Islamic finance which has led to the Times 2009 reporting the $18billion (£12billion) in assets of Britain’s Islamic banks are said to dwarf those of Muslim states such as Kingdom of Saudi Arabia, Pakistan, Bangladesh, Turkey, Malaysia and Egypt. And there are also 55 colleges and professional institutions offering education in Islamic finance in Britain – more than anywhere else in the world. Furthermore the Financial Service Authority (FSA) approved the first European Islamic Investment bank, with global assets of all Islamic Banks are now said to be worth well in excess of £500bn pounds.
The graph further illustrates that Islamic Banks performed considerably better than the conventional banks leading up to the financial crisis. As mentioned previously many forms of trading are disallowed under Sharia and it can be seen that the Islamic Banks did not suffer as much as the conventional Banks did. Profitability drop 7% for Islamic banking whereas conventional banking it dropped over 35% a huge gap which shows why under Sharia law Gharar and Riba are disallowed. It can be seen that Islamic finance hub Bahrain and Malaysia hold a very strong infrastructure for Islamic banking as they show that they are supported by Islamic Development Bank as well as many other large International Financial Islamic Institutions.(Source: International Monetary Fund ).
Despite the recent revival of Islamic Banking and Finance system, there are still much Issues and Problems with Islamic finance to be analysed because Islamic banking has grown from a mere niche market to a multi-billions dollar industry. Ayub 2007 states that there needs to be more dialogue between scholars and that there should be more experts in Islamic finance to help drive innovative Islamic Sharia compliment products and increase the awareness of Islamic Banking. Britain already has the most number of educational programmes supporting Islamic Banking in the world.
This clearly manifests that Britain is keen to follow Gordon browns footsteps in order to make Britain the financial hub. It also shows that the UK being a Non-Muslim country has taken more initiative than the Muslim nations. Critics may argue that if there are more scholars and experts then it may cause further confusion and cause people to be misled. This is because as Verandas 2010 explains that there are ‘different school of thoughts’ in Islam which conflict each other’s. As we know, in Islam there is almost 72 different sects that is why there is a difference in opinion among Islamic scholars. ‘’Islamic Banking system needs more qualified professionals and they have to be known about Islamic finance needs fully’’ (Sanosi, President Central Bank of Nigeria, 2011).
The risks associated with profit sharing seem to be so high that most banks have resorted to such financing techniques to bring them to a fixed guaranteed return. As a result, there is very real criticism that these banks have no interest to the other side, but had actually changed the nomenclature of their transactions. Big issue is, for Islamic Banking system is to be provide interest free products to their customers. Because, in Islam, Riba (interest) is defined as any effortless profit gained on a loan or debt. It is also defined as any increase without a specific cause. Both effortless profit and increase on the loan amount to injustice and are prohibited in Islam. This prohibition is a major issue of concern for many Muslims, especially those living in Non-Muslim countries. To provide an interest free mortgage to Muslims is also a debateable topic now days.
There is no doubt especially in United Kingdom some banks offer interest free mortgage but most the Muslims does not understand this interest free mortgage mechanism, in other words especially Muslims are confused about this interest free mortgage type. For example, HSBC Amanah Home Finance plans. Some other issues surrounding Islamic finance or Islamic Banking system is that financial institutions are regulated by Sharia Law.
This would not be a problem if in a Muslim country but when there are corporations and banks that offer Islamic products in accordance to Sharia law it is difficult to know whether to follow Sharia law as the Quran states or follow the UK accounting standards and UK law and regulations. Thus many critics argue as with the case of an article in the Times 2009 which reported that Sharia law does not comply with UK law and regulation and called for Islamic banking to stop being promoted. The Financial Service Authority which regulates the banks and large business firmly stated that Under the FSA ACT 2000. The FSA's policy towards Islamic banks, and indeed any new or innovative financial services company, can be summed up simply as "no obstacles, no special favours".
We are keen to promote a level playing field between conventional and Islamic providers. One thing we are clear about is that we are a financial, not a religious, regulator. Thus although the UK does have a firm base for Islamic Finance it is clear that the Financial Service authority wants them to abide by UK Law and regulations , whether conflicting issues will arise between the Sharia and UK law is not widely spoken of, but then again Islamic Banking is still very much small overall to their Gulf counterparts. Accounting standards need to be drawn up that are compliant to both Islamic law and International Accounting standards through dialogue as has been witnessed by Pakistan which drew up a framework for both’( Ayub, 2007).
Furthermore, other issues surrounding Islamic Finance are that due to global media since the September 11 attacks there has been constant media propaganda against the Muslims. Muslims have been persistently been associated with acts of terrorism. For this reason, it is quite obvious why there are not much advertisement campaigns regarding the benefits of Islamic Banking to the whole of the UK. The only advertisements noticeably are in high desist Muslim populations such as London and Birmingham. There have been no real newspaper adverts or TV adverts showing the benefits of an Islamic Banking system. Islamic Banking is said to be very complex compared to normal banks. Can this change? I very much doubt so in the short term but with universities offering courses and providing education to people about Islamic banking, the number of Non-Muslims and Muslims adopting this revived finance method could increase in the future. Other critics argue there is a lack of Liquidity management and that some of the Islamic Products are actually not very Sharia compliant at all.
It can be seen that throughout history of Islamic finance stood on firm grounds until the Western Conventional Banking systems took control. However in recent time there has been much revival, and despite the advantages of Islamic banking brings to the economy and society as a whole. Lack of education and awareness by the media has meant many people are sceptical and ignorant of the advantages. On the other hand Islamic Banking is now being introduced to more and more countries but it is also prone to different interpretations of Sharia law and other issues such as regulations and law in Non-Muslim counties may be of an obstacle which Islamic banking system will need to overcome through producing the framework and promotion in order for it to become a mainstream product in the UK.
At the end of this chapter we can summaries that,’ The Islamic Banking system is governed by Sharia law. Sharia law is the “Divine (SWAT) guidance as given by the Holy Quran and the Sunnah (teachings) of the Holy Prophet (Peace be upon him)”). There is no doubt about, Islamic banking system is surrounded by different problems and issues since last thirty years but Islamic banking system, is the fastest growing industry in the banking sector‘ (Independent 2008).
Although most United Kingdom banks also offer Islamic products not many people understand how Islamic Banking works; partly this is due to fact that it is not really promoted. But we have to be investigating more about the process of Islamic Banking system problems with the help of the Quran, Hades and also with the help of the Islamic Scholars (Mufties). Now, i can say one thing, if i succeed in my investigation; then Islamic Banking system can become a mainstream product in the United Kingdom and in other parts of the world.
This chapter will review existing literature that relates to the ‘Issues and problems in Islamic Banking system’ which are facing now days all around the world. This chapter is really important for every dissertation. If the researcher makes mistake in this chapter then the researcher cannot achieve his objective of the study or cannot reach at the specified destination (Miles Taft Bryant 2004, p64). I had used so many books and articles to review for my dissertation topic ’issues and problems in Islamic banking system’ that i am confused where to begin.
According to Fredrick ‘’ the literature review is the problem’’. According to folks ‘’ writing a dissertation is like ‘running a marathon’ or ‘learning a Martian language or is like ‘climbing a mountain’ This chapter will began with a discussion of the Sharia Law (Islamic Law) and the importance of the Islamic law in Islamic banking. The next section will examine the importance the Islamic way of trading (musharakah and mudarabah etc.) and will discuss some of the important elements that make easy understanding to the reader about the difference between conventional and Islamic banking system. These Islamic elements include Quran, hadith, Ijmaah and Islamic fatwas etc.
In this chapter, I am also going to discuss the differences in conventional and Islamic banking system such as Interest (Riba) in more details. ‘Due to the Riba’ element in the banking system, Muslims are confused about Islamic and Conventional banking system all around the world’ (Ezry Fahmy, 2011).
‘’He (Allah) has directed you to the religion (law), which He enjoined upon Nuh and that which we revealed to you and that which we enjoined upon Ibrahim, Musa and Isa (Jesus Christ) saying, "set the religion right and cause not dissension therein (Al-Quran, Chapter No.25, Surah No.42, Verse No.13)’’. According to this Quranic definition we can say ‘Islamic law’ is not a new law brought by Prophet Muhammad (peace be upon Him). But we can say that ‘Prophet Muhammad (Peace Be upon Him) introduces purified form of Islamic law according to the Quran laws (words)’.
As we know Quran is Allah’s (SWAT) last book came on the last messenger prophet Muhammad (peace be upon him). According to Quran conclusion about the Islamic law is as follows; ’’ Quranic law comprises of Allah (SWAT) orders and prophet Muhammad (peace be upon him) saying or actions which we call Hades or ‘Sunnah’’’ (N.J Coulson ,2011). ‘Obey the Messenger of Allah and leave ignorant of the law, and these are the limits of Allah, and for the infidels is a painful torment’ (Al-Quran, Chapter No.28, Surah No.58, Verse No.4). Essentially this is the embodiment of all aspects of the Islamic faith including beliefs and practice.
The word ‘Fatwa’ gives a wrong perception to those, who do not know the actual meaning. Some people think the meaning of ‘Fatwa’ means in Islam to issue a death warrant against a non-believer or issue an order in Islam about anything etc. According to (Mufti Ishfaq Ahmad Qadri, 2011) A Fatwa is a legal opinion in answer to any specific question. If this answer is in accordance to Quran, Hadith or Fiqah or Shariah then it is binding to act upon it.
Fatwas are issued by only a Mufti; an Islamic scholar who has a firm grasp of Islamic knowledge can issue a Fatwa. Religious knowledge; According to Hazrat Imam Ahmed Raza Khan (Allah pleased with him) ‘’is that knowledge which is in accordance to Quran, Hadith, Tafseer, Principles of Islam, Ilm-ul-Adad (numerology) and the timings of Salat (Prayers) calculations (Tauqeeq Knowledge) etc. A Mufti has to be an expert in all these fields of knowledge and have an open and clear mind with his Islamic ideas means free of Bias. He must have practical experience of dealing with religious affairs and answering people’s questions. If a mufti makes a mistake, then it is incumbent on him to accept his mistake’’ (Fatwa-e-Razawai, volume 18, p590).
This is really important for us to understand the importance and History of fatwa in Islam. According to Quran Allah (SWAT) issued first Fatwa, ‘In old time (Zmanh ignorant) people of Arab did not want to give share of deceased’s property or wealth to wife’s and small children as there were heirs of the deceased’s property’. And they were asking questions from prophet (Peace be upon him) about the property or wealth division among children’s and wife’s.
Therefore Allah (SWAT) gave Fatwa or direction, how to distribute the deceased’s property’ (knaz-ul-iman, Imam Ahmad raza khan, 1920). ‘’And they ask you your ‘Fatwa’ concerning women. Say them, Allah gives Fatwa to you concerning them and that which is recited to you in Quran concerning the orphan girls whom you give not what is prescribed for them, and turn your faces from marrying them, and concerning the weak children, and concerning this that you maintain justice towards orphans. And whatever good you do, then Allah is aware of it’’ (Al-Quran, Chapter No. 5, Surah No.4, Verse No.127).
Therefore, as we know Quran orders not for that specific old time these orders are also for whole of the life or till at the end of the world. That is why prophet (peace be upon) and his companions were issuing Fatwas and in current time Islamic scholars (mufties) are also issuing fatwas whenever Muslims are in problems or have a doubt about any Islamic issue (Fatwa-e-Europe, mufti amjad , p2). I took a lot of fatwas from different scholars (mufties) relating my topic according to above Quran instruction.
According to Islamic (sharia) law guidance, if Muslims have any kind of issues or problems, then there are two main sources which they can use to find out the solutions; which include Quran and Hadiths. If they are in a doubt or do not understand the answer of the Quran or hades then there is one more way to find out the answers which Muslims call ‘Ijmaah’ or ‘Ijtihad’. We can find almost same words in one ‘Hades’ about the importance of ‘Ijmaah’ in Islam. ‘One day Prophet Muhammad (Peace Be upon Him) was sitting with his companions and was discussing something about Islam. Suddenly He (Peace Be upon Him) asked from one of his Companion ‘If you are in a different country or area and you do not have any communication with me, and if someone asks you one Islamic ‘Maslaah’ Question then how you give the answer? The companion of prophet replied, ‘‘first i will try to find out the answer from Quran then Hades if unfortunately i did not get the answer from these two sources, then ‘i will do ‘Ijtihad’ or ‘Ijmaa’ meaning I use my religious knowledge or consult with different Islamic scholars,’’ then Prophet Muhammad (Peace Be upon Him) Replied, ‘Allah’s hand on Jammat’. Almost same words we can find in Quran, Allah (SWAT) also ordered Muslims in Quran ‘if u do not know or confused about any Islamic issue asked the guidance from those who have knowledge (Al-Quran, Chapter No. 17, Surah No.21, and Verse No.7).
This word came from Arabic word ‘Shirkah’, which means ‘sharing’ or partner. According to shariah law ‘Musharakah’ means a joint partnership established for conducting a business in which all partners shared profit according to a predetermined ratio and on the other hand loss is shared according to the ratio of the contribution (Abdulkader S. Thomas, Stella Cox, Bryan Kraty – 2005, p35). This approach is based on Riba (interest) free financing. We also find one Hades words on ‘Musharakah’ which is Hades-e-Qudsi ‘’ Allah (SWAT) has declared that, ‘He will become a partner in a business between two ‘Mushariks’(Partners) until they indulge in cheating or breach of trust’’ (Bahar-e-Shariat, 1935). According to Islamic law ‘Musharakah’ further have two types which are as follows;
i- Shirkah al-uqood
ii- Shirkah al-milk
This type also called ‘contractual partnership’ in Islamic Fiqah. Under this type of partnership business, both parties are agreed to start a joint business venture and sharing of profits and risks of the business equally. It can be oral and informal and not necessarily in written form. But losses of the business shared according to the proportion of capital contribution. In Islamic finance law books we find furthermore four types of ‘Shirkah-al-uqood’.
This type also called ‘partnership by joint ownership’ in Islamic law. Shirkah al-milk means joint ownership of two or more people in a specific property or asset. For example, Mr Leo and Romeo receive a gift or inheritance of land or property after the Death of his Dad (Mr Neo). According to the ‘will’ of Mr Neo, Leo and Romeo cannot divide this specific property after his death but they can enjoy the benefit from this property according to their shares.
According to this type of Islamic financing one partner gives money (Ras-ul-Maal) to another (wakeel or agent or also called ‘Mudarib’) for investing in a commercial enterprise. Mudarib function in this type use their skills on behalf of first person try to make good or reasonable profit in any investment. Profits generated from this commercial enterprise are shared in a predetermined ratio and losses are shared by the first partner and Mudarib.( Bahar-e-Shariat, p795,v12, 1935).
Istijrar Islamic finance is a new type in Islamic law. This type means purchasing goods time to time in different quantities. The Istijrar involves two parties, a buyer which could be a bank or company looking for financing to purchase the underlying asset and a financial institution.
Now we look how ‘Istijrar’ works with the help of one example. ‘ABC ltd needs raw material to run their production department but ABC ltd dos not have sufficient funds to buy this. ABC Ltd approaches (Muslim commercial Bank (MCB) ltd) for finance. MCB purchase raw material for ABC ltd at the current price say Po, and resell it to the ABC ltd and make an agreement for future payment with the MCB. Say ABC ltd has to pay the price after 75 days. The price at which settlement occurs on maturity is contingent on the underlying raw material price movement from time say T0 to T75. Where T0 is the day the contract was initiated and T75 is the 75th day which would be the maturity day’’ (Dr Obi, 24-06-2005).
Recently this type of Islamic financing used by financial institutions and banks specifically to sell some goods (agriculture) at a future date in exchange of an advanced price fully paid at spot. According to Salam price is in cash but the transfer or supply of specific goods is deferred. According to the prophet Muhammad (Peace be upon him) hades ‘Salma’ is associated with subject to certain conditions’’ whoever wishes to enter into a contract of Salam, he must effect the ‘Salam’ according to the specified measure and the specified weight and at the particularly date of delivery (Fath-ul Qadir V6, P205 and Ibn-ul-humam)’’. The main objective of ‘Salma’ was to help small farmers who needed money to grow their crops and feed their family up to the time of harvest. ( Muhammad Taqi Usmani, 2010 ,p186-187).
‘Istisna’, like ‘Salam’, is a special kind of sale Transaction/contract where a sale of the goods is transacted before the goods come into existence. For examples in a gold market, buyer gives an order in advance for a special design of jewellery set to prepare. In this type of contract, price must be decided only not full price paid in advance and the specifications of the goods also decided with the consent of both parties in advance.( Frank E. Vogel, Samuel L. Hayes – 1998, p147).
If we look in the Holy Quran we also find ‘Ijarah’ financing type with detailed explanations.
According to Arabic Dictionary (Al-lughat, p65) this word gives two meaning;
i- To give something on rent.
ii- To hire someone as an employee or hired his or her services for a job.
For example, If Mr Ali wants to go Birmingham from Slough he hires a cab (driver name: Naveen) for this journey. Mr Ali called ‘Mustajir’ and Mr Naveen called ‘Ajir’. Another example, If Mr Usman works for BAC ltd as Employee called ‘Ajir’ and employer (BAC ltd) called ‘Mustajir’.
1- According to Quran ‘’ One of the two women said, 'O my father (Mustajir) employ (Ajir) him'. Undoubtedly, the best employee is he who is strong and trustworthy’'. (Al-Quran, Chapter No. 20, Surah No.28, Verse No.26)(Kanz-ul-iman).
2- ‘’If you wish that your children should be suckled by ‘nurses’ (midwifes), then there is no blame on you, provided what was agreed to salary is paid by you with kindness, and remain fearing from Allah and know that Allah is seeing your work’’(Al-Quran, Chapter No. 2, Surah No.2, Verse No.233)(Kanz-ul-iman). In this verse of Quran parents are ‘Mustajir’ and Midwifes are ‘Ajir’.
Murabah is one of the most commonly used types in Islamic financial and banking systems. This type refers to cost plus financing and also known as letter of credit. Meaning of ‘Murabah’ is ‘when the actual price of the good is disclosed to the customer in advance’. ‘’ Murabah is a special kind of sale where the seller clearly mentions the actual cost of the sold goods he has incurred and sells it to another buyer by adding some extra money (profit) thereon’’(Dr Muhammad Imran Ashraf Usmani, 2010).
According to ‘Murabah’ a bank buys goods for its customer and then resale it to the later on with cost-plus profit basis. But important point for the bank, it has to be disclosed the actual price of the goods to the customer. ‘The price of the goods in Murabah may be at spot, and may be later on some time it is totally depends on the agreement between both parties’ (Siddique, 1986). The important point in ‘Murabah’ is the bank can only charge extra money (profit) if transaction is completed according to the agreement. This type of finance is used most of the time to assist short-term business transactions.
This type is equivalent of the cash account use in the conventional banking system, and it assist for day to day cash management. In this type of bank account, account holder cannot make any return. Most high street Islamic banks have no charges for such accounts, and provide facilities similar to any conventional bank.
Islamic finance fundamentals forbid any form of interest which is detailed in great form in the Quran. According to Quran, ‘’those who devour interest shall not stand on the Day of judgement, but like the standing of one whom the evil spirit has by touching made mad. This is because they said ‘the trade too is like interest, ‘and Allah made trade lawful and made interest unlawful so he, who received admonition from his lord and refrained, then whatever he took before is lawful to him, and his affair is with Allah. And now whoever shall commit such Fault, then he is men of hell, they will live therein for longer period’’ (Al-Quran, Chapter No. 3, Surah No.2, Verse No.275). ‘’Allah destroys interest and increases charity and Allah loves not any ungrateful big sinner’’ (Al-Quran, Chapter No. 3, Surah No.2, Verse No.276). ‘’O believers! Devour not interest, doubled and redoubled; and fear Allah, in the hope that you may get prosperity’’ (Al-Quran, Chapter No. 4, Surah No.3, and Verse No.130)
‘’ whatever you give to take back more that it may increase the wealth of the givers, then it will not increase with Allah, and whatever you give as charity desiring Allah's pleasure, then those have two fold increase (Al-Quran, Chapter No. 4, Surah No.3, Verse No.130). ‘’ And because they took usury whereas they were prohibited from it, and they consumed people's wealth unjustly, and those of them who became infidels, we have prepared a painful torment for them’’ (Al-Quran, Chapter No. 21, Surah No.30, Verse No.39). ‘’And whatever you give to take back more that it may increase the wealth of the givers, then it will not increase with Allah, and whatever you give as charity desiring Allah's pleasure, then those have two fold increase’’ (Al-Quran, Chapter No. 21, Surah No.30, Verse No.39). ‘’And because they took usury whereas they were prohibited from it, and they consumed people's wealth unjustly (includes, Bribery and unlawful methods), and those of them who became infidels, we have prepared a painful torment for them’’ (Al-Quran, Chapter No. 6, Surah No.4, Verse No.161).
There are different of hades on Riba, but I use for this chapter only six.
i-Abdullah ibn Hanzalah (Allah pleased with him) narrated: the messenger of Allah (Peace be upon him) said, ‘A dirham of Riba which a man receives knowingly is worse than committing adultery 36 times’ (kitab al-bayn, Mishkat al-Masabih, chapter Al-Riba, on the authority of Daraqutni and Ahmad). According to Bayhaqi above hades came in shu-ab-al-iman with the additional words’ Hall befits him whose flesh has been nourished by the unlawful’.
ii-The companion of Prophet ‘Abu Hurayrah(Allah pleased with him) narrated: the prophet (peace be upon him) said: ’ On the Night Ascension i came upon people whose stomachs were like houses with snacks visible from the outside. I asked Gabriel (Allah pleased with him) who they were. He replied that they were people who had received Riba’ (Musnad Ahmad, Chapter al-taghlizi fi-al-Riba, Ibn-Majah Sharif, v9, Hades No.986).
iii- Second Hades from ‘Abu Hurayrah (Allah pleased with him)’, the messenger of Allah said ‘there will definitely come a time for mankind when everyone will take Riba(interest) and if he does not do so, it dust will reach him’’(Ibn Majah, Abu Dawud, book al-buyu, v4, Hades No. 678).
iv- Again ‘Hazrat Abu Hurayrah (Allah pleased with him)’ reported, the prophet Muhammad (peace be upon him) said:’ Interest has seventy types, the least serious being equivalent to a man committing adultery with his own mother’ (Ibn Majah, p109, V,25).
v- Abu Hurayrah reported , the prophet (peace be upon him) said: ‘‘Allah would be justified in not allowing four persons to enter paradise or to taste its blessings: he who drinks habitually, he who takes ‘Riba’, and last one he who is disobedient to his/her parents’’(book Al-Buyu, p654, v1, and Mustadrak Al-Hakim p167, Hades N0. 987).
vi- On the Day of Judgment,’ interest bearer feels his stomach too heavy and cumbersome and because of that he will fell down. This the punishment for those who think interest is ‘Halal’ lawful in this world’ (Saeed Bin Jubear, knaz-ul-iman, p275).
This is really important section of this chapter. When i was conducting my research from my selected samples all participants except ‘Islamic scholars’ all were saying there is only one type of Riba in Islam. Now, i am going to discuss ‘types of Riba’ are as follows;
a- The first type name, ‘Riba Al-Jahiliyyah or Riba An-Nasiyah this type also called ‘Riba Al-Quran’.
b- Second type has three names, ‘Riba Al-Bai, Riba Al-Fadl or Riba An-Naqd this type also called ‘Riba Al-Hades.’
The reason to call these specific names because first type of Riba An-Nasiyah definition/explanation came in the Holy Quran and second type Riba Al-Fadl definition/explanation did not come in the Holy Quran, second type explained by the Prophet Muhammad (Peace be upon him).
Ali ibn-a-talib (Allah pleased with him) reported: The prophet Muhammad (peace be upon him) said: about ‘Riba Al-Nasiyah’ in following words;
‘’Every Loan that Draws interest is Haram’’.
If we look at some old testaments has declared as ‘Haram’. For references see Ezakhiel 18:8,13,17 and 22:12, proverbs 28:8, Leviticus 25:35-36, Psalms 15:5,Exodus 22:25, Deuteronomy 23:20 20 (Dr Muhammad Imran Ashraf Usmani, 2002). According to Imam AbuBakr Hassas Raze has defined as follows; ‘’ that kind of loan where specified repayment period and an amount in the excess of capital is predetermined’’.
According to above definitions; -Riba Al-Nasiyah is categorically haram has never been disagreement among the Muslims. One important thing for this type of interest; ‘simple and compound interest also come under this category.
According to (Dr Muhammad Imran Ashraf Usmani, 2002) ’’Riba Al-Fadl, actually means that excess which is taken in exchange of specific homogenous goods and encountered in their hand to hand purchase and sale.’’
According to hades of Prophet Muhammad (peace be upon him) said: ‘’sell good in exchange of equivalent gold, sell silver in exchange of equivalent silver, sell dates in exchange of equivalent dates, sell wheat in exchange of equivalent wheat, sell salt in exchange of equivalent salt, sell barley in exchange of equivalent barley, but if a person transaction in excess, it will be Riba (usury). However, transaction of silver anyway you please on the condition it is spot (hand to hand) and transaction of barley for dates anyway you please on the condition it is spot’’.
If we looked at above hades we can find six different commodities names;
These above six types can only be used in hand to hand (spot) transactions in equal quantities and weight. As we know in Islam there is four Scholl of thoughts. This is really important for me to discuss in this chapter about their point of view about ‘Riba Al-Fadl’, otherwise reader of this paper get confused. In Islam this is my responsibility try to make clear each and everything with the help of the Quran or Hades or from different Mufties point of view. Otherwise un-clarity creates a big problem in Islam.
According to ‘Imam Abu-Hanifa’ (Allah Pleased with him) all above six goods are sold or purchased by either ‘weight or volume’ equally.
According to ‘Imam Shafi’ (Allah Pleased with him) Law ‘’apply on everything eatable or having the natural ability of becoming a medium of currency (exchange).
According to ‘Imam Malik’ (Allah Pleased with him) law identified the following features: 1- Preservable, 2- Eatables;
Imam Ahmad Bin Hanbal, ‘he agrees with first and second Imam’s explanation and he also include three more features;
2.6 Possible Reasons to say haram (unlawful) of Riba in Islam
Interest is said to haram to have many reasons according to Quran, hades and also according to different Islamic scholars which are as follows;
· The excess amount is charge on the actual amount which is not allowed because it is injustice.
· Practice of interest is to disturbed the business because to make money from the interest is easy way for the interest bearer. Therefore, if interest bearer does interest business it is really hard to make money without effort. In interest business interest bearer just earns money in an easy way to charge interest.
· Interest also disturbs the personal relations. When a person is an addicted of interest business, then he/she cannot afford to provide an interest free loan to the needy people in the community.
· A human nature can be changed to the ruthlessness because of the interest.
Western economies working within the conventional banking system are feeling the strain of interest payments. The current European debt crisis which has reached countries such as Spain, Portugal, Greece and most importantly Ireland Banks means they have had to be bailed out with taxpayer’s money due to the spending spree of cheap debt borrowing.
When the government borrows money, it must be paid back along with the interest incurred. Now with Islamic finance due to the prohibit of interest , during the economic crisis , banks and other businesses were not as much affected as Sharia compliant Islamic banks are prohibited from investing in toxic assets( The Nation 2009). This clearly manifests the reasons as to why interest is forbidden and secondly that Islamic banking is an alternative to the conventional banking. Thus Islamic banking provides initiative for risk sharing and profit sharing whilst still compliant to Sharia law. Whereas conventional banking has a pre-determined interest rate at which, profit maximisation is the ultimate aim where compound interest is regularity (BBC 2005).
After all above discussion relating to ‘Riba’ unlawfulness or Haram in Islam and as we know for in real world there are two types of organisations;
The primary objective of profitable organisation is only make good profit and the primary objective of Non-profitable organisation is to serve the community. Islamic or conventional banks come under the firs type which aims to make profit. According to Islamic finance law, ’Making extra money from lower money is not allowed’. If money is to be borrowed or it is exchanged, the payment on both sides must be equal, so that money is not used for trade itself (money is treated as ‘potential’ capital). In short ‘money use is limited to its basic purpose i.e. money act as a medium of exchange. Islamic law allows making reasonable profit for the transactions. ‘According to Islamic law, profit is allowed (Halal), it can be zero or positive or negative, even profit sharing ratio is decided in advance but profit is still uncertain and it is unknown until the activity is completed’(Shakeel Ahmad, 2004). When money is used in trading, its uncertain result is profit. If we talk about the definition of profit which is equals to revenue minus cost of production.
Islamic finance also forbids ‘Gharar. According to Ayub 2007 he states that ‘Gharar is uncertainty or hazard caused by lack of clarity regarding the subject matter or the price in which a contract is exchanged’. Examples of these are sales of items, where the item is not present or where the consequence is not known. However Islamic scholars have differentiated between uncertainty and risk and have found a normal level of risk of which they recognise which is known as Gharar e Khalil (Ayub 2007).Some more examples of ‘Gharar’; an excellent example of where Gharar has taken place is with the subprime mortgages which were handed out to millions of people without properly assessing ones income level. ( Gharar-e-kathir too much uncertainty) , the western economies would not have created a huge housing bubble and instead of high short term profits we would have better risk sharing and stable profits which are all promoted by Islamic Finance. Other examples of major ‘Gharar are financial instruments such as derivatives, futures, puts and options all elements of which caused the financial depression’(Obiyathulla Ismath Bacha, 2009). Such financial products can also be argues to hold elements of ‘Maysir’ which is known as gambling and strictly forbidden.
‘Maysir’, According to (Al-Quran, Chapter No. 7, Surah No.7, Verse No.89-90) ‘'O believers! wine and gambling and idols and divining arrows are only unclean things, a work of devil (Satan) then save yourselves from them, so that you may prosper.’’ ‘’The devil (Satan) desires only to put hatred and enmity among you in regard to wine and gambling and to bar you from the remembrance of Allah and from prayer, will you then desist?’’. Sheikh Hussain Hassan a famous expert in Islamic Finance states that"$600 trillion were wasted on options, futures and derivatives, all gambling. Sharia prohibited these kinds of risks 14 centuries back" (BBC 2006). In essence Islamic banking promotes honesty in business transactions so that both parties are not misleading in any investments. Furthermore it suggests that there is not much complexity in contracts thus suggesting that there is a clear line of definition between rights and liabilities.
· ‘A conventional and Islamic banking system differs in many different ways which are as follows; after all above discussions we can say that Islamic banking system follows Riba (Interest) free principle and also use profit and loss sharing principle and on the other side convention banking system follows interest based principle’(Arif 1988).
· ‘Conventional banking system followed by primary motive profit only, with no ethical and religious consideration. But Islamic banking system followed shariah law which includes Quran and Hades guidance’ (Muhammad Ayub - 2009).
· ‘Deposit account holder in conventional banking gets their interest (share) before shareholders. But in Islamic banking system both will have same rights for their shares’ (Kabir Hassan, Mervin – 2007, p97).
· ‘Idle money in conventional banking system earns return, But in Islamic banking system idle money cannot earn any return’ (Fuad Al-Omar, Mohammed Abdel-Haq – 1996, p53).
· ‘Investor or depositors enjoy most of the time risk free return in conventional banking but in Islamic banking system Depositors or investors have an opportunity to earn higher returns’(Abu Umar Faruq Ahmad – 2010,p28).
· ‘Conventional banks collect Government taxes as an agent from deposit accounts and from different accounts as well tax rates are different. Islamic banks collect ‘zakat’ only from Muslims accounts at a rate of 2.5% at the end of every year and deposit in Bait-ul-Mall’(Brian B. Kettell – 2011, p116).
· ‘Investments or trading in derivatives (uncertainty) are widely considered as the main source of liquidity in conventional banking system. And on the other side in conventional banking system investment or trading in derivatives are prohibited e.g. options’ (Mohamed Arif, Munawar Iqbal - 2011).
· Islamic banking is more complex.
· There is more use of Islamic banking in Europe especially the UK, but need accounting standards to help comply with FSA compliancy as well as Sharia law.
· Lack of knowledge of Islamic products - less promotion, less education (although these are improving)
In this chapter an extensive review of the literature on Islamic and conventional banks systems, and detailed discussion about different Islamic finance modes and also about Riba (interest) in the light of Quran and Hades. The next chapter is the Methodology demonstrating the methods used by researcher and justifying those.
In this chapter, I have described the research methodology that has been used in carrying out my research work for the given topic of ’Issues and problems in Islamic Banking’ ’I consider it really important and helpful for the reader of my ‘dissertation’ to have a clear picture of the research findings and analyses contained in the ensuing chapters. This chapter is designed to explain as comprehensively as is reasonably possible about my choice for the research approach i have adopted to do justice for the completion of my dissertation on the given interesting and currently hot topic of ‘Issues and problems in Islamic Banking’’.
Therefore, researcher will try to explain about ‘Research’. ‘’Research is a way of finding, examining and critically evaluating the data and information etc. which are going to support my research work’’ (Hussay & Hussay 2006). Some more definitions and descriptions given by well-known writers and researchers are cited in the following:
- ‘’Research is, an organized enquiry that develops acceptable scientific methodology to solve problems and create new knowledge that is normally applicable (Dawson, Catherine, 2005).’’
- ‘’Research is a process being carried out within a defined framework of a set of philosophies (approaches); Apply techniques, methods and procedures that have been tested for their reliability and validity, Research is also can be used to be unbiased and objective.(Dawson, Catherine, 2002).’’I am now going to be more elaborate about the meaning of the above lines in an easy way to help the reader to understand what ‘a research activity’ actually is ? I have used the word the ‘philosophies’ (see above), which simply means the approaches adopted in any research will that include ‘quantitative and qualitative’ aspects depending upon the nature of the topic given or chosen.
Therefore, researcher is going to use ‘Qualitative’ approach for his dissertation topic ‘Issues and problems in Islamic Banking’ is to do with feelings of diverse people, caused by their opinions on Islamic banking principles and systems, including legislation and regulations of banking industry the quantitative approach will serve little even if there was any sensible and acceptable quantification of the subject matter is possible. To make it meaningfully relevant to the discursive nature of the subject matter (i.e. topic) researcher have consciously chosen the ‘qualitative’ approach that will be considered more justifiable research on topic and complete his dissertation for it submission to the relevant tutor / authority.
‘’Meaning of validity’ is to apply the correct procedures to find out the right answers to the questions. Reliability states to the excellence of a measurement procedure that provides scientific exactness. Unbiased and objectiveness are really important elements in any appropriate research relating to any topic and mislead the new researchers to follow on.
Compliance to the two principles mentioned above enables the method to be called a best ‘research’’ (Kothari, C.R., 1985)([i]). ‘’Research is a way of life dedicated to discovery (Laurie Rozakis, 2007).’’ Research is a way of examining your practice (Dawson, Catherine, 200). ‘’Research word is a combination of ‘’Re + Search’’ (Plutchik). Research is a tool which we can use to find comprehensive and intellectually examining for facts and their inference with reference to the problems under study. According to Elisa (1986) Research is equal to aim, ‘’the aim, as far as I can see, is the same in all sciences. Put simply and cursorily, the aim is to make known something previously unknown to human beings. It is to advance human knowledge; to make it more certain or better fitting the aim is discovery”. Therefore it is really important to justify the research methodology to be used for my dissertation topic as above.
We can use to analyse the behaviour of the social society and the people live in and their experiences about any event (Immy Holloway, 1997, p18). ‘’There is no such thing as qualitative data. Everything is either 0 or 1" (Fred Kerlinger, p.40) Qualitative research provides guidance in obtaining a better understanding of the topic. Qualitative research is cheap and easy to conduct (Hine and Carson, 2004). Qualitative research also helps to the researcher to understand the opinions and thoughts about any issue/topic to give clear understanding (Elias 1986). The idea of qualitative research lies in the interpretive approach to social truth (Immy Holloway, 1997, p18). Interpretive model/approach deals in history, philosophy and human science. ‘’The approach centres on the way in which human beings interpret and make sense of their subjective reality’’ (Immy Holloway, 1997, p19).
According to, Denzin and Lincoln (1994) qualitative research is equal to different things to different people. Therefore, researcher uses for his research topic more than 95% qualitative research to find out the best answers/solutions of my research questions.
3.3.2 Quantitative Research:
Furthermore, researcher intend to give a brief reference and short discussion about quantitative research for the ample reason that he is going to use qualitative research methods as opposed to quantitative ones in his chosen topic basically warranted by its nature. ‘’Quantitative method tool is used to predict and measure, leading to a final course of action (mouly 1970)’’. It is referred to as hypothesis-testing research (Kerlinger, 1964). It involves mathematical and statistical tools to find out the answers of the empirical investigation (Hussey and Hussey, 1997).
· Self-Completion Questionnaires
· Personal Observation
Therefore, researcher used for his topic above types of data collection techniques to find out the answers to his research questions. First of all, researcher is going to discuss about ‘interview’: Therefore, an interview is a common process of collecting required information in which interviewers question people on the topic of the survey. Interview can be face-to-face or conducted by Skype or on phone. Face-to-face interview is expensive, but gives the great opportunity for the interviewer to explain problems/questions and to investigate more deeply into any answers given. Interviews on a phone or on a Skype are relatively cheaper but time saving. Interviews may be unstructured, semi-structured or structured’ (Fontana & Frey, 2005).
a) Unstructured Interviews
In this type of interview, an interviewer does not have a set of arranged questions and the importance is often on finding out the interview’s point of view on the topic of the survey (Punch 1998). Thus, neither the questions nor the answers are predefined. Instead, this type of interview totally relies on social interaction between the interviewer and the interview (Minichiello et al. 1990). According to Patton (2002) this type of interview cannot be conducted without comprehensive knowledge and preparation, to achieve full confidence.
The interviewer will keep in mind the purpose of the topic and the general scope of the problems that he/she would like to discuss in the interview (Fife, 2005). This is really important for an interviewer to get knowledge and experience about how to conduct an unstructured interview (Minichiello et al., 1990). Researcher use most of the time this type of interview for his research. Therefore it is totally depend on his experience in religious field as well as other fields meaning teaching in a college.
§ Importance of interview in Islam
If researcher talks about the importance of this type of interview in his religious field, researcher entire religious teachers (i.e. Sufis) quote one phrase in their saying. That is ’’ Whenever you are going to see a ‘Sufi’ or Islamic scholar to gain some knowledge about Islam or asking some solutions/answers for your problems/questions you have to think, your bowel 1 of knowledge is empty and you need fill it with the followers 2 of his saying. If you prepared yourself with the questions which you are going to ask from him you cannot full your bowel properly (Sofi Abdul, 2009). With above explanations researcher will conduct unstructured interviews to support his dissertation topic to find out relevant answers.
b) Semi-Structured interviews
In this type of interview,’ the interviewer has a set of organised questions, but is happy to discover other appropriate problems elevated by the interviewee’ (Tom Wengraf, 2001).
c) Structured interviews
In a structured interview, interviewers ask predefined questions and interviewee listen the question with great attention and try to give the answers with his or her best knowledge/experience. For that kind of interview an interviewer use a questionnaire to find out the answers. It involved ‘’closed’’ type of questions (i.e. each question has a predetermined set of options for the response, such as a box to be ticked).
For example: Q – 1. Do Islamic banks provide real Islamic Banking system?
Answer Box to be ticked: Agree, strongly agree, disagree or strongly disagree
‘Structured interview is really useful if the information being sought is part of a clearly-defined business research project’(Bruce Pfohl, Nancee Blum, Mark Zimmerman , 1997, p38).
The main benefit of the interviewing is collection of data is fast and cheap. In face-to-face interview an interviewer will usually get high response rate. In face-to-face interview the interviewer is also in a good position to explain any question, although the amount of explanation should be defined during training (Fred Edward Inbau – 2004, p9).
The main disadvantages of interviewing in collecting data are that the use of a large number of interviewers leads to a loss of direct control by the researchers of the project. In interviewing if the interviewer is not properly trained and experienced then this is a waste of the money, time and effort as well as not getting the required result of the study (Leonard Cargan – 2007, p118).
In this type of data collecting the respondent complete ‘Questionnaire’ without any help from the researcher. Questionnaires can be sent by the interviewer to the respondent by an email or send in post or just use any website who can design a survey form for the researcher in ‘HTML’ format. The design or layout and the language used in questionnaires should be easy and clear for the respondent. Following principles should be used when designing a questionnaire: (Roland P. Carpenter, David H. Lyon, Terry A. Hasdell – 2000, p54):
1- Each question should be short and simple.
2- The design of the questions should be in logical sequence.
3- First explain the purpose of the research to the respondents then they will feel happy to give the answers to the questions.
4- The answers provided by the respondents of the questions will be treated confidential.
5- And respondent’s personal information (for example; Name, Age, Address and his marital status etc.) will also be kept confidential.
6- If possible, only definite and short answers are used; for examples ‘Yes’ or ‘No’(Sally Brown, Philip Race, Joanna Bull – 1999, p29 )
See appendix No.1
This method of research is economical and allows plenty of time to the respondent to think about the questions with great attention and try to give the answers in an effective way. I have personally experienced during my research time. And have also got some useful feedback and/or suggestions from the experienced respondents about how I can improve my research study. (Mark L. Mitchell, Janina M. Jolley -2008, p135).
Questionnaires results may be based on bias. In this method of research there must be the scope and ability to get back the questionnaires from the respondents on time. Because, some respondents based on some experience do not bother to fill the questionnaire at all or on time. And the important issue in this method of research is to send the questionnaires that are willing to fill it. ‘’This is a limitation on the large filed as well as it is closer to selection process that may be biased’’ (Stephen Moore – 2001, p27).
This is also one of the methods which researcher use in his research but it is used only 10% of this approach in my study. This is according to ‘Islamic law’ where a person can use his or her own personal observation so long as he/she has reasonably sufficient knowledge of/about Islam. However, it is also vitally important that the person using hi/her personal observation does so strictly in accordance to teaching of ‘Quran’, Hades’ and Islamic Fiqah. ‘’Personal observation means that the data collected is normally limited by the resources available’’ (Paul Minar, 2006, p11).
The main advantage of this technique is that data is observed directly instead of being obtained from different sources (Susan Yuan, 1995). But there is a big problem in this method which is ‘personal biases. This problem arises when only part of the data available is being observed (Edmund Ferreira, Annatjie Erasmus, Darelle Groenewald -2010 ,p387).
As a matter of fact it is not possible for the researcher to include each and every one in the research program. That is why almost every research is based on sampling. According to (Sam McGuire, Roy Pritts – 2007, p1) sampling is a procedure, which involves selecting right participants for a specific research. That is why it is really important for me to choose right persons for my research to get relevant and reliable results for my study. Therefore, I choose some Islamic scholars; Bankers (include Muslims and non-Muslims) and Professionals for my sample (3).
Before further going more, researcher thinks at this point to discuss further about sampling procedures, are as follows:
According to (D. A. De Vaus - 2002) ‘’a population is the set of all the objects or the individuals which have a given characteristics, for example the set of all Islamic scholars who have some knowledge about Islamic finance’’.
According to (David S. Moore – 2009, p222) a sample is a subset of a population, for example the Bankers selected for questioning about their views.
· Sample survey:
According to (Arlene Fink – 2003, p34) the procedures which are used for collecting the data from a sample is called a sample survey, for example asking the selected Islamic scholars from the whole population on their views about Islamic banking. This is called sample survey.
The question: What are the reasons to choose sampling procedures in my research study?
The answer according to (Ken Black - 2009) to the above question is as follow:
To collect the data for my research is not very easily possible until the participants in a sample are divided. Once the division of sample is carried out, I am able to collect the required information from my participants fairly easily and quickly.
It is economical process to collect information from my sample instead of the whole population.
If a sample is small then a researcher can easily control instead of whole population. Because of the greater control on my sample size i got higher response rate. It was possible for me to conduct an interview of sample under the same conditions.
The level of accuracy of a survey is assessed from the size of sample chosen.
Researcher needs only twenty five interviews from my whole of population which consist of forty two participants. It was easier to me to devote a greater degree of effort and control per interview than with a larger number of interviews. And, because of that, researcher got quality answers to his questions from interviewees.
Rest of the 17 people chosen by me to fill the questionnaire, but I got the answers of my questionnaires with some Bias; Therefore, researcher choose one sample of people for my research from the population 40% people have their accounts in Islamic banks or thinking to have an account in Islamic banks and thinking to buy Islamic products, for examples Islamic mortgages and fixed rate Islamic bonds etc. which provided by the UK banks. But out of that 40% people send me back my questionnaires on a different time like 20% of that send me back after more than twenty five days later and 10% people take more than one month and 5% people send me back within 10 days’ time and 5% people send me back within 3 days’ time.
I got all 40% results back after some reminders sent to them. But this sample dose not has any Islamic background, because I choose 10 Muslims and 5 christen and 2 other religion people for my sample. According to (financial times 18-03-2011) report in UK’’ Muslims and non-Muslims are just getting Islamic mortgages because they can save ‘up to 4% stamp duty if the value of the property up to 0.5 million pounds’ according to 2005 mortgages policy issued by the ‘Labour Government’.
According to (Pascal Ardilly, Yves Tillé, 2002) sampling has different methods to do sampling, which are as follows:
· Systematic sampling
· Simple random sampling
· Cluster sampling
· Simple random sampling
· Cluster sampling
· quota sampling
· snowball sampling
· convenience sampling
· judgemental sampling
Researcher applied ‘systematic sampling’ method for his research. ‘’Systematic sampling involves the selection of a certain proportion of the total population’’ (Wayne A. Fuller, 2009).
i) speedy method
ii) close to simple random sampling
iii) Justify its widespread use.
i) There is a chance of bias by the researcher choosing participants for the sampling process;
ii) Chances of under-presentation or over-representation;
It is really important for the researcher to show ethical behaviour (Blumberg et al, 2005). . ‘’There are two types of the Ethics, Normative and Descriptive. Normative Ethics is concerned with supplying and justifying a comprehensible moral system of thinking and judging. Normative Ethics, we can use to pursue to develop and justify basic moral principles that are proposed to guide behaviour, decisions and actions. Descriptive Ethics is concerned with characterizing, and studying the morality of an organization, a society or a culture. Descriptive Ethics, we can also use to compare and contrasts different beliefs, values, moral codes and practices’’ (A. Nelson 2010).
Therefore, it is really important for the researcher for this research work have to be followed the Business Scholl (Kingston university) ethical guidelines. The participants must be informed in advance about the confidentiality and privacy of the information gathered and assured the participants that the information (data) will be used by the researcher and the supervisor of the research study. What happened with me, when i was trying to conduct some interview from my sample frame? Some of them need to see a written statement from me about the confidentiality of the information which i collected from them.
Eventually, I am just going to conclude at end of this chapter about the importance of ‘Research Methods’ to support my dissertation topic. In this chapter, i also explained the importance of interviews, questioners, personal observations, and sampling techniques. Moreover, this chapter also discussed the importance of ethical considerations, in conducting the research process. Therefore, with the help of code of ethics a professional can try to minims the risk level. I used all above methods to justify my research study and have attempted to give as clear a picture as possible to any readers of my study.
3- Researcher choose for my study 15 Islamic scholars from all around the world and 13 Bankers from UK and from Pakistan.14 Professionals which include accountants, lecturers and businessman from Pakistan and UK.
Total population =42 participants
This last chapter presents the findings and results of the interviews, questionnaires and some other research techniques which i undertaken in throughout my research process. This chapter is based on the views of Islamic banking system stakeholders from both public and private sector. Furthermore, the importance of the Islamic finance planning is discussed from the participant’s point of view together with the elements that make Islamic banking system planning successful. These elements include public and private sector cooperation, community involvement, implementation, right interpretation of Islamic law monitoring and evaluation. Furthermore, a detailed description of the methodology employed and interpretation of the data has been given. This chapter also discusses the main findings from literature review and research conclusion. It gives some recommendations drawing from its further analysis and it is followed by the last bit which is limitations.
4.2 Findings of the Dissertation
Some issues and problems which are facing by Islamic banking system I discussed in chapter No.1. In this chapter, I just try to give some reasonable solutions for those problems to see real and successful Islamic banking system in near future. My topic name has a strong relation with Islamic law, means Quran and hades. Therefore, I start my discussion with importance of holy Quran laws in this specific banking system. Being a Muslim or Non-Muslim we have to be having a firm Believe on Allah’s (SWAT) decisions which he makes for us. Allah (SWAT) says in holy Quran you can find every problem solution from this book. ‘’Did you not know that Allah knows whatever is in the heavens and is in the earth. Undoubtedly, all this is in a Book. Verily this is easy for Allah’’ (Al-Quran, Chapter No.17, Surrrah No.22, verse No. 70). During my findings about my topic, i was surprised 75% professionals (excluding Islamic scholars) do not have religious back ground. And even they do not know how to read Quranic verses which is really important for a Muslim to understand the basics of Islamic law and they just only know some famous Islamic finance terms e.g. Musharakah and Mudarabah.
Furthermore, during my findings process, I was astonished, when i saw Islamic finance advisors work in different Islamic banks in UK. They are also confused about Islamic products. ‘’They told me if you want to know more, then you have to contact with our shariah advisory board’’. I tried to make contacts with one of the shariah advisory council but unfortunately i did not success in my first few attempts. After that, luckily I had some meetings with some mufties. Then i understood some points about Islamic banking system. During my research i found some big problems in Islamic banking systems, which are as follows;
· Lack of communication between Islamic banks advisors with Islamic banks shariah advisory council;
· Lack of religious education or knowledge;
· Lack of training in Islamic financing techniques;
· Need a central shariah council
· Lack of confidence about Islamic products;
· Need, interest-free return on their investments
Some of the problems i already discussed in last chapters in details.
I start my general recommendations about the importance of effective communication in an organisation. ‘’Communication is the soul of an organisation’’ (Iftikhar Ahmad, 2004). ‘’Effective communication is the key success of an organisation’’ (S.Q Hussain, FCA, 2003). After this point we are moving towards the importance of religious education. According to Quran ‘’Are those who know equal to those who know not? Only those who are endued with understanding receive admonition’’ (Al- Quran, chapter No.23, surah No.39, verse No.9). This is really strong verse of the Quran about the importance of religious education in every filed of life. According to hades words, Prophet Muhammad said; ‘’ to gain knowledge is compulsory for every men and women’’ (Bukhari Sharif, volume 9, p345 old publication).
For example, ‘if a doctor wants to do a heart surgery without proper heart surgery experience and full knowledge then there is 99% chance of a death of the patient’(Mufti Qazi, March,2011). Therefore, this is compulsory for financial advisors for Islamic banks especially to get appropriate knowledge and experience in Islamic finance field. ‘’Lack of training in Islamic finance, is a big reason to raise misunderstanding about Islamic banking system’’ (khan, 2007). Now days allot of Islamic academies and financial institutions are offering short courses for Islamic finance products. Islamic banks which want to offer training programs to their employees they have to make sure about following things;
· Selection of the employees
· Choose training academy running by Renowned Islamic Scholars;
· Decide about the Length of course (e.g. day release course, sandwich course, weekend course etc.);
Moreover, after the above points, for example, like Pakistan and Malaysia have already formed one central sharia council body. The important point formation of the body, it has to be acceptable of four schools of thought followers. There is no doubt, in UK some shariah councils are already working but majority of Muslims does not have trust on their works. Therefore, all Islamic scholars from different school of thoughts choose their representatives for that shariah body.
The advantages for that council might be are as follows;
· Liaison with Islamic banks advisors;
· Issue a monthly new letter relating to challenges facing by Islamic banking system with the solutions;
· Facilitate to the banks on new Islamic products;
· Issuing timely decisions about any Islamic finance problems;
· Introduce standardisation across the industry;
· Provide trainings to new generations about Islamic finance with the help of modern techniques etc.
After following all above points there is great chance for Islamic banks advisors to get high confidence about Islamic products. After that, Muslims can go for more Islamic banking system Instead of conventional banking system.
Now, i start important part of this chapter with really important recommendations.
There are some big dreams almost for every Muslim are as follows;
1. To earn interest-free return on his or her investment;
2. To have a house with interest free mortgage rate;
If we look back in a history again, we can see some important suggestions relating to elimination of interest with any return. ‘These kinds of recommendations made by Pakistan shariah advisory council board, that advisory council board headed by the finance minister of Pakistan. This shariah advisory board was established in 1980 by Pakistani government with the help of different Islamic scholars and professionals from all around the world’ (Siddique, 2006, v4, p133). The report issued by the advisory board consist of almost 127 pages is a valuable contribution to the important literature on Riba-free banking system. This was the great achievement of Pakistani government in Islamic banking history.
According to paragraph No.1.27, ‘Qard-e-Hasan is really important element of Islamic finance. Qard-e-Hasan, ‘is a loan with free of interest element’ (Ayub, 2007).Therefore, according to this type of Islamic finance banks and other financial institutions issue Qard-e-Hasan for a short time to fulfil the financial needs of the community or a business and banks can be charge some specific fee with the name of ‘admin fee’ in advance only not with the name of as an interest. This report paragraph No. 1.23 categorically state that’ the loss would, however, be shared strictly proportionately to the respective capital contributions’.
Prize Bonds is really famous Islamic finance technique which is using currently in Pakistan and issuing by Pakistani government whenever they need finance. It is totally different with ‘Gharar’ because if you win in a lucky draw then you can make prize or extra money otherwise your money is still safe. For example, Pakistani Government Issue totals RS 2.0 million prize bonds for the public. One prize bond price (face value) is Rs 200.00 with first prize Rs50000.00 and Second prize Rs 25000.00 then 3rd prize Rs 10000.00. If the buyer of this bond dose not wins he or she has a chance go to financial market and sell it and recover his or her face value which was Rs200.00 at any time. But in ‘Gharar’ you can lose your actual money as well, for example, lottery system in UK and Europe. Pakistani prize bond system is really helpful finance system for the community and as well as for the government’s to raise interest free finance from the nation at any time (Paragraph No. 1.48). According to (Mufti Akmal Qadri, 2008), Fatwa’s on ‘Prize Bonds is ‘Halal’ in Islam.
Moreover, advisory council provide some more guidelines about day to day business activities within the Islamic law framework. In short, advisory board state some recommendations for examples, Islamic financing techniques which I have discussed already in chapter No.2. Those recommendations have been following by different banks in all around the world.
As I discussed in ‘literature review’ chapter, in details the importance of fatwa in Islamic law. According to Quran and Hades Riba is ‘Haram’ in Islam. That is why I took some fatwas, to understand in depth what is actually interest and how it is Haram in Islam. During that period of research, I found or took some really important Fatwas personally from world renowned Authorities in Islam. First, I am going to write an important Hades on Riba is ‘Halal’ for Muslims but when,
.’’ بي لحر ا ؤ لمسلم ا بين لاربؤا’’
Meaning of above Hades words is; ‘‘There is no Riba (interest) between Muslims and Non-Muslims’’ (Hidyah Sharif, p978, v1 and Kitab-ul- Bayuooh, p657).
Moreover , I am going to discuss the first Fatwa on Riba is ‘Halal’, with the help of above Hades, ‘’ There is no interest element, when Muslims do trade or business with Non-Muslims and if Muslims earns or receives an interest on their investment’’ (Mufti Ishfaq Ahmad Qadri Rizvi, UK, 16-08-2011).
Furthermore, (Mufti Ishfaq, 16-08-2011) elaborates more on this above hades with issuing one more Fatwa, ’’ In Hidyah Sharif , book name Al Bayuooh it states that the wealth of a Non-Muslim is allowable for a Muslim providing such Muslims are living in non-Islamic countries. The reason being that the responsibility, of looking after the Muslims is in the hands of non-Muslims. In contrast, a ‘Dhimmi’ is a Non- Muslim subject of an Islamic state and therefore governed to a large extent by shariah laws.’’
Second Fatwa on ‘Riba, Halal’ issue to support my recommendations for this chapter, ‘’ Non-Muslims Banks gives profit to their Muslims customers which is not ‘Riba’ this kind of profit is allowed only from Non-Muslims banks according to above hades’’(Mufti Abdul Wahid Qadri, Netherland, 2011, Book Name, Fatwa-e-Europe, p487). Furth more, Mufti Abdul Wahid said’ if Muslims invest their money in Non-Muslims institutions or investment companies and getting profit it is also allowed’’ (Fatwa-e-Europe, v1, p487).
Therefore, i just try to summaries above ‘Hades’ and’ Fatwas’ in an easy way to create better understanding of the reader. Basic concept of the Riba in Islam, it is not allowed only between Muslim to Muslim. Therefore, this is great recommendations of this chapter for the Muslims investor, if they want to earn profit on their investments. Therefore, they have to be open their accounts in Non-Muslims banks and enjoy higher Profit rate and make clean money free of Riba element in Non-Muslims banks. According to above ‘Hades’ and ‘Fatwas’ important point is, ‘Riba is only allowed on receiving profit but on the other side paying interest is still not allowed for paying loans’.
As I mentioned above to have a home is a dream for everyone but it is not possible to pay all price of the home in one go. That is why majority of people including Muslims and Non-Muslims apply mortgage and as we know mortgage includes two elements capital plus interest. This is again a problem for Muslims to pay interest, which is not allowed. Therefore, i just try to solve this problem also for Muslims with the help of the Holy Quran and with some Islamic Fatwas which I took in month of 17-08-2011.
According to Holy Quran ‘’and whatever they have done is in the Books’. ‘And everything, small or big has been written down’’ (Al-Quran, Chapter No.27, Verse No. 52-53, Surrrah No.54). These two above verses of Holy Quran clearly states that you can find everything from this Holy book. In Islamic Law we use one word, ‘SHARIAH HIALLAH’ this is really important point to solve new modern Islamic problems with the help of this.
This is pure Islamic term which is not easy to understand for those who do not have any proper Islamic background. That is why I gave two details references from the Holy Quran about this Islamic term.
No.1 ‘‘Then they went to Prophet Yusuf (Joseph), he gave his brother a place near to himself, he said,’ Believe, I am your brother, therefore be not grieved of whatever they do’. Then when he made ready their baggage, he put the drinking cup in the saddlebag of his brother. Thereafter a crier cried. O men of caravan, no doubt, you are thieves’.’ They said, 'we do not find the king' measuring cup, and whosoever will bring it, He shall have a camel's load and I am his guarantor’. They said, By God, you are well aware that we came not for creating mischief in the land, nor we are thieves’.’ They said, what is the penalty of him, if you be liars?’ ‘They said, its penalty is that he in whose baggage it is found be himself the servant in recompense. Thus is the punishment of the unjust at our place. ’Then first he began the search of their bags before the bag of his brother; then he took it out from the bag of his brother. We taught Yusuf to plan. He could not take his brother under the King’s law but this that Allah willed. We exalt in degrees whomsoever we please and above every man of knowledge there is one of more knowledge’. ‘the brother said, if he commits theft, then no doubt his brother has already committed theft before, then Yusuf kept this thing secret in his heart and did not disclose it to them. He said within himself, you are at worse place, and Allah (SWAT) knows well what you fabricate’’ (Al-Quran, Chapter No.13, and Verse No.68 to 76 and Surrrah No.12).The important point of above all verses ‘Allah (SWAT) knows everything about the ‘Fabrication’ of above story’. This is ‘shariah Hillah’s’ first reference from the Quran.
No.2 Second reference from the holy Quran, ‘’ and remember our bondman Ayub (Job). When he called his Lord (Allah) that the devil has touched me with affliction and oppression’. We said, ‘strike your foot with the ground, here is the cool, stream for bathing and for drinking’.’ And we bestowed him his family and others like them in addition to them as a mercy from us and as admonition to the people of understanding’.’ And we said, ‘take in your hand a broom of dry grass and strike there with and break not your oath. Undoubtedly, we found him steadfast, what an excellent bondman was he? Verily he is of returning’’ (Al-Quran, Chapter No.23, Verses NO. 41 to 44, Surrrah No.38).
With references of above Quranic verses, (Mufti Ishfaq Qadri, 16-08-2011 and Mufti Akmal Qadri, 2-06-2008) issued two important Fatwas in details about Interest free mortgage issue,’’ if anyone wants to buy a house but that person does not have a finance then he or she has to be gone to the financial institutions or banks owned by Non-Muslims. Banks or financial institutions buy a house for that person then that person buy back from the bank or financial institution. Bank charge not whole of price in full but make some instalments with the agreement of buyer. As we know instalments of the house contains two elements, one is capital and second is interest. Then Muslim buyer have to be explain to the banks about ‘shariah Hillah’ process to the mortgage advisor and say to the advisor, ‘ I will pay you the capital element straight but for the interest element bank must sell say one ‘Pen’ and bank assume bank is charging the price of the pen not the interest of the house price. This procedure is totally based on assumption or agreement between both parties according to above Quranic verses. This is not compulsory for the buyer or the seller to sell something along with the house but to understand the ‘shariah Hillah’ process. ’’
Another Fatwa on Mortgage issue ‘’Consider for example the buying of a house mainly financed using a mortgage: ‘’If it is ‘absolutely necessary’ to buy a house, then a mortgage is permissible providing the founder and current owners of the bank or lending institution are Non-Muslims. Imam Ahmad Raza Khan (Fatwa-e-Razawai, v21, p276) defines absolute necessity as that necessity which is acceptable under shariah and such that a person cannot survive without it on a daily basis. In relation to housing, absolute necessity would apply if renting accommodation was not viable; maybe the costs involved are too high or the size of the accommodation is too small in relation to the size of the family. Or it may be that rented accommodation cannot be found in a suitable location where a family feels secure. In such cases ‘absolute necessity’ would allow a person to buy his own home using a mortgage’’ (Mufti Ishfaq Qadri Rizvi, 16-08-2011 and Book Name: Al- ishba Wan-Nazair, p876).
There are some limitations from above Fatwas only one house for one family is allowed to fulfil the basic necessity not more than one.
At the end of this chapter, I just want to conclude for the reader to understand any Islamic things must have to be making connections with Qualified Islamic scholars (Mufties). Furthermore, for Islamic products, I just refer to above fatwas which I used in my study. Remember above ‘fatwas’ are only applicable for investments and mortgage problems and not for other Islamic banking products. Furthermore, 1980’s shariah advisory council report’s recommendations are really important for Islamic banking system because that was the first report in Islam history made by the government of the country with the help of different Islamic scholars and professionals.
There were several limitations to this dissertation work. The big limitations appeared in finding the right or appropriate participants for interviews. This is because there were no replies received from some emails and telephone attempts done by researcher. Therefore, the participants were chosen through sampling. Some more limitations which research were facing, for examples, cost of the traveling for the field work and cost of the collection of data and traveling cost.
Furthermore, translations of Quranic verses from Arabic to English according to Islamic law and translating different Fatwas also from Urdu and Arabic to English with the help Mufties. The interview schedule time which was set up for July and August 2011, was in disadvantage to researcher because of the ‘Ramadan’ as at this time of the year most of the Islamic scholars were busy in their worships and went for ‘Umrah’ in Makkah. I tried my best to complete this report with my heart and sincerity, if I make any religious mistakes; Allah (Azwajallah) forgives me.
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i) Islamic Bank Mortgage rate move along with the LIBOR Rate?
- Answer (Only one box to be ticked): Agree, strongly agree, disagree or strongly disagree
ii) Do Some Non-Qualified Islamic Scholars who are just selling their Islamic Believes to issue wrong ‘Fatwas’ (Islamic decrees) or doing wrong interpretation of the Quran or Hades ?
- Answer (Only one box to be ticked): Agree, strongly agree, differ or strongly disagree.
iii) Do Islamic Banks get one Fatwa for one product but use same Fatwa for all products?
- Answer Box (only one to be ticked): Agree, strongly agree, disagree or strongly disagree
iv) Do Islamic banks sell their products free of interest Rate?
- Answer (Only one box to be ticked): Agree, strongly agree, disagree or strongly disagree
v) Does Islamic banking is same like Conventional Banking System?
- Answer (only one box to be ticked): Agree, strongly agree, disagree or strongly disagree
vi) Are all Muslims happy with current Islamic Banking system?
- One Answer boxes to be ticked: Agree, strongly agree, disagree or strongly disagree
vii) Does Islamic banking really possible?
- Answer (only one box to be ticket): Agree, strongly agree, disagree or strongly disagree
Researcher used all the above questions as a part of my dissertation as well as during my field work.
Fatwas in actual writing:
1- - Bowel mean mind or heart
2- Flowers mean his answers.