The Islamic Finance Show – 'Riba'

The Islamic Finance Show, discusses the importance of Riba in Islamic finance with established Islamic banker and author, Harris Irfan.

Sheikh Shady Al-Suleiman: What Islam Says About Riba (Interest or Usury)

Riba-Free Financing

The Dawning of a New Dark Age – Dust Jacket Hardcover, direct from the publishers (UK) >>>
The Dawning of a New Dark Age – Paperback, direct from the publishers (UK) >>>

Islamic Finance Expands as Wealth Grows
KHALEEJ TIMES: DUBAI - The market for Islamic finance and banking is growing rapidly in the Gulf thanks to burgeoning wealth and attractive financial instruments.

Studies have put the total value of Islamic equity funds in the Gulf region at around 30 billion dollars (19.5 billion euros), said Khaled al-Masri, partner in asset management at Dubai-based Rasmala Investments.

“Investable wealth in the Gulf Cooperation Council is growing by one of the highest rates in the world ... This increase is being met with more product providers and products being launched in the GCC market,” he said.

The Islamic finance industry worldwide is worth around 700 billion dollars, Moody’s Investors Services estimated in a February report.

Economies of the six GCC member states -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates -- have been enjoying remarkable growth over the past few years on the back of record oil prices.

The robust economic performance has inflated local wealth in this Muslim region where many might prefer to seek profit through investments that do not contradict their beliefs.

The basic principle of Islamic finance is the prohibition of Riba (usury), which is correlated with interest in today’s banking.
Islamic funds are also banned from investing in companies associated with tobacco, alcohol, pornography, pork or gambling, all considered taboo by devout Muslims.

Some 125 Islamic equity funds are based in the GCC out of around 320 globally, said Mark Smyth, UK-based managing director of Failaka Advisors, an Islamic fund research company.

“Increasing familiarity with Islamic products combined with the presence of longer and more established funds seems to be driving the current growth, combined with strong returns,” Smyth told AFP.

Islamic finance provides a “solution for investors and consumers who want to adhere to sharia-compliant principles in their investment and consumption decisions,” said Masri, referring to principles in line with Islamic law.

He also pointed out that the sukuk (Islamic bonds) have become appealing at the corporate and government levels as a tool to raise finance, which in turn increased the size of the sector.

A report by the US-based Morgan Stanley investment bank published by the local press in February put outstanding issued sukuk at more than 90 billion dollars worldwide. Islamic finance expands as wealth grows >>>

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Islamic Banking and Finance - Riyazi Farook

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Shari’ah Finance: Plenty of Interest in No Interest
THE TELEGRAPH: The Halal banking revolution is taking off, says Kara Gammell

The British Government is believed to be planning to raise funds by issuing Shariah-compliant bonds in the Middle East, which would be the first time a Western country did so, but many British banks already provide financial services in accordance with Islamic law.

Junaid Abbas Bhatti, an expert in Islamic Finance said: "The industry is growing at 15pc a year, so it's no surprise that the Western world's financial markets are starting to sit up and take notice of the Halal banking revolution.

"Islamic banking is far more complex than a simple prohibition on the giving and receiving of interest."

Emile Abu-Shakra of Lloyds TSB said there are now 2m Muslims in the UK. He added: "Our research tells us that three quarters want banking services that are in line with their faith.

''We have developed a range of products - from current accounts to mortgages - designed to meet the needs of needs of Britain's Muslim community.

"Not only has this made its possible for Muslims to bank according to their principles, but it has also helped to make Britain a real centre for Islamic finance."

The main difference between Islamic and conventional banking is that Islamic teaching says that money itself has no intrinsic value, and forbids people from profiting by lending it, without accepting a level of risk.

In other words, interest - known as "Riba" - cannot be charged. Sharia finance: plenty of interest in no interest >>>

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Banks are Helping Sharia Make a Back-Door Entrance
GLOBE AND MAIL: It seems only yesterday that Premier Dalton McGuinty declared: "There will be no sharia law in Ontario." Many of us, who witnessed the medieval nature of manmade sharia laws in our countries of birth, heaved a sigh of relief back in September of 2005. We thought this was the end of the attempt by Islamists to sneak sharia into a Western jurisdiction. We were wrong.

The campaign to introduce sharia is back. Last time, the campaign took a populist approach, invoking multiculturalism. This time, the pro-sharia lobby is dangling the carrot of new niche markets and has the backing of Canada's major banks. Such icons of the corporate world as Citibank NA, HSBC Holdings PLC, and Barclays PLC have endorsed sharia banking and have started offering Islamic financing products to a vulnerable Muslim population.

In May, 2007, The Globe reported that "Several Canadian financial institutions are preparing sharia-compliant mortgages, insurance, taxi licensing and investment funds to help serve the country's fastest-growing part of the population." Recently, the Toronto Star's business section reported that an unnamed bank may offer sharia loans as early as this summer; Le Journal de Montreal disclosed that Canada Mortgage and Housing Corporation (CMHC) was also getting in on the act. Stephanie Rubec, spokesperson for the CMHC, said the Crown corporation had launched a tender worth $100,000 to study Islamic mortgages for Muslim Canadians. Could she be oblivious to the fact that almost all Muslim Canadians currently have home mortgages through banks and don't feel they are living in sin? In fact, CMHC has gone a step further: It has quietly entered into a partnership with a Saudi company, AaYaan Holdings, to develop sharia-compliant mortgage-lending systems.

The origin of Islamic banking has its roots in the 1920s, but did not start until the late 1970s and owes much of its foundation to the Islamist doctrine of two people — Abul Ala Maudoodi of the Jamaat-e-Islami in Pakistan and Hassan al-Banna of the Muslim Brotherhood in Egypt. The theory was put into practice by Pakistani dictator General Zia-ul-Haq who established sharia banking law in Pakistan.

Proponents of sharia banking rest their case on many verses of the Holy Koran that outlaw usury*, not interest.

Verses that address the question of loans and debts include:

Al Baqarah (2:275): God hath permitted trade and forbidden usury;

Al Baqarah (2:276): Allah does not bless usury, and He causes charitable deeds to prosper, and Allah does not love any ungrateful sinner.

Every English-language translation of the Koran has translated the Arabic word riba as usury, not interest. Yet, Islamists have deliberately portrayed bank interest as usury and labelled the current banking system as un-Islamic. Instead, these Islamists have created exotic products with names that are foreign to much of the world's Muslim population. This is where they mask interest under the niqab of Mudraba, Musharaka, Murabaha, and Ijara. Two authors, both senior Muslim bankers, have written scathing critiques of sharia banking, one labelling the practice as nothing more than "deception," with the other suggesting the entire exercise was "a convenient pretext for advancing broad Islamic objectives and for lining the pockets of religious officials." Why Canadian banks would contribute to this masquerade is a question for ordinary Canadians to ask. Banks are helping sharia make a back-door entrance >>> By Tarek Fatah

*Usury is “the practice of lending money at exorbitant, or illegally high, rates of interest”. [Source: Dictionary.com]

Tarek Fatah is the author of Chasing a Mirage: The Tragic Illusion of an Islamic State, to be published in March.

Mark Alexander (Paperback)
Mark Alexander (Hardback)