Looking for New Steps in Islamic Finance

In the name of Allah, the Most- Merciful, the Very-Merciful
Islamic banking industry has grown rapidly during the past three decades spreading its
operations in many parts of the globe. Making its first debut in the small Savings Association
of Mitghamr (Egypt) in 1963, its strength has now reached over 250 financial institutions
operating in more than 40 countries with assets valuing USD 750 billions, and an annual
growth rate of 15 per cent. Almost all the giant conventional banks are in queue to establish
their Islamic units to capture the new emerging market. This rapid growth of Islamic
financial industry is, no doubt, encouraging for those who wished to relieve themselves from
the prohibition of interest on the one hand and to remain a part of the modern market
economy on the other. Now that a substantial period of more than three decades has passed
on the experience of Islamic Banks and Financial Institutions, it is imperative to review what
they have achieved so far and what they have missed.

It is, no doubt, a great achievement of these institutions that they relieved the Muslims
from clear prohibition of riba, and came up with some alternatives that might be adopted in
financial market without indulging in interest. In an atmosphere entirely dominated by
interest-based transactions, it was really a formidable task. I do not agree with those who
criticize them on the basis of utopian idealism, and claim that they should have brought an
immediate revolution in the entire pattern of the financial market and should, at the very
outset, have achieved the basic objectives of a true Islamic economy. This idealism that
accepts no breathing space between 0% and 100% always tends to support 0% and to
maintain status quo in practical terms. Looking from practical aspect, it is always a wise
policy to start something that can be done in a given situation, even though it is less
preferable from an idealistic approach. It was in this background that some instruments of
lesser risk like murabahah, ijarah and diminishing musharakah etc. were allowed by the
Shariah scholars. It is also wrong to say that these instruments have an element of
camouflaged interest. In fact, if implemented with all their necessary conditions that have
always been stressed upon by the Shariah scholars, they are substantially different from an
interest based financing. At the first place, all these instruments are based on real assets, and
do not amount to trading in money and financial papers, which is the case in an interestbased financing. Secondly, unlike an interest-based transaction, the financier, in each one of
these instruments, assumes the risk of real commodities, properties or equipments without
which the transactions cannot be valid in Shariah. Thirdly, these modes can be used only to
finance a commercial activity that is permissible according to Islamic rules and principles.

These basic distinguishing features are enough to draw a line of difference between the two
2 techniques of financing. Therefore, the notion that they are another form of interest is not

Having said this, one must not forget that these instruments are not modes of financing
in their origin. They are in fact some forms of trade that have been modified to serve the
purpose of financing at initial stage as secondary and transitory measures. Since they are
modified versions of certain forms of trade, they are subject to strict conditions and cannot
be used as alternatives for interest-based transactions in all respects. And since they are
secondary and transitory measures, they cannot be taken as final goal of Islamic Finance on
which Islamic Financial Institutions should sit content for all times to come. It is a matter of
concern for a student of Islamic finance, like me, that both these points are increasingly
neglected by the players in the field, and especially by the new-comers in the industry.

One should always differentiate between the transactions based on the original
philosophy of a particular system and the transactions resorted to in exceptional situations on
the basis of need. The former ones represent the real concept of the system, while the latter
ones do not. The original concept of Islamic financing is undoubtedly in favor of equity
participation rather than creation of debts, because it is only equity participation that brings
an equitable and balanced distribution of wealth in the society. Debt-ridden economy, on
the other hand, tends to concentrate wealth in the hands of the rich, and creates a bubble
economy which fuels inflation and brings many other social and economic evils.

That is why Islam has discouraged creation of debts, which should be resorted to in exceptional
situations only, and encouraged equity participation, which is the best way to a just and
balanced distribution of the benefits of commercial activities. Out of innumerable
instructions given by Islamic resources to that effect, I would like to quote only two
examples. It is reported by Sayyidah ‘Aisha ﷈, the blessed wife of the Holy Prophet ﷺ that,
during his prayer the Holy Prophet ﷺ used to seek refuge from indebtedness.
On the other
hand, the Holy Prophet has declared that ‘Allah Almighty remains with trade- partners (to
help and support them) unless one of them becomes dishonest to the other.’
These two
comments made by the Holy Prophet ﷺ are more than sufficient to show Islamic attitude
towards debts as opposed to the equity participation.
In the light of the above, Islamic financial institutions have much to do before they
achieve the desired objectives of a true Islamic economy. Although the trade-related
instruments like murabahah, ijarah etc. used by them in their operations, are not loans in
strict terms, yet they create debts on the basis of deferred sales or renting. As explained above,
debt-based instruments are not preferred ones, but they were suggested to be used as modes
of financing to start the wheel of interest-free financing, and to bring an instant relief from
interest in an atmosphere that was not fully prepared for immediate switch over to an equitybased system. It was a sort of first aid provided to a patient before he may have access to full
medical treatment. No one can deny the importance of measures taken as first aid, but who
can claim that they are the final cure of the disease, or that no further treatment is needed
after them? Pain-killers are necessary to give immediate relief, but they are not enough to
cure the deep-rooted ailments. The idea was that after starting their operations on the basis

I have explained this aspect of debt-based economy in my book The Historical Judgment On Interest.
Sahih-ul-Bukhari, Chapter10:149, Hadith no.832
Abu Dawood, Chapter 22:26, Hadith no. 3383iççâáåÖ=Ñçê=kÉï=píÉéë=áå=fëä~ãáÅ=cáå~åÅÉ=
of these instruments, they should gradually proceed towards the ideal forms of Islamic
Failure to abide by this idea has caused many problems resulting in total neglect of
equity-based financing. Despite the differences we have explained above between interest and
these instruments, they have many similarities in the net result, especially because of the
benchmark used for their pricing. This has prompted Islamic Financial Institutions to
compete with their conventional counterparts in all respects, and restrict themselves to the
debt-based products. In their zeal to compete conventional banks, they are trying to invent
‘Shariah compliant’ counterparts for each and every financial product available in
conventional capitalist market, regardless of whether or not they are in consonance with the
ethos of Islamic economy. Instead of gradual progress towards equity, the tendency is to
make maximum compromises to accommodate debt- related products matching with
practices of the conventional market. Even derivatives are being designed on the basis of
‘Shariah compliant’ methods. If some products had to be equity based, they too were
equated in some way or the other with a fixed return debt. ‘Sukuk’ was the best way to
proceed towards equity, but in order to restrict the return of sukuk holders, a threshold based
on Libor is applied after which the whole profit is given to a particular party in the name of
incentive for good management. In many cases, it is not even mentioned that after the fixed
rate the rest is incentive.
This situation needs serious consideration of the players in the field and of the Shariah
scholars who oversee the new products for Islamic financial Institution. Many conferences
and seminars are being held frequently to consider various aspects of Islamic finance. I think
it is high time now to find out ways and means to make our products not only compliant
with, but also founded on Shariah. Our research should now focus on how we can move
from debt-based to equity-based instruments in their true spirit, so that they may
demonstrate the beauty of Islamic finance based on its economic ethos. No doubt, there are
still some hurdles in their implementation, but they are not insurmountable for an industry
that is growing so fast, if serious importance is attached to this vital issue, which must be the
next topic of our discussion in a workshop devoted for this purpose. May Allah guide us all.


Soil knows not its color..

The next time you are in your garden or at a park, take a good look at the earth, the soil. Take some of it in your hand, feel it, look at it real close, and remind yourself that when you die that is what you will become.

So, how come then do human beings spend so much of time and energy discriminating against others who are of a different race? Take some time to think about it. If we have all descended from a common ancestor, then what makes any one of us superior to another? It does not make sense.

Racism has been the scourge of society for centuries. From the slave trade in the Arab world in ancient times through the European colonialism that pillaged most of Africa to the annihilation of native Indians by the Spanish in the Americas, racism (combined with greed for natural resources) has brutally destroyed societies and communities.


We undoubtedly see ourselves today as the most progressive and advanced generation of all times, but do we really understand the meaning of advancement? Sure we have advanced heaps and bounds in medicine, science, and technology, but if we truly did advance socially, would we still be suffering the effects of blatant and subtle racism?

In September 2007, an unfortunate incident occurred in the US in a town called Jena. Six African-American youth were charged with attempted murder of a white youth. The incident was apparently invoked by some white students who banned black students from sitting under a particular tree. It is beyond belief that such acts of racism are still common in the US even today, in a country that insists upon equality for all.

Racism, however, is not limited to the US. We see it in Europe, Asia, and Africa — in fact, all over the world. Fortunate not to have suffered under apartheid in South Africa, imagine my utter disbelief and disappointment when I witnessed shocking racism that surmounts what I had personally witnessed in South Africa.


There are many people in the world who justify their discrimination toward others based on religious ideologies. In South Africa, the Christian right-wingers preached that they were sent by God to inhabit the land of South Africa and to “purify” the people of the land. Today, the Zionists justify their theft of the land of Palestine by falsely insisting that God promised the land to them.
However, when we take a look at what Islam says about people, we have to ask ourselves, why are Muslims not doing more to combat racism and promote understanding of different cultures? Furthermore, why has this not been forthcoming by the prominent scholars of Islam? Where are the voices of the Muslim Ummah when racism rears its ugly head?

Muslims are commanded by Allah to get to know one another. Surely, this is to marvel at the wonder of Allah’s creation that from just one male and female, He created hundreds of nations and tribes:

[The believers are but a single brotherhood.](Al-Hujurat 49:10)
[O humankind, We [Allah] created you from a single (pair) of a male and female and made you into nations and tribes that you may know each other (not that you may despise each other). Verily, the most honored of you in the sight of God is (he or sh
e who is) the most righteous of you
.](Al-Hujurat 49:13)

In his book Islam in Focus, Hammudah Abdalati describes the Muslim Ummah as follows:

The community in Islam is not founded on race, nationality, locality, occupation, kinship, or special interests. It does not take its name after the name of a leader or a founder or an event. It transcends national borders and political boundaries. The foundation of the community in Islam is the principle which designates submission to the will of Allah, obedience to His law and commitment to His cause. In short, an Islamic community is present only when it is nourished and fostered by Islam.


 From the above, it is clear that Muslims bear a large responsibility of fostering and nurturing good relations between different races and cultures. While the great Muslims of the past were successful in doing this (as is evident in most of North Africa), the Muslim Ummah of today has fallen behind.

There is a huge responsibility on the shoulders of Muslim scholars, teachers, and parents to instill in every generation the fact that racism can never be justified. The responsibility is on the Ummah to generate and sustain harmonious relationships among different races and cultures. The Ummah has to exert itself in accentuating the virtues and uniqueness of different people.

Arrogance associated with the color of skin has to be the most vile characteristic of any human being — a detrimental waste of time. For Muslims living in multiracial and multicultural societies, it is a perfect opportunity to enforce the cited Qur’anic verse. For Muslims living in a Muslim country, the homogeneity of the social structure should not allow one to forget the extreme and dire significance of the above verse.

Unity in diversity” has been an ongoing call in many countries. We are only cheating ourselves by not allowing ourselves to build bridges. In what is supposed to be a “civilized” world that we live in, we should hang our heads in shame that racism and racial violence — where innocent lives are still being lost — are still a norm in many societies. If we, the Muslim Ummah, were doing what Allah has asked us to do, we would be living in a far more prosperous social environment.

The next time you are about to utter a racial slur or witness blatant racism or racial violence and choose not to do anything about it, bear in mind that soil is all you will be when you die. For your actions or for your inactions, you will be held accountable to your Creator; we will all be.

Have you ever DISTURBED?

 ابو ھریرۃ رضي الله عنه سے روایت ہے 
” ایک شخص ساٹھ سال تک نماز پڑھتا ہے
مگر اسکی ایک نماز بھی قبول نہیں ہوتی
 پوچھا گیا : وہ کیسے ؟؟
انہوں نے کہا : کیونکہ نہ وہ اپنا رکوع پورا کرتاہے اور نا سجود
نا قیام پورا کرتا ہے نا اس کی نماز میں خشوع ہوتا ہے  

حضرت عمر رضي الله عنه نے فرمایا ایک شخص اسلام میں بوڑھا ہوگیا 
اور ایک رکعت بھی اسنے اللہ کے لیے مکمل نہیں پڑھی

 پوچھا گیا کیسے یا امیر المومنین ؟
 فرمایا :
اسنے نا اپنا رکوع پورا کیا اور نا سجود
 امام احمد بن حنبل رحمہ اللہ نے فرمایا
 ایک زمانہ  لوگوں پر ایسا آئے گا
لوگ نماز پڑھیں گے مگر انکی نماز نہیں ہوگی
 اور مجھے ڈر ہے کہ وہ زمانہ یہی زمانہ ہے
امام اگر آج کا زمانہ آکر دیکھ سکتے تو کیا کہتے ؟؟
امام غزالی رحمه الله نے فرمایا
 ایک شخص سجدہ کرتا ہے اس خیال سے کہ اس سجدہ سے اللہ کا تقرب حاصل کرے گا
 اس اللہ کی قسم اگر اس کے اس سجدے کا گناہ تقسیم کیا جائے تو سارا بلد ھلاک کر دیا جائے پوچھا گیا وہ کیسے ؟؟
وہ اپنا سر اپنے اللہ کے سامنے جھکاتا ہے
 مگر اپنے نفس ،گناہوں، اپنی شہوات اور دنیا کی محبت میں مصروف ہوتا ہے
 تو یہ کیسا سجدہ ہے ؟؟؟
 ہمارے نبی صلی اللہ علیہ وسلم نے فرمایا
میری آنکھون کی ٹھنڈک نماز میں رکھی گئی ہے
 تو کیا کبھی آپ نے ایسی نماز پڑھی جو آپکے آنکھوں کی ٹھنڈک بنی ہو ؟؟؟
 کیا کبھی آپ گھر کی طرف تیزی سے پلٹے صرف دو رکعت کی ادائیگی کی نیت سے  ؟؟
کیا کبھی نماز کی محبت نے آپ کو بے چین کیا  ؟؟
کیا کبھی آپ نماز کے لیے ترسے ؟؟

 کیا کبھی آپ نے رات کا بے چینی سے  انتظار کیا 

تاکہ آپ اپنے رب کے ساتھ اکیلے نماز میں ملاقات کر سکیں ؟؟
 اللہ سبحانہ کا ارشاد ہے :
(( ألم يأن للذين آمنوا أن تخشع قلوبهم لذكر الله )) کیا ابھی تک مومنوں کے لئے اس کا وقت نہیں آیا کہ اللہ کی یاد سے ان کے دل نرم ہوجائیں؟؟؟؟
ابن مسعود رضي الله عنه فرماتے ہیں
ہمارے اسلام لانے کے چار سال بعد یہ آیت نازل ہوئی
 اس ایت میں اللہ سبحانہ نے ہم سے شکایت کی    
ہم سب بہت رویے
اپنے قلۃ خشوع پر
  پھر ہم گھروں سے نکلتے تو ایک دوسرے کو عتاب کرتے اور کہتے
 کیا تم نے اللہ سبحانہ کا یہ فرمان نہیں سنا ؟؟؟

(( ألم يأن للذين آمنوا أن تخشع قلوبهم لذكر الله ))  کیا ابھی تک مومنوں کے لئے اس کا وقت نہیں آیا کہ اللہ کی یاد سے ان کے دل نرم ہوجائیں؟؟؟؟

تو لوگ گر جاتے اور رونے لگتے

اللہ کے اس عتاب پر 
تو کیا کبھی آپ نے یہ محسوس کیا اس آیت سے؟؟
کہ اللہ تعالی آپ سے شکوہ کر رہا ہے ؟؟

اپنی نمازوں کو ضائع ہونے سے بچائیں

اپنے تمام دوستوں کو یہ میل نشر کریں
اور اگر آپ پر یہ بھاری ہو تو جان لیجیئے
آپ کے گناہ اس کام میں رکاوٹ ہی

Answer to Athiest

An atheist professor of philosophy speaks to his class on the problem science has with God, The Almighty. He asks one of his new students to stand and……

So you believe in God?
Absolutely, sir..
Is God good?
Is God all-powerful?
My brother died of cancer even though he prayed to God to heal him.
Most of us would attempt to help others who are ill. But God didn’t. How is this God good then? Hmm?
(Student is silent.)
You can’t answer, can you? Let’s start again, young fella. Is God good?
Is Satan good?
Where does Satan come from?
From…God.. ..
That’s right. Tell me son, is there evil in this
Evil is everywhere, isn’t it? And God did make
everything. Correct?
So who created evil? (Student does not answer.)
Is there sickness? Immorality? Hatred? Ugliness? All these terrible things exist in the world, don’t they?
Yes, sir.
So, who created them?(Student has no answer.)
Science says you have 5 senses you use to identify and observe the world around you.
Tell me, son…Have you ever seen God?
No, sir.
Tell us if you have ever heard your God?
No, sir.
Have you ever felt your God, tasted your God, smelt your God? Have you ever had any sensory perception of God for that matter?
No, sir. I’m afraid I haven’t.
Yet you still believe in Him?
According to empirical, testable, demonstrable protocol, science says your GOD doesn’t exist.
What do you say to that, son?
Nothing. I only have my faith.
Yes. Faith. And that is the problem science has.
Professor, is there such a thing as heat?
And is there such a thing as cold?
No sir. There isn’t.
(The lecture theatre becomes very quiet with this turn of events.)
Sir, you can have lots of heat, even more heat,
superheat, mega heat, white heat, a little heat or no heat. But we don’t have anything called cold. We can hit 458 degrees below zero which is no heat, but we can’t go any further after that.
There is no such thing as cold . Cold is only a word we use to describe the absence of heat We
cannot measure cold. Heat is energy. Cold is
not the opposite of heat, sir, just the absence
of it. (There is pin-drop silence in the lecture theatre.)
What about darkness, Professor? Is there such a thing as darkness?
Yes. What is night if there isn’t darkness?
Student :
You’re wrong again, sir. Darkness is the absence
of something. You can have low light, normal light, bright light, flashing light….But if you have no light constantly, you have nothing and it’s called darkness, isn’t it? In reality, darkness isn’t. If it were you would be able to make darkness darker, wouldn’t you?
So what is the point you are making, young man?
Sir, my point is your philosophical premise is flawed.
Flawed? Can you explain how?
Sir, you are working on the premise of duality. You argue there is life and then there is death, a good God and a bad God. You are viewing the concept of God as something finite, something we can measure. Sir, science can’t even explain a thought. It uses electricity and magnetism, but
has never seen, much less fully understood either one. To view death as the opposite of life is to be ignorant of the fact that death cannot exist as a substantive thing. Death is not the opposite of life: just the absence of it.
Now tell me, Professor. Do you teach your students that they evolved from a monkey?
If you are referring to the natural evolutionary process, yes, of course, I do.
Have you ever observed evolution with your own eyes, sir?
(The Professor shakes his head with a smile, beginning to realize where the argument is going.)
Since no one has ever observed the process of evolution at work and cannot even prove that this process is an on-going endeavor, are you not teaching your opinion, sir? Are you not a scientist but a preacher? (The class is in uproar.)
Is there anyone in the class who has ever seen the Professor’s brain?(The class breaks out into laughter.)
Is there anyone here who has ever heard the
Professor’s brain, felt it, touched or smelt it? No one appears to have done so. So, according to the established rules of empirical, stable, demonstrable protocol, science says that you have no brain, sir. With all due respect, sir, how do we then trust your lectures, sir?
(The room is silent.. The professor stares at the student, his face unfathomable. )
I guess you’ll have to take them on faith, son.
That is it sir.. The link between man & God is FAITH.That is all that keeps things moving & alive

Islamic teachings on the Importance of Parents

Say not to them a word of contempt, nor repel them, but address them in terms of honour. Quran 17:23

In Islam it is obligatory for us to show kindness, respect, and obedience to our parents. The position of parents, and the mutual obligations and responsibilities, have been addressed in Islam in great detail. In fact kindness and obedience is so strongly emphasized that God has linked showing gratitude to one’s parents with showing gratitude to God –

And We have enjoined on man (to be good) to his parents: in travail upon travail did his mother bear him, and in years twain was his weaning: (hear the command), “Show gratitude to Me and to thy parents: to Me is (thy final) Goal. (31:14)

Sadly we are living in a time where children speaking disrespectfully to their parents and about their parents, is the norm rather than the exception. However Islam places great emphasis on respectful and considerate behaviour to even our enemies, so to not uphold the obligations laid down by God to our parents is actually one of the major sins.

In the Quran
Let’s see what the Quran says about Parents. This is the Book; in it is guidance sure, without doubt, to those who fear God (2:02)

Treat parents with honour & speak to them graciously & with humility

Thy Lord hath decreed that ye worship none but Him, and that ye be kind to parents. Whether one or both of them attain old age in thy life, say not to them a word of contempt, nor repel them, but address them in terms of honour. And, out of kindness, lower to them the wing of humility, and say: My Lord! Bestow on them thy Mercy even as they cherished me in childhood. (17:23)

Be grateful to parents but do not obey them if they strive to make you associate things with God

…Be grateful to Me and to both your parents; to Me is the eventual coming. But if they strive to make thee join in worship with Me things of which thou hast no knowledge, obey them not; yet bear them company in this life with justice (and consideration), and follow the way of those who turn to me (in love): in the end the return of you all is to Me, then will I inform you of what you did (31:15)

These verses make it clear that we must honour our parents, appreciate their sacrifices and efforts for us, and do our best for them. This is required regardless of whether they are Muslims or not.

Be good to parents and everyone else who you meet

Serve God, and join not any partners with Him; and do good- to parents, kinsfolk, orphans, those in need, neighbours who are near, neighbours who are strangers, the companion by your side, the wayfarer (ye meet), and what your right hands possess: For God loveth not the arrogant, the vainglorious;- (4:36)

If the Quran tells us to be good to a stranger how can we even think of disrespecting our parents?

Let’s see what Prophet Muhammad said about parents in the authentic Hadiths. Whatsoever the Prophet gives you, take it and whatsoever he forbids you, refrain from it. – Quran 59:7

Disobedience to parents is a major sin

Anas narrated from Prophet Muhammad about the major sins. He (Mohammed) observed: Associating anyone with God, disobedience to parents, killing a person and false utterance. (Muslim)

One of the dearest deeds to God is being good & dutiful to parents

Narrated ‘Abdullah: I asked the Prophet “Which deed is the dearest to God?” He replied, “To offer the prayers at their early stated fixed times.” I asked, ”
What is the next (in goodness)?” He replied, “To be good and dutiful to your parents”…(Bukhari)

Being dutiful to parents is one of the keys to enter Paradise

Abu Huraira reported Prophet Muhammad as saying: Let him be humbled into dust; let him be humbled into dust. It was said: God’s Messenger, who is he? He said: He who sees either of his parents during their old age or he sees both of them, but he does not enter Paradise (because he has been undutiful to them). (Muslim)

Acts of kindness we can do for our parents after their death

While we were with Prophet Muhammad of God . A man of Banu Salmah came to Him and said: Apostle of God is there any kindness left that I can do to my parents after their death? He replied: Yes, you can invoke blessings on them, forgiveness for them, carry out their final instructions after their death, join ties of relationship which are dependent on them, and honour their friends. (Abu Dawood)

The High Status given to Mothers

A man came to the Prophet and asked him for permission to join a military expedition. The Prophet asked him if he had a mother, and when he replied that he had, he said, “Stay with her, for Paradise is at her feet.” (Ahmad)


Sometimes we may take our parents for granted and overlook their importance. As Muslims we should constantly be alert to guard ourselves from sins, however, are we guarding ourselves from one of the biggest major sins? Are we honouring and respecting our parents as per their right? Or are we neglecting one of the deeds most dearest to God? Right now the choice is ours!

We ask God the Most High, the All-Powerful, to teach us that which will benefit us, and to benefit us by that which we learn.