jump to navigation

Islamic scholars call for ‘more attention to morals than law’ June 28, 2007

Posted by islamicfinanceaffairs in Uncategorized.
trackback

Gulf Times – Qatar’s top-selling English daily newspaper – Finance & Business

KUALA LUMPUR: Islamic scholars working
with banks to shape Islamic financial products should pay more
attention to the moral rather than the legal aspects of Islamic law,
scholars told the Third International Islamic Finance Forum yesterday.
Islamic
and conventional banks are keen to develop and offer products in the
fast-growing market for Islamic financing but some Islamic experts have
criticised the banks and their advisors for not applying a stringent
enough interpretation of Shariah, or Islamic law, when assessing the
products.
They have also said that some banks are “Shariah
shopping”, that is, selecting scholars most likely to approve
their product.
Most banks seek approval for Islamic products from
either national Shariah boards or from individual scholars attached to
banks to reassure investors that their choices conform to their faith.
For
example, Islam bans investment in products that pay interest,
considered usury, products where there is undue uncertainty, or where
one party is deemed to be taking undue advantage of another.
Although
scholars interpret much of Qur’anic law in the same way, there is
still some difference in views, paving the way for disagreement over
the viability of certain products or practices.
Mohamed Akram
Laldin, chairman of the Shariah advisory committee of HSBC Amanah
Malaysia, said scholars look at three basic areas when assessing the
compliance of products: belief, legalilty and morality.
He said
products could fairly easily comply with Islamic law but it is more
difficult to ascertain whether they comply with the morals of Islam.
The
price of a product may not be controversial from a legal perspective
but if the product costs more than an equivalent conventional product,
it may not fulfil Islam’s moral obligations of fairness and
social equity, he said.
“(We) need the realisation that they
have the responsibility to fulfil the morals of Shariah,” said
Engku Rabiah Adawiah Engku Ali, head of the private law department at
the International Islamic University Malaysia.
Although there is a
plethora of Islamic scholars globally, the Islamic finance industry
tends to rely on fewer than 50 individuals, who often sit on multiple
advisory boards, to sign off on Islamic products and practices.
This
has slowed the introduction of new products and, some say, allowed a
limited number of scholarly views to dominate in Islamic finance.
“This
is not a healthy situation for the (Islamic finance) industry or for
the field of Islamic law,” said Malik Muhammad Mahmud al-Awan,
chief academic officer of the International Center for Education in
Islamic Finance, noting there were currently around 1.5bn Muslims
worldwide with a wide range of views on Shariah.
He called on
financial institutions to engage younger Shariah scholars alongside
more established ones to expand the pool of available advisers and to
provide a broader array of viewpoints.
“It is the social
responsibility of banks to have people who are well known globally and
new scholars who can learn to avoid problems (of insufficient manpower)
in the future,” added HSBC Amanah’s Akram.
Whether there should be greater effort to harmonise interpretation of Shariah is a more controversial subject.
Azhar
Kureshi, State Bank of Pakistan’s executive director for Islamic
finance development, told delegates that standardising the
“fatwas” – or approvals – given by scholars would lead to
harmonisation of Islamic financial product documentation.
Many
have blamed the failure of the financial community to create a global
market for Islamic financial products on the lack of common
documentation. – Dow Jones Newswires

Advertisements

Comments»

No comments yet — be the first.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: