Why Islamic Banking? the historical and practical view.

Byline: Muhammad Zeeshan Farrukh

Why we have need to use the word Islamic as prefix before Economics, Business, Banking, Finance, Marketing, Management etc.? The answer is that unfortunately the Muslim Ummah turned from the long slumber of centuries due to the international downfall. Over the period of few centuries, the secular and western theories and practices were formulated and imposed upon the world in wise manner.

Due to the brutal behavior of Church in the West, the people raise the voice against the Church and Enlightenment Movement of the seventeenth and eighteenth centuries refused any religious interference in the management of human affairs. When the religious guidelines were rejected, the management of human affairs was controlled by the persons who have monetary and political influence into the society. Therefore, like all other social sectors, the economic sector and its policies were also controlled by these persons. The banking is a part of conventional economic framework and follows the conventional economic principles and rules.

We must see the condition and overview of Islamic World at the same time when Enlightenment Movement and banking industry were being flourished in the West. Unfortunately Muslim Ummah was taking the last breath of sovereignty and held by the West along with their socio-economic policies.

When the Muslim Ummah will regain power in the mid of twentieth century, the Muslims think to implement socio-economic system of Islam but unfortunately, the interest based economic and banking system was deeply rooted in the world that could not be removed overnight. The Muslims have been striving to get rid of interest based system and now we see the result of these struggles in the form of modern Islamic banking and finance practices.

When we talk, discuss and use the terms and concepts of Islamic Economics, Banking, Business and Finance, the people generally seem and think that we are talking about something new into the present socio-economic scenario and seem unusual and unnatural concepts, methods, procedures and policies.

The reality is absolutely different. These are not the new and strange concepts in a real sense but these are the methods and modes that we are using in our daily and routine life but when we are applying these modes and methods in prevalent economics, banking and finance field, we feel that these are new concepts. We do sale, rental and partnership based transactions but when we move to...