Who is Responsible?

By Muhammad Rizwan-ul Haque

Founding Chairman, Dawood Family Takaful, CEO of an Investment Bank and Director of a Trust

March 11, 2016

Introduction

If a child does something wrong in school or in the neighborhood, the teacher or neighbors will often contact the parents. In most cases, the parents are held responsible, and rarely is the child alone punished for misdeeds in a civil society.

In a Society

Similarly, in a society, if something goes wrong, we approach institutions such as the police and the courts rather than taking matters into our own hands or putting up fights in the streets.

Shariah

Likewise, if there is a blatant violation of Shariah in a matter, then we must make the regulator, council, or institution cognizant of the issue. They must then carry out the necessary procedures to ensure the cessation of such practices.

A Reminder

The Qur’an and Sunnah have guided us adequately to understand the difference between halal and haram. However, if we still persist in wrongdoing, then the responsibility falls not only on ourselves but also on Shariah authorities, regulators, and professionals if they turn a deaf ear and a blind eye.

Surah Al-Maidah (5:62)

“And you will see many of them run towards sin and transgression and eating what is forbidden. Undoubtedly, they are practicing evil things.”

Surah Al-Maidah (5:63)

“Why do their clergymen not forbid them from uttering sinful words and consuming forbidden things? Indeed, what they are doing is evil.”

Riba

We are blatantly consuming Riba, and it is perplexing how conveniently it is being justified by some Shariah scholars to continue practices that are clearly forbidden. Whether it is:

• Loans are used as a money-making option for wealthy entrepreneurs, or

• Banking systems where depositors are unlawfully exploited,

The result is that capitalists leverage their position to control a large portion of wealth and power, creating widespread economic difficulties.

Islamic Financial Institutions

In many cases, the word “Islamic” is used merely as a marketing term.

A Reality

My brothers and sisters in Islam, the only thing carved in stone is the message of Allah (SWT) and the Sunnah of the Prophet Muhammad (SAW). Fatwas and rulings of individuals or institutions are human interpretations that can change over time. It is therefore necessary to reflect and reconsider our practices, as we may be increasingly getting involved in Riba.

Meaning of Riba

Riba means increase, excess, or growth — and so does interest. Interest continuously increases over the principal amount, whereas real trading profits fluctuate and can even result in losses.

If we truly want to trade, then trade should involve real commodities rather than money itself. The Qur’an clearly distinguishes between trade and interest (2:275).

Benchmarking

Another issue arises when Islamic financial deals are benchmarked against conventional interest rates. If a transaction is genuinely Islamic, then why not benchmark it against the price of the commodity involved in the sale or purchase?

The reason often given is that interest always increases above the principal amount, while commodity prices fluctuate and may even wipe out the principal. Because of this, many Islamic financial institutions peg their deals to prevailing interest rates while avoiding real business risks.

A Bitter Fact

Endorsements from scholars or institutions cannot convert something forbidden into something permissible. In these testing times, it is our responsibility to raise our voices and fulfill our duty. Otherwise, we risk misleading the general public and contributing to further harm.