The word Shari’ah is a complex word even though the definition is very simple. It means ‘the way’ and is derived from the teachings of the Quran and the Prophet. The complex aspect of Shari’ah is that it is subjective and holds different meanings to different individuals as religion and faith is a very personal element and regardless to ones religion, the core principle is that you are answerable to God for your own actions.
Although an individuals preference, the one thing that all Muslims can agree on is that the intention of the individual is the most important aspect. If one has good intentions and aims to follow the guidance of Islam then this it self is sufficient.
Shari’ah law sheds light and provides guidance on day to day problems and provides a set of rules, for which a practicing Muslim should follow. One of the common and well-known principles within Islamic finance is that all forms of interest is forbidden. Institute of the Islamic bank states that, ‘The prohibition on paying or receiving fixed interest is based on the Islamic tenet that money is only a medium of exchange, a way of defining the value of a thing; it has no value in itself, and therefore should not be allowed to give rise to more money, via fixed interest payments, simply by being put in a bank or lent to someone else. institute of the Islamic bank, 1990.’ A majority of Muslims abide by these principles and try their very best to avoid interest. However, we live in a world dominated and run by interest and this leaves very little choice for the Muslim population. Muslim countries have developed Islamic finance regulations to cater for the population and it is now being incorporated in many western high street banks but the development is slow and transparency almost opaque.
It could be argued that transparency and Shari’ah compliance go hand in hand. Just as interest is banned , Islam has similar views on gambling, making money from money, and investments in prohibited businesses such as alcohol. Hence highlighting how important it is for Muslims to be aware what their banks are investing their money in because these are forbidden in Islam also referred to as ‘Haram’ and those who are involved in such activities risk going against Islamic rulings.
Another vital part of Islam is Zakat, which is a annual payment of 2.5% of an individuals assets to charity. Zakat is one of the five pillars of Islam meaning that not only is this a core principle but one of the core foundations of Islam. One would assume that Islamic banks should make it easier for their customers to not only calculate but provide ease and services that ensure their customers are able to fulfill this obligation. However this is not the case and this type of feature should be a essential part of a Shari’ah compliant bank.
For major Islamic banks that do exist they have a very traditional infrastructure that was sufficient for the older generation, where as the younger generation heavily relies on technology and requires their banking to be hassle free. The conclusion can be made that meeting the needs of this younger generation is a challenge because they require adaptable technology and banking systems that takes into account both faith and finance in the perfect balance. It’s about time that the banking world took the requirements of 1.6 billion Muslims seriously.