Alternative marketing thinking

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Islamic Banking

With Arab countries playing a major role in the global economy, there is much to know about the primary banking system that prevails in most of them – banking as per the Shariah law. Many international banks are roping in scholars to bring out Islamic banking versions so that their clientele in Islamic countries can bank in accordance with their values. So what is this all really about? An article in the Economist explains. Sharia, based on the teachings of the Koran and of the Prophet preaches justice and partnership. According to the Shariah, speculation (or gharar) and charging of interest (riba) is prohibited. The idea of a lender levying a straight interest charge, regardless of how the underlying assets fare in an uncertain world, offends against these principles—though some Muslims dispute this, arguing that the literature in Shariah covering business practices is small and that terms such as “usury” and “speculation” are open to interpretation. Shariah-compliant investors are to stay clear of companies that are into “immoral” businesses like pornography, gambling or even companies that have too much borrowing (typically 33% of the firm’s stock market value). However, there is no ultimate authority for Shariah compliance. Different countries use different ways to tackle this. While Malaysia and Bangladesh have their own national Shariah boards, other countries use the rules laid down by known scholars or, as they are know in Islam, the Ummah. Scholars have also helped international banks set up Shariah compliant wings like in the case of the hugely successful HSBC Amanah which has a respected Global Shariah Advisory Board. With countries like France and England having a huge number of Muslim population, it is just a matter of time when Islamic banking will be available as an option to a wider portion of the world.

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