Some of the company’s and individuals’ money pertains to interest-based businesses like NBFC, DFI, and AMC funds not always but 90% of deposits of these companies are interest base. Then Islamic Bank reinvests these deposits into different projects. The quest is whether the profit generated by Islamic Bank which they further distribute to their lenders shariah-compliant or not? Definitely, it turns out to be Haram if the gains are from companies that themselves rely on capitalism and/or do prohibited stuff trade. Also, banks are selling and buying currency notes which is totally haram. In Islamic banks, also sell and buy currency notes.
A lame remark often encountered by those opting for Islamic banking:
As mufti has endorsed it so even if it ain’t 100% Islamic you won’t share the blame (gunnah).
Islamic Banking is the same as Conventional Banking
Whereas to some people, Islamic or conventional banking makes not a dime of a difference – but people say the sin will be on MUFTI Sahab and not you so Islamic banking in Pakistan basically becomes sugar-coated banking. The difference is they call markup and stuff “RENT” by which you feel and consider it’s not Riba. Javed Ahmed Ghamdi also shares the same thoughts about renting for the capital cost borne by the bank in our Car Ijarah example. Some people opt for Islamic Banking products because the extra amount they pay on late repayment is Donated to Charity (Sadqa) whereas in the conventional bank it becomes the income of the bank. But the trouble is when you get advert statements like
Interest = insha’Allah munaffah.
The second thing, the impact is the same in your pocket. This is a manipulative control built to make sure you as a customer pay your rentals on time. After all, the bank is a Financial Institution and exists to earn either Conventional or Islamic. Although it is stated that profit and loss are always shared between the Islamic bank and the customer but eventually every business turns into profit, that’s the miracle of Islamic banks. No bank is out there to give you something with NO PROFIT. If you have to pay any extra amount other the decided amount that’s interesting and that’s Haram. Simple is that.
Argument 2: Also, back to the popular car lease case study.
Interest is one source of the bank’s profit. Using the term “Islamic” is just a marketing strategy to target unknowledgeable “holy people” who cover their eyes like an ostrich. How Islamic Banking works is purely Islamic until the procedure is followed as per the timeline. If not so, then why penalty or donation % is the same as the interest rate in case of a late fee. Interest on loose cash does not have anything liable object attached. In case you don’t pay back, the bank will ask you for money that you don’t have. In case you don’t pay for your car the bank takes your car away.
Not 100% Halal but Better is Islamic Banking Pakistan
Then is it just the change of name with more or less the same non-Islamic financial system? There is an ocean of differences between Islamic and conventional banking. But that difference is more on the soul and logic side of a transaction rather than the facade or front of it. Islamic banks receive bank deposits from all types of individuals and companies. The fact is that normal people don’t understand the basics of Islamic financing and/or the fundamental line of thinking which leads to illogical and ill-informed opinions in society. I would say you rather speak to a few people who are actually knowledgeable in this field and who can help and advise.
Well in Islamic banking treating credit cards as debit cards is a good approach. Spend what you have, and avail facilities at the same 0 percent interest rate. Secondly, Ijarah or Diminishing Musharikah is a totally fine model of Financing not only authorized by Mufti’s or Allamas but yet authorized by State Bank and AAOFI (International Institution for Islamic Financial matters) so if your state authorized some Islamic Banking then God forbid if it’s wrong then sin is not on you. There is a Persian saying…
