The practical application of Islamic teachings in the context of the modern world is a vexed issue for Muslims. Amongst scores of other issues, bank interest is one such. Levying interest is prohibited by the Quran. But this applies to the practice of usury and not bank interest as modern banking was, of course, unknown when Islam came into being. Usurers and moneylenders are ruthless in their dealings with borrowers the world over - this is one of the reasons behind anti-Semitism that was, until recently, prevalent in the western world. Thus, any business dealing solely in money is prohibited by the Quran. In the modern economy, however, financiers and circulation of money play a very important role. Hypothetically, if today any Muslim government were to successfully introduce an interest-free economy, as contemplated by the conventional ulema, it would certainly be a great achievement and may lead to a new economic order. Unfortunately, this is an idyllic dream and the sooner Muslims face up to this reality the better. Some Muslims who want to avail of modern banking facilities but do not want to appear to be doing so, deposit their savings in a bank but do not accept interest in the belief that by so doing, they are conforming to the dictates of Islam. Thus, dealing with Islamic banking has emerged in recent years as a parallel to non-Islamic banking. In the common civic space every citizen, including Muslims, whether directly or indirectly, is involved in modern banking. Interestingly, in Saudi Arabia, too, banks, as part of the international economic system, are involved in the practice of charging and paying interest. Saudi banks, however, declare themselves to be interest-free, using the term profit and loss sharing in place of interest. Since banks in Saudi Arabia, an oil-rich economy, do not usually suffer losses, the depositors share the profits as a matter of course, and it is not considered 'riba' (usury). A few years ago, mullahs in Pakistan demanded an end to the interest-paying system of banks, thereby laying the country open to ridicule. They even got the federal Shariat court to pronounce a judgment in their favour but the government did not pass it in the legislature. Later, the judgment was set aside by the appellate bench of the supreme court and the matter is still sub judice. While in the oil-rich economy of Saudi Arabia and even, in the ultimate analysis, in the Islamic state of Pakistan, a practical approach to the issue of interest is the majoritarian one, in India, because of the educational backwardness of Muslims, not only has bank interest become a much-debated issue, it is also one that is used by elite Muslims to exploit poor Muslims in the name of Islamic banking. Thus, unscrupulous Muslim Shylocks in the country operate in a very clever way to fool Muslims in the name of Islamic or non-interest banking. The modus operandi is very simple and one can find these banks in every locality where a substantive Muslim population exists. These people open accounts in nationalised banks and make huge collections deposited in them from poor Muslims with small savings on the counters of Islamic banks. They use their knowledge and skills of the banking system very shrewdly - deposit 80 per cent money in nationalised banks in different fixed deposits as hardly 20 per cent of the money is in circulation - to profit from the interest earned on the deposit of the collected sum. The common investor who has entrusted his principal amount to the usurer gets back his original amount only when needed, little knowing that the interest from his money is being used for the moneylender's business plans. Whenever Muslims need money, the Islamic bank gives them loans, keeping gold ornaments or their land as security, and charges interest calling it 'service tax' instead. So the Islamic banking system not only makes money for its unscrupulous operators but also keeps the Muslim community from becoming part of the modern economy. The writer is a political commentator.
Jul 28, 2008
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