Basics of Islamic Banking
Rise of Islamic Banking
Basics of Islamic Finance by Maulana Taqi Usmani
Basics of Islamic Finances
Why Islamic Finances?
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Mutual Life, Limited: Islamic Banking, Alternative Currencies, Lateral Reason Bill Maurer
Winner of the 2005 Victor Turner Prize in Ethnographic Writing, Society for Humanistic Anthropology
Paper | 2005 | $28.95/ £19.95 | ISBN: 9780691121970 256 pp. | 6 x 9 | 5 halftones. 5 line illus. 3 tables.
eBook | 2005 | $28.95 | Purchase This eBook ISBN: 9781400840717
Google full text of this book:
|Why are people continually surprised to discover that money is “just” meaning? Mutual Life, Limited spends time among those who, in acknowledging the fictions of finance, are making money anew. It documents ongoing efforts to remake money and finance by Islamic bankers who seek to avoid interest and local currency proponents who would stand outside of national economies. It asks how alternative moneys both escape and reenact dominant forms of money and finance, and reflects critically on their broader implications for scholarship.|
Based on fieldwork among participants in a local currency system in Ithaca, New York, and among Islamic banking practitioners in the United States, Indonesia, and elsewhere, this book exploits the convergence between the reflexivity of monetary alternatives and social inquiry by questioning the equivalence between money and ethnography. Can money ever be adequate to the value backing it? Can social description ever be adequate to messy and contingent realities?
Bill Maurer’s ethnographic discovery is that ethnography as such–the holistic description of a way of life–cannot be sustained when faced with a set of practices that anticipates and incorporates it in advance. His fluently written book represents an unprecedented critique of social scientific approaches to money through an ethnographic description of specific monetary alternatives, while also speaking broadly to the very problem of anthropological knowledge in the twenty-first century.
“A fascinating study. . . . It is . . . quite possibly the best study in the
English language on the topic and, to those involved in banking, currencies, and anthropological facets of economies, should prove of unquestionable value.”–Haidar Moukdad, Digest of Middle East Studies
“I enjoyed this book mightily. Not only is its topic–money in various manifestations–inherently interesting but the book is both theoretically innovative and empirically rich, as well as being well written.”–Nigel Thrift, University of Oxford, author of Money/Space: Geographies of Monetary Transformation
“This book represents an ethnography of a far more interesting kind than the standard sort. Its genius lies in the way its author has drawn in diverse social practices to comment upon (lie alongside) one another. Islamic banking is revealed to have much in common with local currency schemes, both being alternatives to capitalist finance based on interest. Because the subject is discourses of money, one would expect the text to be abstract; in fact the text summons myriad points that are splendidly concrete.”–Marilyn Strathern, University of Cambridge, author of Property, Substance and Effect: Anthropological Essays on Persons and Things
List of Illustrations and Tables xi Preface xiii Acknowledgments xvii A Note on Transliteration xxi INTRODUCTION: Lateral Reasons for a Post-reflexive Anthropology 1 CHAPTER 1: In the Matter of Islamic Banking and Local Currencies 24 CHAPTER 2: Of Law and Belief 55 CHAPTER 3: Of Monetary Alternatives and the Limits of Values Past 77 CHAPTER 4: Innumerate Equivalencies: Making Change with Alternative Currencies 100 CHAPTER 5: Wiseman’s and Fool’s Gold 122 CHAPTER 6: Mutual Life, Limited: Insurance, Moral Value, and Bureaucratic Form 136 CONCLUSION: Restaging Abstraction and Adequation 154 Notes 169 References Cited 185 Index 205
Islamic banking has arrived and this book is clearly the best introduction to it. Objections to the ban arose at the outset, and Al Azhar in 2002 decided to declare riba Islamic because 99 percent of the banks in Egypt practised conventional banking. Today the western banks are earning great profits from their Islamic banking sections, The Economist saying recently, ‘Compared with the ethics of some American subprime lending, Islamic finance seems virtuous as well as vigorous’.
If Islamic banking was bad, Lloyds TSB, Britain’s fifth-largest bank, wouldn’t be involved in it, seeing its accounts growing by 12 percent annually. The UK is at the top with hardly 1.5 million Muslims, and France with 5 million is girding up to net the pious money. In Pakistan, Islamic banking is getting set to become dominant in the years to come, but it is Saudi Arabia, Iran and the UAE who lead the flock so far. Other Muslim states like Turkey and Malaysia are fast converting because of the Islamic upsurge.
Muslims account for 20 percent of the world’s population, but Islamic finance, for less than 1 percent of its financial instruments — so there is opportunity there for everyone. And the banks in the Islamic world may soon have to compete with the Western banks out in the market to trawl Muslim savings.
The amount of Islamic assets under management stands at around $700 billion; but rating agencies thinks the bankers could be vying for $4 trillion of assets held by the industries. Islamic terms are becoming familiar in the world. There is sukuk for bonds, mudaraba for investment partnership, musharaka for equity partnership, and riba for interest.
Finally it is the people who decide and the banks that serve them, not the state, through a fiat. The Supreme Court of Pakistan did not succeed in banning modern banking but Islamic banking has come in competition with modern banking and is doing nicely.
The only way to go is cater to the people’s piety and their resolve to transact honestly. And if Islamic banking takes off it might face the next theological debate: should it let the non-Muslims with their tainted money come in too? Zakat is only for the Muslims. What if an honest non-Muslim wants to pay zakat? Flexibility is the name of the game and Islamic banking is practising it with the help of Islamic scholars.
The book explains the concept of riba better than any earlier book. It says the term riba is not an economic theory and there is nothing in the Quran and hadith to make us believe that it is so. The Quran prohibits riba but is not clear about what constitutes riba. Later exegesis was needed and Muslim jurists have decided that any money begetting money is wrong and no transaction in which the lender doesn’t share risk with the borrower is guilty of riba.
Riba is still to find its right expression in English. Literalism hounds us when we take a Quranic verse and don’t rationalise it through context. The book hazards that either riba was not common in society at the time of Revelation or too rampant to explain.
Early jurists who pronounced on riba were of course not familiar with modern banking and would have been troubled to see a poor widow lending to a bank and surviving only because of the fixed return, but here we are talking of finance and the debate has become reasonable, not because of any state fiat against riba, but because the Muslims want Islamic banking.
The book offers the following definition of riba: ‘According to sharia, riba technically refers to the premium that must be paid by the borrower to the lender along with the principle amount as a condition for the loan or for an extension in the duration of loan.
At least four characteristics define the prohibited interest rate: It is positive and is fixed ex-ante; It is tied to the time period and the amount of the loan; its payment is guaranteed regardless of the outcome of the purposes for which the principal was borrowed; and the state apparatus sanctions and enforces its collection.’ (p.56)
It is clear that the city-state of Madina had the same sort of problems from the money-lenders as the city-state of Athens because Plato railed against interest as did Aristotle whose dictum ‘money will not beget money’ was taken literally centuries later by Muslim jurists. Democracy in Athens was derailed because power passed from the Assembly to the money-lending oligarchs. The borrower, not the lender, had to be protected. On the other hand, today it is the savings account-holder who should be defended by the State Bank against malpractices of the borrowing bank of both sorts, conventional and Islamic.
There is an observation in the book in this regard that must be quoted. It refers to a ‘weak argument’ dismissing riba as applicable only on borrowing for the purpose of consumption: ‘Charging of riba on the lendings for consumption was deemed unfair unjust and exploitative and therefore like other traditions Islam also prohibited it’.
It goes on to explain that riba ban applied also to productive borrowing. This is correct because the traders of Athens borrowed to finance their shipments across the Dardanelles. Islam stood for banning the exploitation of the borrower. The Prophet himself was a trader and borrowed for his business!
It is for the reason of protecting the individual lender that the book has a chapter on the regulation of the institutions doing Islamic banking and another on the corporate governance of an Islamic bank. It is not enough for an Islamic banker to appear on TV sporting a beard; he must be immaculate in his transactions. That is the only way he can compete with the highly developed but now not so honest conventional banking. (Even the ATM machines are being manipulated these days!) The market will be the final arbiter.
BOOK REVIEW – Rapid Developments of Islamic Banking – Brunei
“Orang Berbank Kita Juga Berbank”
This book “Orang Berbank Kita Juga Berbank” explains the rapid development of the Islamic banking system. It provides a wide variety of Islamic banking products, including takaful (Islamic insurance), based on syariah (Sharia’h) methods, according to a report by RTB last night.
The procedures can be used as the foundation for the advancement of the Islamic banking system, said Pehin Orang Kaya Laila Setia Dato Seri Setia Hj Abdul Rahman at the launching ceremony yesterday. He said that the book published by the State Mufti Department is an important foundation in Islamic banking, where Brunei has already established an infrastructure in the banking system. He added that the guidelines were not only in the form of fatwa (Islamic laws) and decisions by the Brunei Religious Council, but also laws and regulations practised by the various Islamic institutions such as Tabung Amanah Islam Brunei (TAIB), Brunei takaful companies, and the National Syariah Committee.
The book contains texts of speech and talks by State Mufti Pehin Dato Seri Maharaja Dato Paduka Seri Setia Dr Ustaz Hj Abdul Aziz at a gathering marking the 1429 Hijriah in the Islamic calendar, the report said. Apart from clarifying the difference between Islamic banking and conventional banking systems, the book also explains the practice based on aqidah (faith) and syariah.
Some 10,000 copies of the book were printed by the State Mufti Department. BIBD bought 7,000 copies for the Ministry of Religious Affairs and to be distributed to guests of the Nuzul al-Quran celebration. (Dec 2008)