By Guest Blogger
11th November 2017
Brother Tarek El-Diwany is a long standing prominent expert in the area of Islamic Finance, and a specialist who combines strong analytical views gained from two paradigms in the world of finance; an industrial one as well as an academic counterpart. We were fortunate enough for him to deliver a session to CICC on Saturday 11th November 2017. The session started by identifying some prohibited financial acts in Islam such as:
- Dealing with harmful resource (e.g. cigarettes, alcohol),
- Interest-based transactions (riba),
- Contracts of uncertainty (gharar),
- Limited liability structures for commercial application, and
- Legal tricks (hiyal).
Then acceptable types of financial contracts were discussed from Islamic perspective such as the contracts of Exchange, Investment, and Charity. Finding an alternative to interest based lending was the main topic in this workshop. The true nature of home finance within the Islamic Finance market was discussed by Brother Tarek in the context of money creation and debt based fiat money. The concept of advancing money now in return for more money later and the usury based money creation system found in the west and adopted by Islamic world goes against the Islamic principles of justice and the so called ‘Islamic Banks’ have created the same type of financial products that are traded in the conventional markets and claimed them to be Sharia compliant!
A diminishing partnership model was discussed as one of the proposed ways forward when it comes to Islamic alternatives to a conventional mortgage. The workshop ended with a reminder that the Shariah does not discourage its followers from accumulating wealth but in pursuing wealth the Islamic principle of “Do No Harm” must be adhered to at all times. We should always remember that: Worldly wealth is a temporary thing, Charity does not make the giver poorer, and finally our sustenance is independent of ourselves and it is all in the hand of our Creator.