When we start talking about Islamic Finance we often do so with a cynical smile, a world-weary roll of the eyes at the incessant capitalism of it all, and a wry shake of the head at an industry that shamelessly tries to profit and make halal that exact thing which Islam has made haram – interest.
But we’re in the wrong when we do that and, in fact, there are three fundamental reasons why Islamic finance can help us be better Muslims.
But before I go through what those three reasons are, let me tell you why you’re wrong when you roll your eyes.
You’re wrong when you roll your eyes because you’re jumping onto a bandwagon you have no expertise on. You haven’t got the requisite Islamic, legal, and financial knowledge to make an educated decision on the topic. That uncle who tells you “Islamic Banks are just riba in a headscarf” couldn’t tell you the difference between LIBOR and Liberia, and yet everyone seems to agree with him. (There are lots more reasons why you’re wrong, and some reasons why you’re right, but we’ll go into the details in later posts.)
So how can Islamic finance help us be better Muslims?
How can the simple mundane act of banking with a certain company, taking out a certain kind of mortgage, and giving charity in a certain particular way help us better our spiritual lives?
1. It fulfils the human purpose of life.
Muslims believe that they must follow the Shariah in order to fulfil their purpose of life, which is to fulfil the teleological design of the Creator: to live a good and moral life by submitting to his instructions on how to live life.
Given this all-pervading purpose, it makes sense that the Shariah addresses all the key areas that we spend most of our time engaged in and are important in shaping our lives, such as children, family, spirituality, politics, and, our current focus, wealth.
So every time you check your Islamic bank account and every time you make a payment on your Islamic mortgage you are in fact submitting to the instructions of the Creator and engaging in an act of worship. Why? Because you chose to do those acts because of what the Shariah taught you.
2. It is the most sin-free option
If I was to give you a choice between two restaurants, one of them only serves pork, while the other only serves HFA-certified, stunned, halal chicken, and you simply had to eat, which one would you choose?
The HFA chicken shop of course.
“Ah, but that’s not the right analogy here,” you might say. “In real life we can just walk away and choose to not eat at either.”
In real life can you choose to not have a bank account, a debit card, and a savings plan? Can you choose not to use GBP and USD?
The simple fact is, that most people who smugly say“Islamic finance is a sinful option” don’t realise that what they are doing by walking away and setting up and account at a mainstream bank instead is that they are supporting the mainstream, unambiguously haram, financial industry, and are in fact much more sinful. Islamic finance and banking may not be perfect, but its certainly the most sin-free option currently available.
3. You enable others to do good
Islamic finance is a young and growing industry, and it will only grow more if more people use it, invest in it, and trust it. That will only come from us banking with Islamic banks, taking out Islamic mortgages (even if they’re more expensive!), and forging careers in the industry.
Yes it has issues with it both Islamically and financially, and there is absolutely no sugar-coating that, but if we have a hands-off approach to it then in the long run either it will end up completely unIslamic or it will die. Neither option is particularly appealing.
Industries on this scale take decades to grow and mature, indeed the conventional financial industry has a centuries-long history. It may not be that you will see the ultimate result of your decision to bank Islamically – a viable ethical alternative to riba – but your children might, and your grandchildren certainly will.
So stop being an armchair mufti and support this industry. Muslims and non-Muslims alike will benefit.
Extra: I’m convinced. Now what?
Now you support the industry in the obvious ways you can – by using them and setting up an account with them.
I personally have a savings account with Al-Rayan Bank (formerly Islamic Bank of Britain) as they are a solely Islamic bank. I do not have a current account with them as the way things are structured in Al-Rayan Bank, at the last time of checking, Al-Rayan don’t actually make a profit from the current account and offer it as a facility for people. So in a way it actually costs them to provide this service. However, they do profit from the savings account, and so, even though the rates might be a bit lower than others on the high street (though not bad with ISAs, actually) this is a good way of supporting the industry.
I still have a current account with a high street bank but make sure to send all my savings to Al-Rayan. That way the Islamic Bank is supported in the best way possible, and not burdened with unprofitable workloads.
For those who want to stick to a big-name bank, Lloyds Islamic account is a good solid current account alternative, and they don’t use the money you deposit with them in haram ventures.
Make sure you subscribe to our mailing list (using the box at the top right of the page) and leave your comments below. We need to start this debate so we can really develop this industry and make it useful for Muslims and non-Muslims alike.