Friday, July 29, 2005

"Islamic mortgage", suspension of reason, and audacity

An article labeled RELIGION: BRITISH TRY TO BANK THE ISLAMIC WAY, posted today on, contained the following:

"You as a customer come to me saying I would like to buy a house," says Lewis. "The bank then buys the house in its own name. You then make a monthly payment to the bank. That payment will not include any interest. But what it will basically cover is rental for the bank as if you were living in a property in their name, and then further payment, gradually buying back the title of the property. By the end of the term, the property is yours. But the payment itself doesn't include an interest element."

But could this be conventional banking in a roundabout way, with the interest paid and received, but disguised?

"These products launched on the market have been approved by a board of internationally respected Sharia experts who have issued a fatwa for each of our products that it is fully in accordance with Sharia law," Lewis said.

The products have been supported by some Islamic leaders who have become key consultants to banks for these products.

The quote speaks for itself: no rationale is given besides the presumed sacred authority of "respected Sharia experts who have issued a fatwa...". Indeed, Mr. Lewis did not even bother to deny (can he?) that this was disguised interest. I guess the attitude is that if they want to buy holy water, or an indulgence, along with their mortgage, the banker's only constraint is to cover his costs, and possibly make an extra profit margin in the process of Shari`a-arbitrage.

All of that is fine: reasonable people can disagree about such issues. What is disturbing is having the audacity to claim that "... is fully in accordance with Sharia law"! A juristic opinion expressed in a fatwa is by definition probabilistic knowledge (علم ظني). So, the most a Shari`a board (even if all of its members were in fact internationally respected scholars) can announce is that some dealing is "probably in accordance with Shari`a". As Imam Al-Shafi`i was famous for saying: "I hold my opinion to be correct, recognizing that it may be incorrect; and hold other opinions to be incorrect, recognizing that they may be correct" (رأيي صواب يحتمل الخطأ؛ و رأي غيري خطأ يحتمل الصواب).


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