Sunday, April 12, 2009

Crooks in the name of Islam

As I was thinking of a good name for the RoSCA management and insurance scheme that I wanted to propose for Islamic microfinance, I thought of the name بنك القرية (the village bank). I was extremely depressed when I googled that term, and ran across this article about embezzlement of funds. So, I stopped writing this string of posts. Then, yesterday, I was watching an Egyptian television show on Dream Channel, which covered another wave of شركات توظيف الأموال (fund mobilization companies, similar to the ones that were popular in the 1980s when real interest rates in Egypt became significantly negative). The show discussed a recent case with the wrinkle that marketing was done by the son of the Egyptian Minister of Economic Growth. We all know about the pyramid schemes in the 1980s under the same banner of "Islamic finance".

What is it about this industry that invites snake oil salesmen in religious garb?

Maybe it was a mistake even to contemplate doing research in this field. One should stay away from the snake oil salesmen lest one's reputation and religion be compromised.


Blogger The Cook Crazy Economist said...

stick with it brother. I too find it a bit dishearting but we have to find a way to make the markets as fair yet profitable as possible. I dont even think we should get so cault up on names and titles or forming "Islamic" bends to it when technically we never had a official complex "islamic" system to begin with. Maybe we are trying to hard to make our own unique mark on the world instead of just carving out a little dent.

I don't know... it certainly has effected my iman as well.. but reasonable minds have to stay involved if only to help hold and kep some of the "islamic pimps" at bay.

2:05 AM  
Blogger Muhammad Saeed Babar said...

There is a lack of understanding or misunderstanding about everything Islamic. Is it Islamic Banking that is being practiced in the guise of Islamic? Every conventional banking product is twisted and marketed as Islamic. I have been following your blog, you are a respectable name in Islamic Economics, Please define what is Islamic Banking or any type of banking can be Islamic. When there is no concept of loan except Qarz-e-Hassana and only form that is allowed is trading.

8:34 AM  
Blogger Sadaqa India said...

This comment has been removed by the author.

4:04 AM  
Blogger Sadaqa India said...

Dear Professor. The percentage of crooks in this world is no new information. Is there no hope for the poor Muslims? As you mentioned in the beginning, the sheer number of the poorest of the poor in this world should justify spending a life time on research into this problem. We live in this world dominated by crooks. But let those whom Allah has given wisdom blow the whistle and show the right way. Please, we are waiting to hear from you.

4:06 AM  
Blogger nhusain said...

I think a 15 year mortgage through one of the islamic models of finance is halal. As about half of the monthly payment goes towards the equity. Also you should start a gamaeayah thing at your islamic center. Let everyone pitch in $1000.00 and rotate it among groups of 12 for a period of one year. See if you can get a lawyer to write up a functional document for this purpose.

5:56 AM  
Blogger Muhammad Saeed Babar said...

Whenever, we start thinking of helping the poor, we come to think in terms of loan - financing scheme, be it Micro Finance or something else like Islamic Mortgage. Can we not think in terms of cooperatives to extend qarz-e-hassana to the needy with good sound idea or some form of partnership on the pattern of venture capital? This rotating saving association, which is known as committee in our country is also a type cooperatives. It is working very effectively.

11:44 PM  
Blogger nhusain said...

Title Does the bank ownership to the property make any difference when you apply for a conventional mortgage?
Scholar Dr. Main Khalid Al-Qudah
Date 2007-08-16
Category Financial Transactions
Question Peace be upon you, honorable sheikh. Is it Permissible to buy a foreclosure house from a bank by using a conventional mortgage loan from the same exact bank? Does the bank ownership to the property make any difference from sharia point of view when you apply for a conventional mortgage?

Fatwa AAWW

If buying a foreclosure house means that you buy it from the bank directly, the bank holds the deed as an owner and not a (lien holder) of the respective property, the bank is the financier in this transaction without involving any third party to pay off on your behalf and charge you a tip over the capital, then the transaction is permissible.

8:28 PM  
Blogger Muhammad Saeed Babar said...

Is it justified to seek a Fatwa on a financial transaction that one cannot do with his own resources? By seeking a Fatwa, we only satisfy ourselves that we are not transgressing the limits set by Islam, whereas, our inner soul knows that something is wrong.

11:01 PM  

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