Why the world is turning to Islamic banking
Today, the whole world is seeing the great benefits inherent in Islamic banking. Even countries that are not Muslim are also turning to it. For those who may be wondering what Islamic banking is all about, a quick definition will be given now. Also called Islamic finance or sharia-compliant finance, Islamic banking is a kind of banking or financing that follows all the rulings of Islamic law (sharia). What this means is that Islamic banking does not involve itself in businesses that have been declared to be haram (forbidden) in Islam. These include alcohol, pork, gambling, pornography, or interest-based ventures.
Of late, there has been a massive spike in the growth of Islamic banking so much so that there more than 300 banks across the globe that are sharia-compliant. In addition to this, a total of over $3.5 trillion is the worth of assets classified under Islamic banking and it is still growing. Finally, the world is beginning to see the merits of Islamic banking.
One of the biggest reasons why Islamic banking is becoming more popular by the day is because it is the truest interpretation of the concept of financial justice. Unlike what obtains in the usury-based conventional banking system, Islamic banking considers all the parties in an agreement. The conventional banking system is an offshoot of cold-blooded capitalism and it is only interested in making profits from interests. This way, it transfers all the risks to the beneficiary and that is not fair at all.
Thanks to Islamic banking, this is not the case at all. In sharia-compliant financing, the most enchanting thing is that all the profits and losses are shared by all parties in a very fair and just manner. This way, everyone can do business with peace of mind because they know that no matter what happens, no one will be at a disproportionate loss. This concept of financial justice is so attractive to the rest of the world but this part of Islamic finance is already a direct commandment to us Muslims by Almighty Allah (SWT) who said in the Holy Qu’ran:
O, believers! Be steadfast in justice, witnesses for Allah, even if it is against yourselves or your parents or your family, whether (the case be of) a rich man or a poor man, for Allah is nearer to both. So do not follow your passion lest you deviate from the truth and if you deviate from the truth, then Allah is ever informed of all you do. – An-Nisa, Chapter 4, verse 135.
So as you can see from the verses above, Allah (SWT) enjoins us to be fair in all our dealings. Expansion of financial inclusion, provision of stability in investments, reduction of poisonous substances (like tobacco and alcohol) from circulation, and the optimization of economic development are some other reasons why individuals, corporations, and governments across the globe are turning to Islamic banking. May Almighty Allah (SWT) keep manifesting His signs for all of humanity and may He keep us firm on the right path, aameen.