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The latest breakfast meeting
to be organised by St Mary’s was devoted to the subject of Islamic
banking. Over 20 parishioners attended, ensuring a full house in the
small hall, and demonstrating a perhaps surprising level of interest in
what might be considered to be a somewhat peripheral topic.
It very quickly became crystal clear that the topic was not peripheral –
nor was it obscure. Furthermore, what none of us had expected was that
the presentation and discussion had immediate relevance for our own
behaviour as Christians.
The core questions posed were: why does Islam prohibit the earning of
interest? And what are the consequences for Muslim individuals and
businesses? These questions were addressed by Ahmad Salam, a member of
the Morden mosque community, at the instigation of Alan Morris. Ahmad
outlined the Islamic position on banking as going right back to the
prophet Allah. It is that:
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Money cannot create more money
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It is trade that creates
wealth
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You shouldn’t put your money
in the bank, you should invest it in the community, by buying and
selling assets
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As a Muslim, you are forbidden
from investing in certain types of assets – defence and gambling being
two
Ahmad is a senior member of
the Islamic Bank of Britain. He described the consequences of this
philosophy on the operations of the Bank. It recently bought Aston
Martin, the car firm. Because of the rules of Islam, the bank provided
its own finance for the purchase of 60% of the equity, a much higher
proportion than the 15 – 20% which, Ahmad suggested, is the norm in
ordinary banks. This forces Islamic banks to research propositions much
more thoroughly. And every three months, Sharia’a scholars come into the
Bank to review all contracts and ensure that any new products are in
compliance with Islamic law.
All this provoked many questions and comments. Doesn’t the need for much
more equity, for Sharia’a compliance, place the Bank at a commercial
disadvantage? No, Islam insists that there must be no disadvantage to
being a Muslim. So decisions have to be taken quickly, risks have to be
run. Islam places great emphasis on the intention being pure, whilst the
act can be flawed. For Muslims, God rewards intentions.
How do Muslims handle mortgages? By having a Sharia’a compliant equity
sharing contract.
Is there an Islamic credit card? Yes, but you can’t borrow, so you have
to pay off the balance each month – which many members of the audience
claimed to do as well.
Isn’t quite a lot of Islamic banking similar to the Co-operative
movement? Yes.
What happens if a Muslim does earn interest? It has to be paid to
charity. And, Ahmad went on, if you have assets which you do not use,
jewellery in a vault for example, a zaka’h tax is levied on them. You
have to pay 2˝% of their value every year to community charities,
particularly ones supporting orphans.
This was a very stimulating encounter. Alan and his catering team are to
be congratulated on finding and delivering a fascinating early morning
session
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