ISLAMIC BANKING -Shirkah-

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Year IV Issue 11 – Quarterly 2010-Switzerland CHF-Others €10,00 - $15,00 www.shirkah-finance.com

Transcript of ISLAMIC BANKING -Shirkah-

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Year IV Issue 11 – Quarterly 2010-Switzerland CHF-Others €10,00 - $15,00 www.shirkah-finance.com

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Islamic civilization is not a thing of the past without any link with the present.

Rather, Islamic civilization is the fruit of the culture, history, thought, inven-

tiveness and originality of a people, who have never and will never cease to

offer it as a gift to mankind.

This dynamic role for civilization in our era, is exactly the practical role of civili-

zation that was spelt out by Ibn Khaldoun in the eighth century A.H. In his Mu-

qaddima, we find him making the link, with total clarity, between civilization,

theoretical and applied science, the latter of which we today call technology.

As Ibn Khaldoun expresses it, civilization is "God's secret way for man to gain

knowledge of theoretical and applied science".

Ibn Khaldoun attributes the blossoming of civilization, in those Islamic regions

where it blossomed in the eighth century A.H., to the presence of "a significant

deposit of theoretical and applied science". He gives the example of contem-

porary Egypt, which he describes as "the mother of the world, the sanctuary of

Islam and the spring of theoretical and applied science".

As we all know, Ibn Khaldoun is a powerful mind, acutely perceptive, and sharp

of wit, and the expression which he coins here, "the spring of theoretical and

applied science", is very exact. It is true that civilization is the spring of theo-

retical and applied science, and it is natural for springs to bubble up, gush

forth and spread out. Islamic civilization is continuous, with its roots going

back uninterrupted into history, and its message continuing into the future.

Islamic civilization has a distinctive character, springing from the doctrine of

tawhid. It springs from the message of Islam, and draws its special characteris-

tics and unique features from the spirit of this generous religion.

In Islamic civilization is embodied a wisdom which has kept it from extrava-

gance. Islamic civilization does not deify Nature, but respects it and lives in

harmony with it. By contrast, contemporary materialist civilization gives abso-

lute value to the created world, while being unable to read the signs of God in

it, stripping it of any sacredness, and ending up by destroying its balance.

The impetus to rebuild the edifice of Islamic civilization so that it can resume

its historic role and continue its benevolent contribution to mankind, can only

spring from firmly rooted doctrine, a deep conviction of the necessity of intel-

lectual renewal according to true principles, and the necessity of undertaking a

process of self-criticism, so as to be able to see the ways in which we can

guide civilization aright, and to discover what effective actions the present era

demands of us.

There is no way of reviving Islamic civilization, except by taking over the

means required to release it, in awareness, open-mindedness and responsibil-

ity, following the guidelines of the fixed stars of our civilization, the factors

working for change in the present, and the possibilities for the future. The con-

ditions for all this are continuous scientific excellence, uninterrupted techno-

logical development, and continuously radiant cultural and artistic creativity.

All this must be accompanied by self-aware guidance of social and political life

on the basis of principles of truth, justice, equality, participation and coexis-

tence.

Editorial

SFMagazine 11 1

Alberto Di Gennaro

Chairman & Publisher

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Contents

4 SFMagazine 11

SFMagazine 11 | 2010 1 Editorial

4 Contents

Islamic Real Estate

7 Thom Polson

A more effective way to in-

vest in property

Sharia Scholars

10 Muhammad Zubair Usmani

The Concept of Musharakah

14 Beata Paxford

Sharia Boards

16 Ezry Fahmy

Shari’ah Scholars as an In-

dipendent Director : a Pro-

posal

5

10

14

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Focus on Pakistan

18 Muhammad Taqi Usmani

Islamization of Laws in

Pakistan

Islamic financial rules

24 Mohammad Delwar Hossain

Al-Quard al-Hasan a Prati-

cal Approach

International Relationships

29 Louis Baeck

Islamic views on globaliza-

tion

Sharia principles and rules

32 Abu Shariq

Zakah a priority for poor

and needy

Islamic Culture

36 Ibn Khaldun

Islamic Architecture

40 The future of Islamic archi-

tecture

42 The Mosque of Al-Azhar

7

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In recent years we have seen property investments in the Arabia become

highly speculative and increasing in price. Much of this has been due to the

buying and continual of reselling of properties that have not been completed.

Particularly in the United Arab Emirates this has built up a speculative bubble

that took away actual property values to ones that was inflated and unsustain-

able. An investment such as this is highly dangerous and illiquid if you are the

final buyer in the chain. What happens if the property is never completed or

delayed for years such Hydra Properties projects in Abu Dhabi? Thankfully in

places such as Saudi Arabia, the speculative bubble was never fully embraced,

as so much of their property is purpose built or purchased for habitation.

For an investor or group to buy an office or residential building is a large under-

taking. Not just in terms of the capital needed for the purchase, but also the

costs of operations and maintenance. One must also think of whether they are

going to sell off the units or rent them out. A clear problem of selling is that is a

onetime only fee that doesn’t not reflect changes in the economy or demands,

once a sale is final, no more profit can be gained from the tenant. Yes, some

fees will flow from the tenants to cover building maintenance, but not enough

to enhance the builders overall profit.

This scenario will undoubtedly lead the owner or group to consider renting the

units. This is of course a much more stable and

long term way to recoup the investment though

continual rental payments although there is the

risk of illiquidity if the building owner is in need of

capital. Being a building owner though presents a

range of costs that have to be covered through

the tenements rental payments. Those being the

advertising and leasing available space, the main-

tenance and cleaning of the premises, and of

course insurance. When we add up all these

costs, what will the owners income really be, and

more importantly will it remain constant or fluctu-

ate from month to month?

This idea of rental space has applications not only

to the tenant, but also the economy and financial

system. This is because it is a rent producing asset, by where the cash flows

can be commoditized for a mass of investors. Real Estate Investment Trusts

have been used throughout the world as a way to deal with the costs of prop-

erty ownership. They can be for commercial, industrial, retail, residential, and

even medical or hospitality space. By having a mass of investors whether it is

for an individual office building or thousands of units spread across hundred

properties the principles will remain the same. For tax purposes a REIT will de-

vote 90% of its income to its investors through yearly dividend payments. But

as well this structure is designed to a listed tradable security just as a stock is.

There is also the ability to create REIT funds that act just as mutual fund does,

by investing in range REITs throughout specific a region or even defined prop-

erty types to gain returns from a much wider base.

As REITs are easily tradable in the market they have wide reaching implica-

tions, as with most real estate investments access to liquidity is a major con-

cern that an investor has to deal with. This is especially true when one thinks

of the billions of Dollars that were invested in Middle East Private Equity over

the last few years for real estate development, especially as these placements

will take years until the investors are able to redeem their shares. This brings

to light the importance of the property itself when investing in real estate. Yes

investing in real estate development is important, but may take years for those

Islamic Real Estate

A more effective way to invest in property By Thom Polson

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properties to produce a profit. While when dealing with

REITs, they are based upon already built and inhabited

properties.

Much like a Sukuk the dividend payments will come from

the cash flows, but nonetheless the REIT investor is also

an owner of the property(s). In terms of Islamic investing

this is a very crucial point. There are so few products

available to us that can provide for a dependable income

payment without being involved with Riba. Sukuk has

been the natural tool to deal with this as it is a Sharia-

complaint way to spread ownership of an asset and re-

ceive a fee from another’s use of it. Although unfortu-

nately as important as this product is, it is not allowed in

some jurisdictions and is not an efficient tool for the retail

investor to partake in. This is because of the costs of su-

kuk ownership is very high, as a single share may amount

to more than $100,000. However, this was not always the

case as the minimum buy in for the 2003 Qatar Global

Sukuk was only 10% of today’s average.

For this kind of Islamic quasi-fixed income investment

system to flourish there has to be a more affordable way

for the retail investor to become involved. The costs of

Sukuk have risen mainly due to the complexity, time, and

number of participants it takes to structure the transac-

tion. However, the costs of participation in a REIT are left

up to the market to decide as they are in essence listed

equities and one can trade as many shares as they wish,

when they want. Although at the moment for GCC inves-

tors there are no listed REITs, Islamic or conventional on

exchanges such as Tadawul in Saudi Arabia. However

there is no basis for preventing ownership in foreign

REITs. There are a number of Islamic REITs available in

Malaysia and Singapore. The newest and most notable

product is from AXA Management in Singapore that has

recently launched an Islamic REIT that uses 164,000

square meters of residential and hospitality properties in

Qatar as its asset base.

This investment vehicle could become very important in

the sphere of Islamic investing as will become evident.

The principle reasons are that the yearly dividend can

either be taken as a cash payment or reinvested, increas-

ing ones ownership percentage as the years go by. This is

very important because when an investor does decide to

take the dividend as an income payment it will be linked

to the economy and not as a set payment derived from

Sukuk. As well Sukuk generally are short term that range

in life from 5-10 years. When this time is up, the investor

will have to find a new place to invest. And what if there is

no Sukuk at the time that meets their criteria? However

with a REIT, this is a perpetual income stream because as

long there are renters, there will be owners. This is be-

cause the dividend payment is based upon the REITs in-

come, profitability and inflation rate. There are some key

reasons for this as income is derived from renters and the

fewer vacancies a property has the more profit it will re-

ceive. Also the more the REIT takes care of its properties

through regular maintenance and refurbishments are

ways to keep occupancy high increase rents over time.

The economy and inflation are key factors as well, be-

cause as the economy expands, people’s incomes go up

meaning that the cost of living should rise at the same

pace. Although REITs can also achieve growth from the

negative effects of the financial system, as unfortunate as

it when an economy turns people may lose their homes

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as was seen in the United States and England over the

past few years. The scenario put higher demands on the

need for rental housing; thus occupancy rates and the

REITs income grew. All of these factors are reasons to

think of why this easily developable Sharia-compliant

product falls into the category of a buy and hold asset

There is clear evidence from the United States, which

have had REITs since the 1960s. When rates of return

under the buy and hold mentality are computed, REITs

have a favored advantage over other fixed income vehi-

cles. A study from the Journal of Real Estate Finance and

Economics found that from 1990-1996 average yearly

returns were 4.9% for Treasury Bills, 11.2% for the S&P

Market Portfolio, and 14.2% for REITs. But more impor-

tantly if we widen the time frame, The National Associa-

tion of REITs in Washington, DC found that from 1972 to

2008 average annual dividends amounted to 8.3% of

one’s total holding. For example if $50,000 was invested

the payout would be $4,150; however this would undoubt-

edly rise as the investor’s holdings increased over the

years and or the economy expanded. But as well the Na-

tional Association of REITs found that the average annual

total returns (dividends + capital gains) were 11.2%. If we

think logically about the future, that as people are living

longer, their retirements could easily last 30 years and

will undoubtedly need an income from investments that

matches inflation of which a REIT can provide for.

However when we bring the focus back to the GCC, we

have to consider the population as a very important factor

in the growth of residential Islamic REITs. Not just in the

need for individuals to invest in them, but from a REITs

operational sense there is the obvious need for renters to

complete the system. Yes the expatriates in many of

these countries are a dependable base to fill up rental

units, but in all realties a good portion of GCC society will

need rental units as well. The majority of the population is

under 30 years old, the price of single family homes for

ownership has gone up considerably, and the cities can-

not expand outward forever. As with other countries and

cities that have grown; the villa has been replaced by

multi-family properties as the dominant practice of con-

struction. Not just because of the lower costs, but from

the practicality of it all. It takes much more time and

space to construct 100 villas, than it does to build a single

high rise tower. And as well once a high rise is completed

the natural conduit for ownership in many parts of the

world is not the sole investor, but a REIT with thousands

of like minded investors behind them.

Sharia-compliance is of course the primary factor that has

to be worked through for this discussion to really take

hold. Would the rules for a Malaysian Islamic REIT hold up

in the GCC? A Malaysian Islamic REITs says that no more

than 20% of the total rented space and income can be

derived from haram actives. For example if a 1,000

square meter supermarket was the asset base, up to 200

square meters could be used for the sale of alcohol or

pork. Now while these products are not sold in the major-

ity of the GCC, what factors would be in play? If the asset

base was an office building, could a conventional financial

firm take up to 20% of the space and rental income or

would it be 5%? As 5% of income is generally the maxi-

mum a company, under GCC Sharia-compliance can at-

tain from haram activities in order for compliance to be

had. From this sense is real estate, different from equi-

ties? As well if it were it were in the form of an Islamic

REIT fund, which invests in various REIT operators. Would

Sharia-compliance be achieved by passing a known set of

qualitative and quantitative screens as is already the case

when constructing an Islamic mutual fund? I do not know,

but these are real questions that need to be answered

before a GCC wide Islamic REIT industry could take hold.

However, as there will mostly likely be a massive need for

rental units in the future; this asset class could prove to

be one of the most vital for building a more credible and

effective way for Islamic inclined investors to profit from

real estate.

Graduate from Bangor University in the

United Kingdom in September with a Mas-

ters in Islamic Banking & Finance. He is a

graduate of the Institute of Islamic Banking

& Insurance in London and Franklin College

Switzerland. He is area of expertise is in the

field of Islamic mutual funds

Thom Polson

Islamic Banking Expert

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Sharia Scholars

Musharakah means relationship established under a contract by the mutual

consent of the parties for sharing of profits and losses,arising from a joint en-

terprise or venture.

• Investments come from all partners/shareholders hereinafter referred to as

partners.

• Profits shall be distributed in the proportion mutually agreed in the contract.

The existence of Muta’aqideen(Partners):

• Capability of Partners: Must be sane & mature and be able of entering into a

contract. The contract must take place with free consent of the parties with-

out any fraud or misrepresentation.

If one or more partners choose to become non-working or silent partners.

The ratio of their profit cannot exceed the ratio which their capital invest-

ment bears so the total capital investment in Musharakah.

The basic rules and Features of Musharakah

• It is not allowed to fix a lump sum amount for any of the partners,or any

rate of profit tied up with his capital. A manage-

ment fee however, can be paid to the partner

managing the Musharakah provided the agree-

ment for the payment of such fee is independent

of the Musharakah agreement.

• Losses are shared by all partners in proportion

to their capital.

• All assets of Musharakah are jointly owned in

proportion to the capital of each partner.

• All partners must contribute their capital in

terms of money or species at an agreed valuation.

• Share capital in a Musharakah can be contrib-

uted either in cash or in the form of commodities.

In the latter case, the market value of the com-

modities shall determine the share of the partner

in the capital.

• The presence of the commodity: This means the price and commodity itself.

• The rate of profit sharing should be determined: The share of each partner

in the profit earned should be identified at the time of the contract. If how-

ever, the ratio is not determined before hand the contract becomes void

(Fasid).

Therefore identifying the profit share is necessary.

Distribution of Profit

� The proportion of profit to be distributed between the partners must be agreed upon at the time of effecting the contract. If no such proportion has

been determined. The contract is not valid in Shari’ah.

� The ratio of profit for each partner must be determined in proportion to the actual profit accrued to the business, and not in proportion to the capital

invested by him. It is not allowed to fix a lump sum amount for any one of

the partners, or any rate of profit tied up with his investment.

� If A and B enter into a partnership and it is agreed between them that A shall be given Rs. 10,000/- per month as his share in the profit, and the rest

will go to B, the partnership is invalid. Similarly, if it is agreed between

The Concept of Musharakah By Muhammad Zubair Usmani

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them that A will get 15% of his investment, the con-

tract is not valid. The correct basis for distribution

would be an agreed percentages of the actual profit

accrued to the business.

OBSERVATIONS

If a lump sum amount or a certain percentage of the in-

vestment has been agreed for any one of the partners, it

must be expressly mentioned in the agreement that it will

be subject to the final settlement at the end of the term,

meaning thereby that any amount so drawn by any part-

ner shall be treated as on account payment and will be

adjusted to the actual profit he may deserve at the end of

the term.

But if no profit is actually earned or is less than antici-

pated, the amount drawn by the partner shall have to be

returned.

However, if a partner has put an express condition in the

agreement that he will never work for the Musharakah

and will remain a sleeping partner throughout the term of

Musharakha, then his share of profit cannot be more than

the ratio of his investment.

Sharing of loss

In the case of a loss, all the Muslim jurists are unanimous

on the point that each partner shall suffer the loss exactly

according to the ratio of investment. Therefore, if a part-

ner have invested 40% of the capital, he must suffer 40%

of the loss, not more, not less, and any condition to the

contrary shall render the contract invalid. There is a com-

plete consensus of jurists on this principle.

Profit is based on the agreement of the parties, but

loss is always subject to the ratio of investment.

Termination of Musharakah

Musharakah is deemed to be terminated in any one of the

following events:

1. Every partner has a right to terminate the Mushara-

kah at any time after giving his partner a notice to

this effect, whereby the Musharakah will come to an

end.

In this case, if the assets of the musharakah are in

cash form, all of them will be distributed pro rata

between the partners. But if the assets are not liqui-

dated, the partners may agree either on the liquida-

tion of the assets, or on their distribution or partition

between the partners as they are.

IN CASE OF A DISPUTE

If there is a dispute between the partners in this matter

i.e. one partner seeks liquidation while the other wants

partition or distribution of the non-liquid assets them-

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selves,the latter shall be preferred, because after the ter-

mination of musharakah, all the assets are in the joint

ownership of the partners, and a co-owner has a right to

seek partition or separation, and no one can compel him

on liquidation. However, if the assets are such that they

cannot be separated or partitioned, such as machinery,

then they shall be sold and the sale-proceeds shall be

distributed.

2. If any one of the partners dies during the mushara-

kah, the contract of musharakah with him stands

terminated. His heirs in this case, will have the op-

tion either to draw the share of the deceased from

the business, or to continue with the contract of

musharakah.

3. If any one of the partners becomes insane or other-

wise becomes incapable of effecting commercial

transactions, the musharakah stands terminated.

Termination of Musharakah without closing the

business

If one of the partners wants termination of the mushara-

kah, while the other partner or partners like to continue

with the business, this purpose can be achieved by mu-

tual agreement. The partners who want to run the busi-

ness may purchase the share of the partner who wants to

terminate his partnership, because the termination of

musharakah with one partner does not imply its termina-

tion between the other partners.

However, in this case, the price of the share of the leaving

partner must be determined by mutual consent, and if

there is a dispute about the valuation of the share and the

partners do not arrive at an agreed price, the leaving

partner may compel other partners on the liquidation or

on the distribution of the assets themselves.

Muhammad Zubair Usmani

Mufti Muhammad Zubair Usmani completed

his Doctorate in Islamic Finance from Kara-

chi University. He is also the Fazil Takhassus

(specialist of Islamic Fiqh and Fatawa) from

Jamia Uloom Karachi and is also a research

scholar and teacher. He is also working as

Shariah Advisor at Muslim Commercial Bank

since july 2000.

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Sharia Scholars

Islamic finance & banking has successfully settled in Europe. That is a fact.

However, if you happen to talk with someone about the idea, you will usually

hear the answer: “Yes, interest free banking”. And what has to be emphasized

is that Islamic banking & finance is not only related to the prohibition of riba,

but it has a whole spectrum of issues worth knowing. One of such is the ques-

tion of Sharia boards – the advisory body of all Islamic financial institutions.

The presence of the Sharia board is a sine qua non condition of the existence

of an Islamic financial institution. A Sharia Board consists of experts or scholars

trained, as its very name suggests, in Sharia. Their first role is to provide ad-

vice to the Board of Directors in matters connected with religious Islamic law.

The members of the Sharia board are also responsible for compliance checks of

transactions held by the institution the board advises for. The rule has it that

an Islamic finance institution (Islamic banks included) has to make sure that all

the transactions are compliant with Sharia and can therefore be called Islamic.

Banks and other financial companies that intend to embark on the Islamic ven-

ture, are obligated to employ a Sharia board. In traditionally Islamic countries,

this issue is not a problem, as there would be plenty of access to scholars. Nev-

ertheless, in Europe, finding and keeping a reliable and credible Sharia body

might cause some legal and management issues.

First of all, availability. Experts in Islamic finance point out that the European

market does not boast a large number of Sharia

scholars to chose from. This is why many Islamic

firms literally share members of a Sharia board.

The question arises as to whether one and same

expert can provide unbiased advice for competing

firms. Islamic institutions, it has to be underlined

here, are not charity organizations, they are des-

tined to compete and woo clients, often using

various marketing techniques. Furthermore, insti-

tutions may differ in terms of goals, targets and

scope of business. Hence, economists and law-

yers specialising in Islamic finance ask if such a

solution provides for a healthy and trustworthy

standard. Of course, it might be said that the

members of the Sharia board sitting in various

firms are objective and independent, but still the issue remains. Likewise, some

financial institutions want the members of their bodies to sign an anti-

competition agreement, requiring them not to work for a competitive institu-

tion for some period of time. For Islamic finance firms, that could turn out to be

disastrous. There are only a few respected experts in Sharia and from what can

be seen, there is a long way to go before new ones appear on the scene.

For a European market, an Islamic financial firm would need a Sharia board

that knows the religious law, economy and the characteristics of continental

financial and banking services. For a Sharia scholar trained in another country

on a different continent, a more lax European approach to Sharia may seem

unacceptable. For instance, derivative based transactions that are used in

Europe can be considered haram in more conservative Islamic environment.

Bodies like the Islamic Finance Services Board or AAOIFI are working hard to

provide a unified set of guidelines for Islamic institutions around the world, but

there is still a long way to go. Luckily, recently European universities (mainly in

the UK) have developed MBA courses in Islamic finance & banking aiming at

educating more professionals in Sharia-oriented business. However, we have to

wait a couple of years to assess whether the specialists with the MBA diploma

in Islamic finance will prove efficient and well prepared for the job.

The other issue worth considering is the independence of the Sharia board.

Usually, the members of the Sharia board are employed by an Islamic institu-

Sharia Boards By Beata Paxford

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tion. According to European law, they have to work on the

grounds of an employment contract under the supervision

of an employer. In financial institutions, the Board of Di-

rectors (or the Management Board as it is sometimes

called or le directoire in French) is the main authority of

the firm. The Board decides on the strategy of the firm,

the salaries, the investments and lay offs and other like-

wise issues. In an Islamic financial institution, ideally and

theoretically, the Sharia Board is a completely independ-

ent body that provides fatwas on Sharia compliance. Nei-

ther the Board of Directors nor the Supervisory Board can

influence the fatwas issued by the Sharia board. Gener-

ally, the employment contract as such excludes independ-

ence because there exists subordination between the em-

ployee and the principal. In terms of the Sharia board,

such solution would be not acceptable, as the employed

members of the Sharia board could be stripped of their

independence in a compliance check.

In respect of the independence of the Sharia board, there

is also a question of potential legal problems related to

this body. As mentioned previously, financial institutions

(if they act as joint stock companies, plc, limited liability

companies etc.) are required to have two bodies – that is,

the managing Board of Directors and a Supervisory Board.

The members of each of the bodies are either appointed

by the shareholders or by another body. Their roles are

usually specifically stipulated in the relevant legal codes.

Both bodies have different roles in the company. In terms

of the Sharia board, it is difficult to place their role among

these bodies. The role of the Sharia board is mostly simi-

lar to the role of the Supervisory Board. However, the

members of the Sharia board do not often possess the

required economical and legal knowledge to read compli-

cated financial statements and to assess the work of the

Board of Directors.

Hence, those shaping the Islamic finance industry have

much on their plate in respect of the Sharia board. In the

author’s view, the members of the Sharia board should

excel both in Islamic law and economics. They should go

on a special course or even studies to gain the required

knowledge of e.g. bank management, specific legal issues

in a given jurisdiction, the ability to value and understand

financial transactions and their aim. The Sharia board can

no longer remain archaic in terms of the modern manage-

ment of a financial firm. As for their independence, the

best solution would be to either appoint members of the

SFMagazine 11 15

Is a senior lawyer for a renowned Polish law

firm. She is a PhD candidate in the Chair of

Banking Law at Warsaw University. Her PhD

dissertation is devoted to Islamic banking.

Beata Paxford

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Sharia Scholars

1.0 Shari’ah scholars in IFIs

Malaysian rules and regulations have spelled out several provisions in relation

to the establishment of Shari’ ah Advisory Committee (SAC) in the Islamic fi-

nancial institutions in Malaysia. The existence of Shari’ah Advisory Committee

(SAC) or Shari’ah Supervisory Board (SSB) is one of the most important govern-

ance mechanisms of an Islamic Financial Institution (IFI) to ensure the Islamic

Financial Institutions (IFIs) are compliance with Shari’ah.

It is important for the SSB to understand their roles and responsibilities as well

as the process of how an SSB should reviews the performance of a given IFIs.

The roles and responsibilities of the SSB of IFIs as define by the AAOIFI con-

notes a greater duty of not only endorsing and approving the Bank’s products

but ensuring its compliance through directing, supervising and importantly

reviewing its operations. This actually has no difference than what define by

IBA 1983 whereby the function of the Shari’ah committee is more than just an

advisory role on the bank’s operation1. Thus the SSB are considered to be re-

sponsible in most aspects of the bank’s operational.

The Shari’ah scholars who act as advisors grounded in endorsement of all prod-

ucts and services of their respective IFIs, without whom the compliance of the

product to the Shari’ah would be questionable2. This critical role is indiscrimi-

nate to all financial products, be it banking, takaful, capital markets, wealth

management and so forth. According to AAOIFI standard, Shari’ah advisers can

be defined primarily as "specialized

jurists, particularly in fiqh muamalah

and Islamic finance, entrusted with

the duty of directing, reviewing and

supervising the activities related to

Islamic finance to ensure they are in

compliance with Shari’ ah rules and

principles. The views of the Shari’ah

adviser shall be binding in the specific

area of supervision".

1.1 Role and responsibilities of

Shari’ah scholars

As what explained above whereby the

roles and responsibilities of the

Shari’ah scholars as SSB in respective IFIs has a lot to do with ensuring the

operational side of IFIs are Shari’ah compliance. Therefore, indirectly the

Shari’ah advisor control what do’s and don’ts in the IFIs operational sides and

their authority in approving products and services more or less determine the

path of the IFIs in terms of growth and sustainability. Consequently, there

should be no chance for conflict of interest between the Shari’ ah advisor and

the IFIs!

Another question mark that we feel important to raise is whether the endorse-

ment in the yearly annual report where the Shari’ah advisor claims that “we

hereby confirm that all the business activities fulfill the Shari’ah requirement”.

Personally, we have a doubt; because it lacks the criteria of being independent.

Our premise is that, the Shari’ah officer/advisor works in the organization, paid

by the organization and where the one who approves the many products of-

fered by the bank. Therefore, it does not seem right to have people from inside

to make such claim. Even the financial reports are being validated by an exter-

nal auditor.

2.0 Comprehend the position of Independent director and Shari’ah

Scholars

Analyzing such statement above indirectly questioning why it is in the first

place there is a need of independent director especially for Shari’ah scholars?

As what explained above whereby the roles and responsibilities of the Shari’ah

scholars as SAC in respective IFIs has a lot to do with ensuring the operational

side of IFIs are Shari’ah compliance. Therefore, indirectly the Shari’ah advisor

Shari’ah Scholars as an Independent

Director: A Proposal By Ezry Fahmy

16 SFMagazine 11

Page 18: ISLAMIC BANKING -Shirkah-

control what do’s and don’ts in the IFIs operational sides

and their authority in approving products and services

more or less determine the path of the IFIs in terms of

growth and sustainability. Consequently, there should be

no chance for conflict of interest between the Shari’ah

advisor and the IFIs!

But currently, majority IFIs in the Islamic finance industry

appointed the Shari’ah scholars and pays them as advisor

for the IFIs. Therefore, there is a direct relationship be-

tween the Shari’ah advisor and the IFIs their working with.

This kind of relationship reflects that the Shari’ah Advi-

sory Committee (SAC) as not totally independent as what

the bankers ought to be. Especially when such issues rise

when in some cases like products and services by Malay-

sia’s IFIs, which are often, deemed not Shari’ah complaint

in the more austere Gulf. These kind of issues being used

by the critics as they called ‘Fatwa Shopping’ where the

bankers phone up a Shari’ah scholar that are willing to

give them a Fatwa to seal of approval, confirming the

product is Shari’ah compliant by offer them a sum of

money. Such claim analogically may be viewed as a glass

of water with half empty or half filled. But on the other

side, this kind of case will happen as long as the Shari ’ ah

scholars are ‘attached’ with the respective IFIs.

3.0 Independent director in IFIs

The idea of having one of Sha ri’ ah scholar as independ-

ent director in IFIs mainly because to ensure there are

sound policies, procedures and effective and efficient

monitoring systems with proper checks and balances can

be done especially regards to Shari’ah matters in IFIs op-

erational process. An independent director can be ex-

plained as:

a) not been employed by the Company

b) not, and is not affiliated with a company that is an ad-

visor or consultant to the Company

c) not affiliated with a significant customer or supplier of

the Company

d) no personal service contracts with the Company

e) not affiliated with a non-profit organization that re-

ceives significant funding from the Company

f) not employed as an executive of another company

where any of the Company's executives serve on that

company's board of directors

g) not a member of the immediate family of an individual

who is, or has been during the past five years, employed

by the Company

h) not a controlling person of the Company

In simple words, an independent director is one who is

independent of management and free from any business

or other relationship that could interfere with the exercise

of independent judgment or the ability to act in the best

interests of a listed company6. The purpose of identifying

and appointing independent directors especially the

Shari’ah scholar is to ensure that the board includes di-

rectors who can effectively exercise their best judgment

for the exclusive benefit of the IFIs, judgment that is not

clouded by real or perceived conflicts of interest.

In IFIs case, the business operational processes represent

Islamic business organization, it portrays the image of

Islam, thus any actions or decisions have direct and indi-

rect impact towards the teachings and religion of Islam.

By having a Shari’ah scholar in as the independent direc-

tor, the Shari’ah scholar can help the board to provides

expertise and guidance on conformance to the Shari’ah

principles in all matters of the IFI business operations.

Having a Shari’ah background person in the board of di-

rector and being independent will give good impression to

the public. A Shari’ah scholar is a person with good repu-

tation and character as well as possesses the necessary

qualifications and expertise, particularly in fiqh muamalah

and Islamic jurisprudence, and has experience and/or ex-

posure in Islamic finance brings greater confidence from

the public towards the IFIs.

Stakeholder may feel relief if the independent director

plays their important role as part of corporate govern-

ance: automatically maintaining public trust and confi-

dence in the banking business.

4.0 Governance Framework: The way forward

Moreover, effective governance framework requires in-

volvement of all stakeholders, namely, the board, senior

management, and Shari’ah advisors that properly struc-

tured and complement each other in providing check and

balances mechanism that strengthens the corporate gov-

ernance practices. A committed and knowledgeable board

is a cornerstone to an effective corporate governance

system. Therefore having a Shari’ah scholar on board

would help the IFIs via the necessary skills and experi-

ence towards achieving the IFI’s goals. This will eventually

lead to a sound corporate governance practices that later

on will contributes to situation where risk taking activities

and prudence practices are appropriately balanced in the

interest of stakeholders.

Besides that, an independent director comprises of

Shari’ah scholar even only one of them being selected

should be seen from a brighter side, this is when the role

of the Shari’ah scholar as the Shari’ah Advisory Commit-

tee (SAC) as well as role as part of the boards can be

strengthen when the Shari’ah scholar could fully utilize

knowledge that he possess about market and industry. A

dynamic mix of competent and diverse skill sets coupled

with an appropriate tone at the top of practicing and pro-

moting legal-ethical compliance and professional conduct

are necessary ingredients for an effectively governed

board.

To conclude, the appointment of Shari’ah scholar as an

independent director will enhance the effectiveness of the

board as the oversight body to oversee what the manage-

ment does. Hence it will also help the company not only

be independent according to the legislative but also inde-

pendent in thought and action especially regarding the

Shari’ah matters which are the back bone of the industry.

SFMagazine 11 17

Graduated from International Islamic University Mala-

ysia (IIUM) with a B. Econs.(Hons) in Islamic Economics

and Finance qualification, currently he is pursuing

Charted Islamic Finance Profesional (CIFP) program at

the International Centre for Education in Islamic Finan-

ce (INCEIF). He is now attach with one of the Islamic

bank in Malaysia under Shariah and Product Develo-

pment Division and has written various articles on

Islamic Banking and Shariah issues.

Ezry Fahmy

Page 19: ISLAMIC BANKING -Shirkah-

Ever since the creation of Pakistan, the issue of Islamization has been a subject

of debate both within and outside the country. Islamization of laws is an impor-

tant element of the overall concept of Islamization in the country, and this as-

pect generated great discussion and deliberations in 1979 when the govern-

ment introduced Hudud Laws (Ordinances).

An objective study of the views and response to the Ordinances indicates the

existence of three opinions. There are people who think that since hudud are

prescribed in the Qur’an and Sunnah, one cannot think of changing or amend-

ing them. Some are opposed to the very idea of Islamization, so they call for a

total repeal of the Ordinances.

The third group consists of those who support the idea of Islamization and, in

fact, consider it Pakistan’s raison d’etre, but feel that the Ordinances might be

in need of review and amendments, even though the hudud are certainly di-

vinely ordained. They are of the view that, surely, it is the Qur’an and Sunnah

that prescribe hudud, but their translation into laws is a human effort that

needs continuous review to adjust to the demands of changing times. This

analysis, with its focus on the Hudud Ordinances, seeks to help in creating an

understanding of the entire debate on Islamization of laws in Pakistan. The task

is onerous, delicate and complex. Underscoring the importance of implementa-

tion of Islamic laws, and refuting the allegations of opponents, the article also

identifies some of the areas in the Hudud Ordi-

nances, specially the Hudde Zina Ordinance, that

are in need of reform.

The country has been in the grip of a raging de-

bate on the issue of the Hudud Laws ever since

they were introduced in 1979. There are some

who ask for complete repeal of these laws, others

who insist on keeping them as they are, and a

third group calling for amending and reforming

these laws to make them more responsive to hu-

man and social conditions.

Presented here is a dispassionate analysis of

these, so-called ‘controversial,’ laws for a better

understanding of the actual situation.

The analysis is divided into three parts. The first part discusses briefly the im-

portance of the injunctions of Islamic Shari’ah; the second part addresses the

questions and doubts that are raised, furiously and frequently, about the

Hudud Laws; and the last part focuses on those aspects that, to this scribe, are

in need of review, amendment and reform.

Hudud and their Place in Shari’ah

As far as the importance of Shari’ah injunctions is concerned, it does not need

to be impressed upon Muslims for the simple reason that when they profess

the kalima, confirming the oneness of Allah and the prophethood of Muham-

mad صلى هللا عليه وسلم (peace be upon him), they proclaim that they will observe Allah’s commands by following the example of the Prophet Muhammad صلى هللا in all walks of life. Needless to say, these commands and teachings عليه وسلم are not confined to acts of worship (ibadah) but cover all aspects of life –

including criminal law of which the Hudud Laws are a part.

The ‘hudud’ are the penalties that the Qur’an and Sunnah of the Prophet have

prescribed for certain crimes. Notably, Islamic criminal law is quite lenient in

this matter in that it prescribes punishments for only a few crimes. For all other

crimes, there is no permanent prescription for specific punishments, and the

Focus on Pakistan

Islamization of Laws in Pakistan By Muhammad Taqi Usmani

18 SFMagazine 11

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task of imposing punishments has been left to the ruler

and the judge, i.e., the legislature and judiciary in modern

society. It is these institutions that can prescribe punish-

ments for different crimes according to the demands of

the time and prevailing conditions. These punishments

are called ‘tazir, ’while those prescribed in the Qur’an and

Sunnah are called ‘hudud.’

Theft, robbery, Zina (fornication, adultery and rape) false

accusation and drinking are crimes for which hudud have

been prescribed. In Pakistan, the Hudud laws were en-

forced in 1979 and the ordinances regarding these crimes

are commonly referred to as the Hudud Ordinance. Why

immutable punishments were prescribed for these par-

ticular crimes and not others, and why these too were not

left to the discretion of the legislature and the judiciary is

beyond this article’s purview. I would rather limit myself

to submitting that Divine Revelation insists on something

only where human intelligence is unable to move or vul-

nerable to mistake. So, the issue is settled with a direct

command contained in Revelation, instead of being left to

human intelligence. Whether one—an individual or a peo-

ple—understands the wisdom behind the command or

not, it is binding in all circumstances. In such situations,

compliance with the command accrues invisible yet not

totally imperceptible benefits, but the chain of cause and

effect remains beyond human discernment. Such is the

case with hudud, too, perhaps.

This underscores the importance of enforcement of hudud

in an Islamic state. It is understandable that there can be

different views with respect to setting priorities in the

formidable task of transforming an entirely non-Islamic

legal system into an Islamic system. However, there can-

not be two views about the importance of enforcement of

hudud.

Hudud Laws and Islamization Debate in Pakistan

It is true that hudud laws are only one element of the Is-

lamic legal system; in other words, the Islamic legal sys-

tem is not solely about hudud. Besides legal means for

discipline, Islam also gives non-legal teachings for the

reform of society, which greatly help in curbing crimes.

This implies that an Islamic state cannot absolve itself of

its duties by just enforcing the hudud; it is also responsi-

ble for creating an atmosphere that discourages the inci-

dence of crime in the first place. However, this does not

provide sufficient grounds for the objection, sometimes

raised, that it is unjust to enforce Shari’ah laws consisting

of harsh punishments in a society where no other thing is

Islamic and where media is spreading waywardness in the

youth. Building on this objection, some even say that

unless all the sources that instigate violence and crime

are eliminated, and until a model Islamic society is estab-

lished, laws like the Hudud Ordinances should not be in-

troduced.

This objection is unreasonable. For one thing, there is no

doubt that the very enforcement of hudud in letter and

spirit plays a significant role in creating such an environ-

ment, and it is therefore not right to postpone their en-

forcement until the establishment of such an environ-

ment. Moreover, it must be appreciated that the estab-

lishment of a model Islamic society is an onerous task,

and it would be impossible to assess when a society had

become ‘sufficiently Islamic’ for enforcing hudud. The

model society that Islam seeks to establish is an ideal

that requires continuous and unflinching struggle to be

realized. Laws are made and enforced to curb evil and to

move the society closer to the ideal, and the Hudud Ordi-

nance seeks to serve this purpose.

The criticism that harsh punishments of death and lashing

are uncalled for in prevailing conditions, which consist of

too many temptations, offers no solution to the problem.

Instead of being scrapped altogether, the law should be

improved to effectively check the spread of evil from soci-

ety.

It is important to note that the Hudud Ordinances are not

‘static.’ It is for the courts to decide each case, keeping in

view specific details, the context in which the crime took

place, as well as the condition of the accused. In Shari’ah,

even a small plausible doubt suffices to annul hadd pun-

ishments. The importance of this condition can be gauged

from the fact that no accused has been awarded a hadd

SFMagazine 11 19

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punishment since 1979; all of those convicted were given

‘tazir’ punishments. This underlines the reasoning that,

instead of waiting for society to become Islamic (as if this

would come about by some stroke of magic!) before en-

forcing Islamic laws, the wise course would be to continue

with Islamization of laws as a step towards Islamizing so-

ciety.

Before proceeding further, it needs to be realized that

whereas the laws ordained by Allah and His Prophet are

sacred, and there is no room for doubts about it, when

these laws are codified, that code of law represents hu-

man effort, which is not infallible, but susceptible to mis-

take. The drafting of any law is a very delicate undertak-

ing. All possible situations have to be kept in mind and

provided for in words. Since human intelligence, being

limited, cannot visualize all kinds of circumstances in ad-

vance, there is always a possibility of flaws and weak-

nesses in any piece of law. The Hudud Ordinances are no

exception. They might suffer from weak drafting. They

might contain some aspects that are in need of review

and improvement. Without changing the injunctions of

Shari’ah, as commanded by Allah and enforced by His

Prophet, the process of change and improvement in its

implementation can theoretically go on forever, as indeed

it should. Of course, this process should be guided by ob-

jective critique and not hostility.

It is unfortunate that polarization has kept the doors shut

for such an objective approach.

Whenever a proposal concerning some issue is raised at

the political level, people get divided into two camps:

while one fails to see any good in it and calls for its total

repeal, the other fails to notice any flaw in it and deems it

heretical to even think about amending it. This is what is

happening in the case of the Hudud Ordinances also.

There is a group that, instead of undertaking a critical

analysis, is raising unfounded objections against the

Hudud Ordinances. These people, many of whom are in

fact against the very concept of enforcement of any Is-

lamic injunction as a law, are not ready to accept any-

thing less than its annulment. They represent the secular

mind that holds that religion is a private matter between

man and his God, and it should not interfere in the affairs

of the state. An added factor that has lent stiffness to

their opposition to Hudud laws is that these laws top the

list of Islamic injunctions that are the target of many cir-

cles in the West as well.5 Thus, they can be expected to

oppose the Ordinances tooth and nail, no matter how

flawless they become or how pristine a shape they as-

sume.

The dilemma facing these people is that they cannot

openly say in a Muslim society, as Pakistan’s is, that Is-

lamic laws are not acceptable to them. So they adopt an

‘indirect’ approach. Instead of raising objections against

Islam or its legal system, they find fault with the man-

made drafted laws. In the case of the Hudud Ordinances,

they have deemed it most useful to term them anti-

women. This is how they try to raise the concerns of the

international community and solicit its support for their

political ends.

Harshness of the Hadd Punishments:

Much hue and cry has been raised against the harshness

20 SFMagazine 11

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of the hadd punishments. In any action, it is human psy-

chology to compare prospects of profit against possibili-

ties of loss, and opportunities against dangers. If the pros-

pects of profit are greater than the danger of loss, one

goes ahead; if not, one refrains from the undertaking. In

committing crimes, similarly, one is lured by a tempta-

tion, but deterred by the prospect of punishment. If, in

one’s reckoning, the pleasure of the crime exceeds the

pains of punishment, one may commit it; but if the deter-

rence is greater than the urge, one would be more likely

to refrain. Shari’ah has prescribed punishments keeping

in view this human psyche and nature. The more heinous

the crime, the harsher is the punishment, so that the soci-

ety is purged of wicked and depraved elements.

As for the ‘brutality’ of the punishment of stoning to death

(Hadd punishment for adultery and rape), it should be

realized that it is, in fact, a kind of death sentence. In nu-

merous laws around the world, many crimes incur a death

sentence, which might be administered through various

forms, such as hanging, decapitation, gas chamber, elec-

tric shocks, injection, bullet-fire or stoning. The methods

are different but the punishment is the same. It is there-

fore not so relevant to debate that a bullet kills instantly

and with greater efficacy, while stoning protracts the inci-

dence of death. At times a bullet does not hit the right

mark and death is delayed, while a stone hits its point

and results in instant death.

In any case, the argument that death should be swift goes

against the purpose of this punishment: without its

‘torment’ and gravity, the sentence of death would lose

much of its meaning. This is borne out by the fact that

people are not afraid of death as much as they are of un-

dergoing the agony of death.

Aside from plain logic, if those who are worried about the

death sentence for adultery consult the statistics, they

would know that cases of death on account of adultery

are fewer than half of the deaths in other cases. While no

one can condone the killing in the name of honour, the

current situation in our society is that when a man finds

his wife or sister or daughter in a ‘compromising relation-

ship’ with someone, he himself kills her along with the

paramour. At times, the methods employed for the mur-

der of the wrongdoer are even more drastic and severe

than stoning to death. So, the punishment of stoning to

death is a pragmatic realization of the actual situation

and a measure to rectify it, along with providing a better

system for the elimination of crimes.

Similarly, to say that the punishment of lashes (Hadd pun-

ishment for fornication, drinking and false accusation) is

against human dignity is itself against the dictates and

demands of respect for humanity. If a person ignores his

or her own dignity and impinges on others’, why shouldn’t

there be a punishment that forces him or her to correct

this behavior? To punish one or two for their wrongdoing

in order to deter other criminal-minded elements and to

protect the rest is better than letting criminals get away

with their crimes and morally harm the social fabric.

Discriminatory against women:

It is said that the Hudud Ordinances are discriminatory to

women, that they have made women victims of all kinds

of injustices, and that they have been handed down pun-

ishments for wrongs they have not committed.6 This view

has been repeated ad nauseam until even neutral ele-

ments have become suspicious about the purpose of the

Ordinances. There is one clause in the Zina Ordinance –

clause 8(b) about women’s witness – on account of which

it can be said that it discriminates between men and

women. Yet, not a single woman has ever been punished

on the basis of this clause, nor has it made any significant

difference in practical terms. This issue is discussed later

in this article, but what needs to be stressed here is that

the allegation of discrimination against women is totally

baseless with respect to the other clauses of this Ordi-

nance. This allegation is levelled without studying the

laws and their implications, and amounts to giving such

meanings to the laws, just to oppose it, that are not even

intended. This has led to ridiculous situations. The follow-

ing two examples expose the true depth of such allega-

tions.

The Qazf Ordinance is one of the Hudud Laws.7‘Qazf’

means levelling a false accusation in hadd cases. The in-

tent of the law is that if one is accused falsely of commit-

ting a crime liable to hadd, one can seek punishment from

the court against the false accuser. While Shari’ah has

declared such crime highly serious, it has prescribed a

punishment of 80 lashes for it. The Qazf Ordinance is

there to enforce this punishment. Clause 8(a) states who

can file a complaint of Qazf: If the person in respect of

whom the Qazf has been committed is alive, that person

or any person authorized by him…

It is the use of ‘him’ here that has become the bone of

contention. It is an established rule of law that the mascu-

line pronoun is inclusive of both men and women. This is

the situation with most of the laws of the world. But, since

this Ordinance had to be condemned as anti-women, its

opponents picked the issue of a pronoun to claim that it

SFMagazine 11 21

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allows only men to file complaints.

If such allegations come from some ignorant people -

those who do not understand legal language - their other-

wise baseless protests are understandable. But, surpris-

ingly, this objection was raised by the National Commis-

sion on the Status of Women, which was appointed to

review the Ordinances and included legal experts. Its

comment on section 8(a) of the Qazf Ordinance is:

It is obvious from the wording used in this clause that the

drafters of this law overlooked and completely ignored

women… excluding the term ‘her’ means that it is only a

man against whom Qazf is committed is eligible to file a

complaint.8

This was done to indicate that the Ordinance is discrimi-

natory, allowing men to approach courts for redress

against false charges of illicit relations, but not women.

The blatant bias in this charge becomes even clearer

when one considers that Clause 2(b) of the Qazf Ordi-

nance says that Pakistan Penal Code is applicable to this

law – and Clause 8 of Pakistan Penal Code’s clearly states:

The person ‘he’ and its derivatives are used for any per-

son, whether male or female.

The second example of a baseless charge pertains to the

Zina Ordinance. Clause 5(1)(a) of the Zina Ordinance at-

tempts to define the crime of Zina in the following terms:

Zina is liable to hadd if it is committed by a

man who is an adult and is not insane, with

a woman to whom he is not, and does not

suspect himself to be, married.

Here, the objection raised is that while the

word ‘adult’ has been used for a man, it

has not been used for a woman. The rea-

son, however, is clear. If a man who has

committed Zina is not an adult, hadd can-

not be imposed on him; but if an adult man

has committed the crime against a woman,

whether adult or not, hadd can be imposed

on him. Not setting the condition of being

‘adult’ for the woman ensures that hadd is

imposed on a man who has raped any

woman, whether she is an adult or a minor.

In this context, the recommendation of the

National Commission on the Status of

Women that, “As the term ‘adult’ has been

used for a man, it should also have been

used for a woman,” is strange indeed.9 It

means that the crime would be liable to

hadd only when an adult man has committed it against an

adult woman; if an adult man has committed the same

heinous crime against a minor girl, he would go scot-free.

Clearly, the existing definition of Zina and its hadd in the

Zina Ordinance ensures more rights for women than the

draft recommended by the Commission.

The above two examples amply expose the depth of alle-

gations, as well as the mindset, against the Hudud Ordi-

nances. A similar example occurs in the Report of the

Commission of Inquiry for Women,10 which says that dif-

ferent clauses of the Ordinances are used against women

and they are booked in false hadd cases for personal rea-

sons.

Some 80-90 percent of women prisoners are facing cases

under these Ordinances and languishing in jails. This is

factually wrong, as the statistics given below indicate.

Justice Muhammad Taqi Usmani, born in

Pakistan is a renowned figure in the field of

Shariah, particularly in Islamic Finance. He

currently holds advisory positions in a num-

ber of financial institutions practicing Islamic

Banking and Finance. Justice Muhammad

Taqi Usmani has vast experience in Islamic

Shariah, teaching various subjects on Islam

for 39 years.

Muhammad Taqi Usmani

22 SFMagazine 11

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Islam allows loan as a form of social service among the rich to help the poor

and those who are in need of financial assistance. Loan in Islam may be ob-

tained in two ways: (i) Loan with condition of repayment, and (ii) gratuitous

loan without any compensation or gift. However, Islam does not recognize any

loan with interest for the benefit of the debtor. It only recognizes gratuitous

loan or better known as al-qard al-hasan. Such loans have not been uncommon

in human history among peers, friends and relatives. Kindness is encouraged in

Islam. The Prophet (s.a.s) is reported to have said:

the inmates of Paradise are of three types: one who wields authority and is just

and fair; one who is truthful and has been endowed with power to do good

deeds and the person who is merciful and kindhearted towards his relatives

and to every pious Muslim, and who does not stretch out of his hand in spite of

having a large family to support. [Sahih Muslim]

Definition of Qard al-Hasan

The word "qard" is derived from Arabic "qirad" which means 'to cut'. It is called

qard, as it cuts certain part of the lender's property by giving loan to the bor-

rower. Hasan is also an Arabic word, which originates from 'ihsan'. Ihsan means

kindness to others. So, hasan is an act which benefits persons other than those

from whom the act proceeds without

any obligation. The term al-qard al-

hasan means beneficial loan or be-

nevolent loan, gratuitous loan, inter-

est free loan, beautiful loan etc. M.

Umer Chapra has given the defini-

tion of qard al hasan as: "Qard al-

hasan is a loan which is returned at

the end of the agreed period without

any interest or share in the profit or

loss of the business." Therefore,

qard al-hasan is a kind of gratuitous

loan given to the needy people for a

fixed period without requiring the

payment of interest or profit. The

receiver of qard al-hasan is only required to repay the original amount of the

loan.

Objectives of Qard al-Hasan

Islam emphasizes to make brotherhood among the Muslims. The main principle

of brotherhood is to care and share each other. Qard al-hasan being a gratui-

tous loan can help the fellow Muslim brothers who need money but they do not

have. Thus, qard al-hasan enhances brotherhood among the Muslims. The

main objectives of qard al-hasan are:

a. To help the needy fellow people.

b. To establish better relationship among poor and the rich.

c. The mobilization of wealth among all people in the society.

d. To perform a good deed that is encouraged and appreciated by the

Almighty Allah and His messenger.

e. To strengthen the national economy.

f. To facilitate the poor to create new jobs market and business ven-

tures by using their merits, skills and expertise.

g. To establish a caring society.

Islamic financial rules

Al-Quard al-Hasan a Pratical Approach By Mohammad Delwar Hossain

24 SFMagazine 11

Page 26: ISLAMIC BANKING -Shirkah-

h. To eradicate unemployment problem from the

society.

i. It can be also a missionary work for daw'ah ac-

tivities by giving qard al-hasan to the non-

Muslims, who might be attracted by knowing the

beauty of Islam.

j. It can remove social and economical discrimina-

tion from the society, and

k. Finally, obviously there is a great reward in the

Hereafter for giving qard al-hasan.

Qard al-Hasan in Qur'an and Sunnah

In many places of the Holy Qur'an, Allah has mentioned

and encouraged His creature for qard al-hasan by assur-

ing better reward in this world and in the Hereafter. In the

Qur'an Allah says,

1. He who will give Allah qard al hasan, which Allah will

double into his credit and multiply many times. [Al-

Baqarah (2): 245]

2. If you give Allah qard al hasan. He will double it to

your credit and he will grant you forgiveness. [ Al-

Tagabun (64):17]

3. And give Allah qard al hasan. [ Al-Maidah (5): 12]

4. And give Allah qard al hasan, it will be increased

manifold to their credit. [ Al-Hadid (57): 18]

5. Who is he that will give Allah qard al hasan? For Al-

lah will increase it manifold to his credit. [Al-Hadid

(57):11]

6. Establish regular prayer and give regular charity and

give Allah qard al hasan---. [Al-Muzzammil (73): 20]

The sunnah of the Prophet (s.a.s) is also very clear on this

issue. It is reported that the Prophet (saw) said, "in the

night of the journey, I saw on the gate of heaven written,

'reward for sadakah is ten times and reward for qard al-

hasan is eighteen times'. So, I asked the angel, how is it

possible? The angel replied, "Because beggar who asked

had already had something but a loanee did not ask for

loan unless he was in need." [Ibn Hisham & Ibn Majah].

In another hadith reported by Abu Hurairah (R), the

Prophet (s.a.s) said, "whoever relieves a believer from a

difficulty in this world, Allah will relieve him from his diffi-

culty and Allah will facilitate him in this world and world

hereafter." [Muslim]

The above Qur'anic verses and ahadith directly and indi-

rectly encourage the Muslims to give qard al-hasan and

which will increase their credits in manifold and bring for-

giveness for them.

Rules regarding al-Qard al-Hasan Transaction:

Al-qard al-hasan, being a contract ('aqd) between two

parties requires same principles which are applicable for

other Islamic transactions. These principles are as follows:

a. Both parties should be legally (shari'ah) capable to

enter into the qard contract.

It is unanimously agreed by the four schools of law

that to enter into a contract, parties will be baligh,

'aqil and rashid (major with sound judgment). The

Mejelle has also incorporated the same principles. In

the holy Qur'an, Allah says, "Make trial of orphans

until they reach the age of marriage; if then

you find sound judgment in them, release their

property to them." [Al-Nisa (4): 6]. This verse

states that the age of marriage and the sound judg-

ment is the age of majority,

and thereby a major person

is capable to enter into any

transaction validly.

In a hadith, the Prophet

(s.a.s) said, "The pen is

raised for three groups (of

people) that is, they will not

be responsible for their ac-

tions: the insane until they

become sane, those who are

sleeping until they are

awaken, and the youth until

they reach pu-

berty." [Ahmad, Abu Daud

and al-Tirmidhi]

The above hadith makes it

clear that a person, who has

not attained the age of pu-

berty , may not be a respon-

sible party for al-qard al-

hasan transaction.

b. Ijab (offer) and qabul

(acceptance) of the qard

must be clearly made before

entering into the loan con-

SFMagazine 11 25

Page 27: ISLAMIC BANKING -Shirkah-

tract

All four schools of thoughts agree upon that ijab and

qabul should be clearly indicated in the contract, oth-

erwise, the loan contract may create dispute in fu-

ture. In the loan agreement, there should have clear

expression, collation and conjunction of the ijab and

qabul between the parties.

c. The date of payment must be specified:

It is also agreed among the Muslim jurists that the

date of payment should be mentioned in the loan

agreement. If no date is specified, the transaction

may lead to ambiguity and dispute in future among

the lender and the borrower.

It was based on the loan agreement of the Prophet's

(s.a.s) companions. When the Prophet (s.a.s) mi-

grated to Madinah, he was informed that contracts of

salam were made without stating specified time or

amount, then the Prophet (s.a.s) said, "Whoever en-

ters into a contract of salam should specify the date

of delivery and the amount of subject matter."

d. The loan contract should be written down.

This ruling is based on a Qura'nic injunction. As Allah

(s.w.t) says; "O you who believe! when you deal

with each other in transactions involving fu-

ture obligations for a fixed period of time re-

duce them in writing." [Al-Baqarah (2): 282]

Muslim jurists, however, differ on this condition. Ma-

jority of the Muslim jurists opine that it is not obliga-

tory but strongly recommended. The reason given

by them is that if both parties agree not to write,

then it is no longer an obligation upon them to write

down. The wisdom behind the writing down is to

avoid future dispute. On the contrary, minority of the

Muslim jurists like al-Tabari are of the opinion that it

is obligatory upon the parties to write down the con-

tract. It is submitted that the majority's stand seems

more reasonable as they have given the option upon

the parties whether to write down or not.

e. Getting two witnesses.

The Qura'nic injunction is that there must have two

male witnesses, if two men are not available, then

one man and two women will have the same effect.

As the Qur'an says: "And get two witnesses out

of your own men and if there are not two men,

then a man and two women." [Al-Baqarah (2):

282]

It is very essential for the loan contract to be com-

plied with this Qura'nic requirement to avoid future

disputes.

f. Administrative fee / Service charge:

A question may arise whether a charge of admini-

stration fee is allowed in Shari'ah and if yes, how

much will be the charge. Now, it is a settled issue

among the Muslim jurists that administrative fee or

service charge for loan transaction is not against

Islamic principles.

Dr. Irfan Ul Haq in his Ph.D. dissertation entitled,

"Economic Doctrines of Islam" mentioned that "

Banks are permitted to charge a minimum service

fee to cover the cost of administrative fee". Accord-

ing to S.H. Amin, "Some charges are in fact legiti-

mate fees and not interest by any standards but

sometimes the line is hard to draw. For instance in

Islamic law payment of expenses may be allowable if

the fee is attributable to some identifiable out of

pocket expense such as lawyer's fees but not gen-

eral overheads of the bank." He further mentioned

that to obtain some compensation for offering al-

qard al-hasan facilities, the banks demand some

charges and fees. These expenses incurred by banks

on providing al-qard al-hasan are collected from the

borrowers and the basis for the calculation of these

expenses are laid down by the central bank.

In an article entitled "Islamic Banking for Social Jus-

tice" M. Azizul Huq, an executive vice president of

Islamic Bank Bangladesh, said, "The Shari'ah does

not permit and Islamic banks do not receive any in-

come from interest-free loaning investment. The

lending banks can, however, recover their adminis-

trative cost directly related to the investment as

service charge. Islamic Development Bank Jeddah

recovers service charge 2% to 3% on interest free

loans. Alternatively, the cost can be reimbursed by

third parties or the government. In Pakistan, the cost

of interest for rural lending is reimbursed to the

bankers by the government."

So, if al-qard al-hasan is given by any bank or other

institutions, they may require service charge or ad-

ministrative fee. However, there is no scope for an

individual lender to demand this charge unless any

amount incurred due to procedural requirements of

the loan agreement, such as lawyer's fee, stamp

duty etc.

g. Extra Payment:

It is very clear that in the loan agreement, there will

be no condition for extra payment, otherwise, it will

be riba . It is however, advisable for the debtor to

give some sort of gift to the creditor as a sign of ap-

preciation of his voluntary deed. In a hadith, Jabir bin

Abdullah (R) reported that I had the right (of loan) on

the Messenger of Allah, he had settled it and made

additional payment to me. Again Abu Rafi' reported

that the Prophet (saw) had borrowed a young female

camel from someone and when he received zakat of

camels, he ordered me to send a young female

camel to the man as settlement of the loan. I said to

him, "I could not find among the camels except a

female camel which is ready for pregnancy". The

Prophet (s.a.s) said, "give it to him, indeed, the good

person among you is he who settles loan with some-

thing better." [al-Muwatta of Imam Malik].

The statement "every loan which draws benefit is

riba" is in fact not a hadith of the Prophet (saw) ac-

cording to the hadith scholars as there is a doubt of

its chain of narrators. Moreover, Muslim jurists have

various opinions relating to extra payment over loan.

The Hanafi, the Shafi'e and the Hambali's stand is

that every loan with profit is forbidden if the profit is

26 SFMagazine 11

Page 28: ISLAMIC BANKING -Shirkah-

stipulated in the loan agreement, otherwise, the

profit is permitted. According to Malikis, the bor-

rower may pay more than the capital quantitatively

or qualitatively at the time of the settlement of the

loan provided that the loan was used for commercial

purpose. They restricted the extra benefit from the

loan if it was used for consumption purpose.

Indeed, the majority's view is more reasonable, it is

up to the loanee whether to pay extra or not, regard-

less the loan was for consumption or commercial

purpose. The only restriction is that there should not

be any stipulation for extra benefit in the loan agree-

ment.

h. Early demand to pay back:

Loan is a voluntary act by the creditor. However, it is

not encouraged for early demand to pay back the

loan from the debtor. In the Holy Qur'an Allah says,

i. O you, who believe, fulfil your contract. [Al-

Maidah (5):1]

ii. And fulfil your covenant, for every cove-

nant will be inquired into. [Al-Isra (17):34]

iii. Then for having broken their covenant, We

rejected them and caused their hearts to

harden. [ Al-Maidah (5):13]

iv. And so (We punish them) for the breaking

of their covenant. [Al-Nisa (4):155]

In a hadith the Prophet (s.a.s) said, "Muslims are

bound by their conditions except a condition that

changes halal into haram or haram into halal." [Al-

Muatta of Imam Malik]

The Qur'anic and the Hadith injunctions indirectly

provide that the creditor should not demand the loan

amount from the debtor before the agreement ma-

tures or lapses. Muslim jurists, however, have given

different views on this matter. According to the

Shafi'e and the Hambali jurists, the creditor can de-

mand the settlement from the debtor before the

expiry period as he wishes. They have given the rea-

son that the loan is voluntary and it can not compel

any party to abide it. The Hanafi and the Maliki ju-

rists, on the contrary, are of the views that the credi-

tor can not demand the loan amount back until the

time for settlement mature. Their reason is the

above stated hadith of the Prophet (s.a.s).

It is submitted that the latter view is more reason-

able as being beneficial to the creditor and should

be accepted.

i. Guarantors:

In the case of the al-qard al-hasan, there can be

guarantors. The guarantors of the borrower may be

any person or the property of the loanee that is col-

lateral security, such as, mortgage, charge etc. In

case of the borrower's failure to pay back the loan

after the expiration of the time specified, his guaran-

tor has to pay or the collateral security is to be val-

ued for the repayment of the loan. But, Muslims

should remember that a true believer should not

delay to pay back his obligations. As the Prophet

(s.a.s) said, "Deliberate delay of a rich borrower to

settle the loan is injustice." [Sahih Bukhari & Muslim]

Islam attempts to establish justice and eliminate exploita-

tion in the society and prevents the accumulation of

wealth in the hands of few people. Islam, therefore, abso-

lutely prohibits riba as it is the root of all injustice in the

human society. Al-qard al-hasan, on the contrary, being

an interest free loan for humanitarian and welfare pur-

pose may ensure the proper movement of wealth

amongst all classes of people in the society. That is why,

the Qur'an and the Sunnah have much appreciated and

encouraged for the implementation of al-Qard al-Hasan in

the Muslims society.

SFMagazine 11 27

Mohammad Delwar Hossain

Islamic Banking Expert

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The assertion of non-western modernities

The various geopolitical configurations of the world each produce a dominant

discourse. During the period of ideological rivalry between the two superpow-

ers, the choice was between westernization or, alternatively, sovietization, with

a reluctant Third World in between. Since the implosion of the Soviet empire

and China's entry in the international market, the "assertive" cultures and re-

ligions are the ones who find themselves in trouble. The pressure of global

standardization exercised by the sole superpower and the prevailing view of

neoliberal globalization have produced identity countercurrents. In the large

cultural areas of the world - China, India, Africa and Islamic lands - ground

swells surge to oppose the standardizing pressure, in favour of the right to au-

thenticity and difference. The most striking example is China, a colossus of 1.3

billion inhabitants, which achieved the highest rate of growth in the world dur-

ing the last twenty years through a strategy of openness, modernization and

internationalization which is quite different from the western model. The so-

called socialist government, while controlling the project, combines an authori-

tarian one-party state and a network of multinationals that bring hefty invest-

ments and technology. With its low-cost exports and the enormous surplus of

its commercial and financial deficit with the United States, China has already

become a driving force of the world economy. In India, the strategy centred on

the creation of niches of sophisticated technology

is more autonomous. And its modernization is

more democratic than that of China, in accor-

dance with its multicultural genius for synthesis.

In Malaysia, a new unified wave of Islam supports

a remarkable economic dynamic. During the

1990s,, multiple trajectories of non-western mod-

ernization emerged, even in Latin America where

the postmodernist current is proudly called mod-

ernidad periférica. Thematic areas and texts

about the various possible angles on this subject

are increasingly debated in conferences through-

out the world. In the Muslim world, since the end

of the 1990s, seminars and conferences in Beirut,

Cairo, Damas, Rabat, Lahore and Kuala Lumpur

on globalization's issues and global governance have taken place. Multiple

Internet networks have spurred transnational contacts; they act as opening

catalysts in circles that had until recently been closed or had existed in an eth-

nic, cultural and religious cleavage. Clicking on the heading "liberal Islam"

leads to some forty sites of Muslim intellectuals of international reputation.

From the point of view of western neoconservative or fundamentalist commen-

tators who are influential theorists of the prevailing discourse, these multiple

ways of asserting identities will inevitably lead to a clash of civilizations. From

a hegemonic perspective, Western publicists judge the policies and practices of

other civilizations on the basis of principles and ideals prevailing in the western

world. According to this method, the non Western cultures are judged accord-

ing to criteria which are not theirs. We would like to reverse this trend so that

we may listen to Muslim intellectuals and understand, especially on the chal-

lenges that globalization represents for them. In spite of well-known differ-

ences between fundamentalist, liberal and innovative thinkers, they are com-

monly critical of our practices in the field of global governance. They consider

that our principles are not universal and moreover not convincing. Indeed,

some of the ideals we present as the most important appear to them as tram-

pled and disavowed by our neo-colonialist behaviour.

To open this intercultural dialogue, it will be necessary to critically assess not

only the thoughts and the prejudices of the others but ours as well, accepting

International Relationships

Islamic views on globalization

By Prof. Louis Baeck

SFMagazine 11 29

Page 31: ISLAMIC BANKING -Shirkah-

the test of contradiction wherever it may come from. Dia-

logue implies that everyone can present his argument

while listening to the Other.

The historical trajectory of Islam

From the eighth to the fifteenth century, Islam was at the

core of the dominant cultures and peoples which pre-

vailed in the Mediterranean area : Arabs, Persians and

invaders coming from Asia such as the Turks and Mon-

gols. During this period, Islamic culture deployed its

splendour and was hegemonic in the Mediterranean ba-

sin, reaching as far as Spain. Its scholars picked up where

the Western world left off: Greek philosophy, mathemat-

ics, the beginnings of medical science, and numerous

technologies for irrigation, agriculture and architecture.

These transfers accelerated our take-off in the 11th and

12th century. Then came the decline. One of the great

Maghreb masters, Ibn Khaldoun (1332-1406) theorized

the causes of the decline in his historical work Muqadim-

mah. Later, stagnation in the material sense and in the

intellectual sphere brought political colonization as well as

grudgingly adopted modernization. The movement of re-

form (nahda) at the end of 19th century did not hold its

promises because it was not supported by the masses

that remained anchored in tradition. Decolonization

brought to the Islamic world its share of more or less au-

thoritative governments. Currently, there are some 1.3

billion Muslims dispersed in about fifty nation-states

around the world. OPEC's oil crisis marked the first divide.

And the Ayatollahs' Iranian revolution started a trend in

which religion and culture override imported seculariza-

tion and models. In the wake of this spiritual and political

revolution, the Muslim world was vivified by a movement

of cultural and religious revival : Al sahwa Al islamiyya. In

the large, diverse Islamic world (Arab, Asian, African, and

the diaspora with its numerous Muslim intellectuals and

university professors), it is impossible to give due place to

the complex dynamics which animate these cultural areas

with their different schools of fiqh and theology. The lead-

ers of a cultural Islam (Al Islam hadari) have become

more influential than the protagonists of the Islamic state.

In spite of an enormous financial support for Saudi

Wahhabite fundamentalism, liberals and innovators gain

ground in most areas. However, fundamentalists received

a gift from heaven when the American army, supported

by some Western forces, invaded and occupied oil-rich

Eurasia. Muslims who were sympathetic to the Western

culture were not rewarded. Even sympathizers disapprove

of democracy when it is imposed by foreign military force

like a suppository. Imposed westernization hurts national-

ism and national pride and consequently works like a con-

traceptive.

Debates on globalization build on those of modernization,

however they are more about geopolitics and strategies

for economic development.

The culturalist and religious debate

A great number of Muslims see globalization (Al aulama)

as an elegant neologism which hides reality; they see

globalisation as a powerful lever for westernization (Al

taghrib) whereas pro-Westerners favour it and see as a

highway to modernity. Fundamentalists demonize global-

ization as an invasion and even as cultural rape. They

argue that Western mass-industry (pop art, cinema, tele-

vision and other media, consumerism, Mc World, etc)

brings perversion through seduction. Secularization pre-

sented by Westerners as liberating in fact destroys the

canonical hierarchy of values where religious morals con-

trol the social, economic and political processes. Seculari-

zation is perceived as a lever to push religion out of the

public sphere. Its purely instrumental rationality deprives

life of its fundamental dimension. In the Western world,

demystification or desacrilization led to dechristianization.

Churches are empty. Structuring principles no longer

guide fundamental values. Culture becomes merchandise

and values (including economic morals) dissolve. While

reading fundamentalist texts, the learned reader has

sometimes the impression they are hearing the great

master of Western rationalization, Max Weber, discussing

the other side of modernity: disenchantment of the world,

loss of direction as a result of secularization.

On the other hand, liberals and innovators underline the

obsession of the fundamentalists for models of the past.

Admittedly, cultural heritage is a value but it should not

function as an obstacle to the present. All cultures have a

dynamic which takes in external elements and contribu-

tions. Islam cannot paralyse itself through excessive glori-

fication of past values. Each culture like each religion has

appeared in the world at a historical moment and in a

particular cultural context. Thus, innovators say, our cul-

ture like our religion must evolve in order to serve as an

existential anchor for the faithful who wish to progress in

their historical trek. According to these new scholars, Is-

lam must be situated in history, just like Western culture

that proclaims itself universal. The evolution of the West-

ern world, its secularization and particularly its

economism (priority given to material development) must

be understood within the framework of its particular his-

torical course. Viewed as a product of history, the West-

ern world has moved away from models that are more

grounded in the human tradition of the long term. Thus it

became the exception and cannot aspire to universality.

Our postmodernists (Lyotard, Derrida, Foucault) have also

deconstructed the myth of universalism, of the isms of

modernity through the recognition of difference, specific-

ity and endogeneity.

The Muslim revival thus tends to outfit imported models

with its own intellectual productions,, especially in the

social sciences. Great intellectual centres are reformulat-

ing economy, sociology and political science in new terms

on the basis of the Islamic system. However transition to

Western modernity rests on the critique of traditional

knowledge and the evacuation of religious morals. This

model of secularization implies autonomy in the spheres

of knowledge and life in accordance with their own valida-

tion and operational processes. Through this evolution,

politics, society and economy free themselves from the

30 SFMagazine 11

Page 32: ISLAMIC BANKING -Shirkah-

religious morals by which they were governed. Without

structural regulation, conflict between these spheres of

values is unsolvable, say even the innovative Muslims.

But a group of new scholars of international reputation

plead for a religion that is not subdued to jurisprudence

(fiqh). They contend it should open the way to hermeneu-

tic debates (ijtihad) in order to reconcile the spiritual

foundations of religion, its existential value, and its contri-

bution to the future of umma. A religion that mingles con-

stantly with turmoil and the variations of day-to-day politi-

cal options becomes an ideology and loses its transcen-

dental substance. Intense and profound thematic topics

reflect the cultural creativity and theological renewal that

has arisen through the debate on globalization. The Mus-

lim world very strongly resents the militarization of inter-

national relations which touched on aspects of its histori-

cal splendour. For them, the globalization process seems

to be pushed less by an earnest care for democracy and

development than guided by material interest.. A Muslim

is deeply stung when he feels he is being "bedouïnized"

by an arrogant Westerner.

Economic analysis of geopolitics

In the view of publicists writing from an economic per-

spective, the geopolitics of security is a project imagined

and directed by the Western world to ensure its vital raw

materials supply (such as oil) and to retain its capacity to

attract world savings towards Western financial markets.

Wall Street is the epicentre of the recycled savings of the

whole world which serve to finance deficits in the US

trade balance and American public sector deficits. In or-

der to control the rate of the dollar and thus world trade,

it is vital to control oil reserves on which competitors

(Japanese, Chinese, Europeans) are even more depend-

ent. Global governance produces a view and a strategy of

development that suits Western needs as a whole, includ-

ing also Europe. These strategies of development are

passed down to staff and think tanks associated with the

institutions with economic capacity such as the World

Bank and the International Monetary Fund. In order to

allow them to impose their discipline (by punishing the

uncooperative through the Malthusianism of loans and

privilege for those that yield to structural adjustment),

their financial means and their capacity of intervention

have become considerable. While researching on the Chi-

nese course of action, I read similar critical analyses. In

China, the questioning of global governance is formulated

by the intellectuals of the New Left and the militants of

cultural nationalism (cf analysis of Wang Hui, Liu Kang

and Zheng Yongnian).

But criticism of consumerism is absent from Chinese dis-

course, while it is very present in Muslim publications that

recommend a reserved attitude towards consumption.

From a planetary perspective, the Western consumerist

model is a false utopia, because it is impossible for the

Western model of consumption to apply to the 6.5 billion

inhabitants of the world without bringing about an eco-

logical explosion. For innovators, development is a project

of civilization. Their writings laden with principles of social

ethics support the harmonious development thesis. In this

way, they come close to some Western reformers, such as

Indian Amartya SEN and also the inspirers of the Kyoto

school, notably Yasusuke Murakami. A comparison of

Asian and Islamic courses of action is all the more inter-

esting because modern Malaysian Islam has played an

important role in the economic success of this country.

This is partly due to Mohamed Mahathir who was during

12 years (1981-1993) its bold Prime Minister. As an enthu-

siastic Muslim, he associated Islamic masters to the doc-

trinal framing of his development strategy. Some innova-

tors of the Arab world, like Hassan Hanafi, see the mod-

ernized Islam of Malaysia as a model.

Conclusion

In spite of the constraints exerted by global governance, a

counter-current exemplifying courses of non-Western

modernization is shamelessly emerging. In order to un-

derstand correctly these trends and perspectives from

inside, a recommended method is to read and to analyse

their intellectuals' writings and publicists' writings. If one

is uninformed of ongoing controversies and trends as they

are viewed from inside, one cannot understand the real

situation. Western analysts are often blamed for reading

only western scholars and for ignoring or neglecting in-

digenous sources even on issues such as globalization. If

this debate is to become really a dialogue with multiple

voices on world issues and the future, it must not shun

but rather include the views of Others.

SFMagazine 11 31

Is Professor of International Economics and Development at the Catholic University of Leuven (Belgium). He is also administrator of the Belgium University Foundation.

Prof. Louis Baeck

Page 33: ISLAMIC BANKING -Shirkah-

Zakah has been an integral part of all prophetic religions. All of the prophets

exhorted their followers to pay zakah.[1] The Old and New Testaments contain

various verses that encourage the followers to spend on the welfare of the

poor and needy.[2] Although Old and the New Testaments do not indicate any

fixed heads of expenditure for zakah, the Quran has fixed it heads of expendi-

ture of zakah which is mentioned in the following verse:

Alms are for the poor and the needy; and those employed to

administer the (funds); for those whose hearts have been

(recently) reconciled (to truth); for those in bondage and in-

debt; in the cause of Allah; and for the wayfarer. (Thus it is)

ordained by Allah. (9:60)

By fixing the heads of expenditure of zakah Islam has minimized the possibility

of misuse of fund from the rulers and individuals. The primary goal of zakah is

to ameliorate the living conditions of the poor and the needy. In the above

verse the priority has been given to poor and needy. This is inferred from the

fact that the heads of the poor and the needy have been mentioned in the very

beginning. According to the principles of Arabic usage the most important

things are mentioned first.[3] The priority of the upliftment of the poor and the

needy through zakah is also evident from Prophetic traditions (ahadith). In or-

der to assess the role of zakah in human development, an analysis of its heads

of expenditure is given below.

1. The Poor and the Needy

The first head of expenditure of zakah is the poor

and the needy. In Islamic jurisprudence there are

different opinions on the criteria of the poor and

the needy. According to Hanafi jurisprudence fol-

lowing types of persons are eligible to benefit

from zakah:

� Those who have nothing for their subsistence

and basic necessities of life.

� Those who own a house, furniture, means of

conveyance etc., but can hardly afford their daily

needs.

� Those whose wealth is less than nisab (the minimum wealth on which

zakah is payable).[4]

But according to Shafai, Hambali and Maliki jurisprudences that nisab wealth is

not the criterion of richness and poverty. It depends on the condition whether a

person is able to meet his basic requirements or not. On this criterion the poor

and the needy are those who have no sufficient amount for their subsistence

and their dependents. They have also not the opportunity of employment ac-

cording to their status through which they can earn their living. In other words

the person who has wealth more than nisab but is unable to meet his basic

necessities and his dependents can be considered as the poor.

In Hanafi school of jurisprudence the person who has wealth equivalent to ni-

sab cannot receive zakah. In other words the person who pays zakah cannot

take it. According to Maliki, Shafai, Hambali schools of jurisprudence, if a per-

son earns according to his need, he cannot avail of zakah whether he owns

anything or not. If he is unable to earn according to his needs he will be eligible

to take zakah even if he owns a furnished house and conveyance etc. Accord-

ing to Shafai and Maliki jurisprudence, richness and poverty will be determined

on the basis of whether a person is able to manage basic necessities of life for

him and his dependents or not.

Sharia principles and rules

Zakah a priority for poor and needy By Abu Shariq

32 SFMagazine 11

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In the light of the above discussion we can say that, ac-

cording to a majority of the fuqaha (imams of Islamic ju-

risprudence), if a person has wealth that constitutes nisab

or is more than that but is not enough to fulfill his basic

needs and those of his dependents, can avail of zakah.

This implies that a person can benefit from zakah only if

he has no opportunity to work according to his qualifica-

tion and status and earn sufficient amount to support his

family.

From the above discussion it becomes clear that the pur-

pose of zakah is to ensure such a living for the poor and

the needy as is appropriate to the general standard of

living. Islam does not compel its followers to sell-off their

property to meet basic requirement of life but urges afflu-

ent people to come forward and provide them social secu-

rity at the time of distress. Accordingly, in the distribution

of zakah preference should be given to self respecting

people over the professional beggars, as indicated in the

Quran.[5] There are two types of the poor and the needy.

First, those who can earn their livelihood like craftsmen,

traders, farmers etc. but they have not enough resources

to start work. They can be helped by zakah to make them

self-reliant. Second, those who cannot earn their living

due to some handicap like the blind, the elderly, widows

and orphans. For this type of the needy, the financial as-

sistance by zakah can be given annually or on monthly

basis according to their exigencies and convenience.

Further, Islam takes into consideration natural require-

ments of man other than food, shelter, and clothing. Ac-

cordingly, students, researchers, and scholars can also be

helped by zakah if they are unable to continue their work

due to financial constraints. Similarly, those who cannot

marry due to financial constraints can also be helped by

zakah. In Islam the poor and needy have not been left at

the volition of the affluent but provided an institutional

arrangement of social security.

2. Administrators of Zakah Fund (Amilin)

The verse specifying the heads of expenditure of zakah,

mentions administrators of zakah just after the poor and

the needy. This shows that Islam prefers an organized

system of zakah for social justice. The collection and dis-

tribution of zakah is the state’s responsibility, but in the

absence of the Islamic state the Muslim society must

have institutionalized system of zakah.

3. Muallafah al-Qulub

The main purpose of this head of expenditure is to help

the men and women who have been weaned from hostil-

ity to Islam, who would probably be persecuted by their

former associates, and require assistance until they es-

tablish new connections in their new environment. This

head of zakah is relevant particularly in societies where

Muslims are a minority. Some of the very prominent

ulama hold that this head of expenditure can only be

managed by an Islamic state.[6] But this is a matter open

to ijtihad and Muslims can pick and choose from varied

views of the independently thinking fuqaha, according to

the suitability of the views to their environment.

4. Freeing of Slaves (Fi al-Riqab)

It is a widely held view that Islam stopped short of closing

the door of taking slaves through war. The Quran men-

tions the model conduct for the Islamic state towards the

war captives. The Quran says that they should either be

released generously or for a ransom:

It is not fitting for a Prophet that he should have

prisoner of war until he hath thoroughly sub-

dued the land. Ye look for the temporal goods of

this world; but Allah looketh to the Hereafter:

And Allah is Exalted in might, Wise (8:67).

Therefore, when ye meet the unbelievers (in

fight), smite at their necks; at lenth, when ye

have thoroughly subdued them, bind (the cap-

tives) firmly: therefore (is the time for) either

generosity or ransom: until the war lays down

its burden. (47:4)

Islam took various measures for uprooting the system of

slavery. Apart from exhorting Muslims towards generous

treatment and voluntarily freeing of slaves, it has fixed a

permanent head of zakah to be used for securing free-

dom of slaves. In modern times this head of zakah can be

spent in securing the release of innocent people unjustly

captivated by the government. A special beneficiary of

the head under discussion can be Muslims minorities liv-

ing amid hostile majorities.

5. The Indebted (Gharimin)

Islam encourages Muslims to give interest free loans to

their fellow humans. At the same time it urges creditor to

grant time to debtor until his economic condition be-

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comes better. In Islam waiving off the debt is the most

admirable act of virtue on the part of creditors.[7]

Moreover, Islam has fixed one of a head of zakah for debt-

ors, alive or deceased. If a person cannot pay his debt by

his own earning he will be helped by zakah fund. Islam

does not ask the debtor to sell off his property to pay off

his debt but ensures the payment of the debt through

zakah. The debtor can be the owner of all basic amenities

of life. The only condition is that the debtor must have

taken debt for basic necessities sans extravagance. Some

scholars are of the opinion that interest free loans can be

given by zakah for making the small-time but, most often,

skilled debtors self reliant so as to pay off their dues. In

this way, they hold, the benefits of this head of zakah can

be multiplied in favour of future candidates. This arrange-

ment of paying debt on behalf of debtor saves him from

dishonour and the assurance of recovery reinforces the

social practice of charitable loaning.

Some ulama include among the beneficiaries of this head,

persons who become debtors in the process of making

compromises between two conflicting parties/tribes. In

modern context, those engaged in social work can be

treated as beneficiaries of this head of zakah if they, in

the process of their work, turn into debtors.

6. In the way of Allah (Fi Sabilillah)

Literally, fi sabilillah means in the way of Allah. It is a

Quranic term used largely in the context of defense. The

prominent meaning of this word, according to the Quranic

usage and applicable also in the context of the verse con-

cerning heads of expenditure of zakah, is jihad.[8]

7. Wayfarer (Ibn as Sabeel)

The system of zakah also takes into consideration ad hoc

needs of individuals. The Quran invariably encourages

people for globetrotting for various purposes.[9] As the

wayfarers may face various problems during their jour-

ney, the Quran, at many places, urged Muslims to take

care of wayfarers or travelers’[10] and also fixed a head

of zakah for them. From this head the funds can be used

for the construction of musafir khanas (inns) and provid-

ing other facilities to travelers.

34 SFMagazine 11

Abu Shariq

Islamic Banking Expert

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Ibn Khaldun is universally recognized as the founder and father of Sociology

and Sciences of History. He is best known for his famous

'Muqaddimah,' (Prolegomena). Abd al-Rahman Ibn Mohammad, generally

known as Ibn Khaldun after a remote ancestor, was born in Tunis in 732 A.H.

(1332 C.E.) to an upper class family that had migrated from Seville in Muslim

Spain. His ancestors were Yemenite Arabs who settled in Spain in the very be-

ginning of Muslim rule in the eighth century.

During his formative years, Ibn Khaldun experienced his family's active partici-

pation in the intellectual life of the city, and to a lesser degree, its political life.

He was used to frequent visits to his family by the political and intellectual

leaders of western Islamic states (i.e., North Africa and Spain), many of whom

took refuge there. Ibn Khaldun was educated at Tunis and Fez, and studied the

Qur'an, Prophet Muhammad's Traditions and other branches of Islamic studies

such as Dialectical theology, shari'a (Islamic Law of Jurisprudence, according to

the Maliki School). He also studied Arabic literature, philosophy, mathematics

and astronomy. While still in his teens, he entered the service of the Egyptian

ruler Sultan Barquq.

Ibn Khaldun led a very active political life before he finally settled down to

write his well-known masterpiece on history. He worked for rulers in Tunis and

Fez (in Morocco), Granada (in Muslim Spain) and Biaja (in North Africa). In

1375, Ibn Khaldun crossed over to Muslim Spain

(Granada) as a tired and embittered man solely

for the reasons of escaping the turmoil in North

Africa. Unfortunately, because of his political past,

the ruler of Granada expelled him. He then went

back to Algeria to spend four years in seclusion in

Qalat Ibn Salama, a small village. It was in Qalat

he wrote Muqaddimah, the first volume of his

world history that won him an immortal place

among historians, sociologists and philosophers.

The uncertainty of his career continued because

of unrest in North Africa. Finally, he settled in

Egypt where he spent his last twenty-four years.

Here, he lived a life of fame and respect, marked

by his appointment as the Chief Malakite Judge.

He also lectured at the Al-Azhar University.

Ibn Khaldun had to move from one court to another, sometimes at his own will,

but often forced to do so by plotting rivals or despotic rulers. He learnt much

from his encounters with rulers, ambassadors, politicians and scholars from

North Africa, Muslim Spain, Egypt and other parts of the Muslim world.

Ibn Khaldun is most famous for his book 'Muqaddimah' (Introduction). It is a

masterpiece in literature on philosophy of history and sociology. The main

theme of this monumental work was to identify psychological, economic, envi-

ronmental and social facts that contribute to the advancement of human civili-

zation and the currents of history. He analyzed the dynamics of group relation-

ships and showed how group feelings, al-'Asabiyya, produce the ascent of a

new civilization and political power. He identified an almost rhythmic repetition

of the rise and fall in human civilization, and analyzed factors contributing to it.

Ibn Khaldun's revolutionary views have attracted the attention of Muslim schol-

ars as well as many Western thinkers. In his study of history, Ibn Khaldun was a

pioneer in subjecting historical reports to the two basic criteria of reason and

social and physical laws. He pointed out the following four essential points in

the study and analysis of historical reports: (1) relating events to each other

through cause and effect, (2) drawing analogy between past and present, (3)

taking into consideration the effect of the environment, and (4) taking into con-

Islamic Culture

Ibn Khaldun

36 SFMagazine 11

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sideration the effect of inherited and economic conditions.

Ibn Khaldun's pioneered the critical study of history. He

provided an analytical study of human civilization, its be-

ginning, factors contributing to its development and the

causes of decline. Thus, he founded a new science: the

science of social development or sociology, as we call it

today. Ibn Khaldun writes, "I have written on history a

book in which I discussed the causes and effects of the

development of states and civilizations, and I followed in

arranging the material of the book an unfamiliar method,

and I followed in writing it a strange and innovative way."

By selecting his particular method of analysis, he created

two new sciences: Historiology and Sociology simultane-

ously.

Ibn Khaldun argued that history is subject to universal

laws and states the criterion for historical truth: "The rule

for distinguishing what is true from what is false in history

is based on its possibility or impossibility: That is to say,

we must examine human society and discriminate be-

tween the characteristics which are essential and inherent

in its nature and those which are accidental and need not

be taken into account, recognizing further those which

cannot possibly belong to it. If we do this, we have a rule

for separating historical truth from error by means of de-

monstrative methods that admits of no doubt. It is a

genuine touchstone by which historians may verify what-

ever they relate."

Because of his emphasis on reason and its necessity in

judging history and social events, some scholars have

claimed that Ibn Khaldun tried to refute conventional reli-

gious knowledge and substitute for it reason and rational

philosophy. This claim is unfounded. It is known that some

schools teach things which are irrational in nature. But

this is not true of Islam which has always encouraged ob-

servation and thinking, and reminded the nonbelievers for

not using their reason and thinking. An example is the

Verse 164, Chapter 2 of the Qur'an: "Behold! In the crea-

tion of the heavens and the earth; in the alternation of

the night and the day; in the sailing of the ships through

the ocean for the benefit of mankind; in the rain which

God sends down from the skies; and the life which He

gives therewith to an earth that is dead; in the beasts of

all kinds that he scatters through the earth; in the change

of winds and the clouds which they trail like slaves be-

tween the sky and the earth; - (here) indeed are signs for

people that are wise and think." Qur'an 2:170: "When it is

said to them: "Follow what God hath revealed." They say,

"Nay: We shall follow the ways of our fathers." What!

even though their fathers were devoid of wisdom or rea-

son and guidance?"

Ibn Khaldun remarked that the role of religion is in unify-

ing the Arabs and bringing progress and development to

their society. He pointed out that injustice, despotism,

and tyranny are clear signs of the downfall of the state.

Ibn Khaldun points out that metaphysical philosophy has

one advantage only, which is to sharpen one's wits. He

states that the knowledge of the metaphysical world par-

ticularly in matters of belief can only be derived from

revelation.

He was a pioneer in education. He remarked that suppres-

sion and use of force are enemies to learning, and that

they lead to laziness, lying and hypocrisy. He also pointed

out to the necessity of good models and practice for the

command of good linguistic habits. Ibn Khaldun lived in

the beginning period of the decline of Muslim civilization.

This experience prompted him to spend most of his ef-

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forts on collecting, summarizing and memorization of the

body of knowledge left by the ancestors. He vehemently

attacked those unhealthy practices that created stagna-

tion and stifling of creativity by Muslim scholars.

Ibn Khaldun emphasized the necessity of subjecting both

social and historical phenomena to scientific and objective

analysis. He noted that those phenomena were not the

outcome of chance, but were controlled by laws of their

own, laws that had to be discovered and applied in the

study of society, civilization and history. He remarked that

historians have committed errors in their study of histori-

cal events, due to three major factors: (l) Their ignorance

of the natures of civilization and people, (2) their bias and

prejudice, and (3) their blind acceptance of reports given

by others.

Ibn Khaldun pointed out that true progress and develop-

ment comes through correct understanding of history,

and correct understanding can only be achieved by ob-

serving the following three main points. First, a historian

should not be in any way prejudiced for or against any

one or any idea. Second, he needs to conform and scruti-

nize the reported information. One should learn all one

could about the historians whose reports one hears or

reads, and one should check their morals and trustworthi-

ness before accepting their reports. Finally, one should

not limit history to the study of political and military news

or to news about rulers and states. For history should in-

clude the study of all social, religious, and economic con-

ditions.

The Muqaddimah was already recognized as an important

work during the lifetime of Ibn Khaldun. His other volumes

on world history Kitab al-I'bar deal with the history of Ar-

abs, contemporary Muslim rulers, contemporary European

rulers, ancient history of Arabs, Jews, Greeks, Romans,

Persians, Islamic History, Egyptian history and North-

African history, especially that of Berbers and tribes living

in the adjoining areas. The last volume deals largely with

the events of his own life and is known as Al-Tasrif. As

with his other books, it was also written from an analytical

perspective and initiated a new tradition in the art of writ-

ing autobiography. He also wrote a book on mathematics

which is not extant.

Ibn Khaldun's influence on the subject of history, philoso-

phy of history, sociology, political science and education

has remained paramount down to our times. He is also

recognized as the leader in the art of autobiography, a

renovator in the fields of education and educational psy-

chology and in Arabic writing stylistics. His books have

been translated into many languages, both in the East

and the West, and have inspired subsequent development

of these sciences. Prof. Gum Ploughs and Kolosio consider

Muqaddimah as superior in scholarship to Machiavelli's

The Prince written a century later, as the former bases

the diagnosis more on cultural, sociological, economic

and psychological factors.

38 SFMagazine 11

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Certain architectural features have become fixed and eternal. In this modern

world, they help us find our architectural roots and remain true to our identity.

Almost every architectural structure addresses, in a direct sense, cultural iden-

tity and philosophy within a physical context.

If we want to understand, appreciate, and evaluate the architectural quality of

a building, we need to develop a sense of dimension, topography, climate, ma-

terial, structure, and proportion, and of the surrounding physical environment -

- both natural and human-made. This sense goes far beyond the building's abil-

ity to serve utilitarian needs.

The Islamic world -- and the Middle East in particular -- is undergoing a trans-

formation today unprecedented in its history, writes architect Garry Martin in

the essay "Building in the Middle East Today -- in Search of a Direction." Oil

wealth, along with social and political change, have threatened Islamic culture

and traditions. This identity crisis is readily apparent in architectural design.

A desire for rapid development, Martin notes, brought to the Middle East the

massive importation of Western technology, planning, design and construc-

tional expertise. Many of the new buildings in the Middle East, continues Mar-

tin, are direct imitations of Western models that were designed for another

culture -- and they are creating an alien environment in Islamic communities.

Many Muslim planners and architects are reacting

to this invasion of Western culture by reasserting

their Islamic heritage. This leads to the questions

of just what constitutes Islamic architecture!!!

Central to this definition, Martin explains, is the

Islamic concept of Unity. Writes Martin:

"The concept of Unity in multiplicity is the deter-

mining factor in integrating Islamic societies. His-

torically the revelation of Islam as expressed by

the prophet Mohammed and the Holy Koran

brought together the most diverse cultures and

peoples from Spain across to India and beyond.

The architecture of the Islamic world throughout

history adapted and responded to different cul-

tures and existing traditions of buildings without weakening the spiritual es-

sence which was its source of inspiration. Urban centers in Islamic cities

evolved over long periods of time with generations of craftsmen whose sensi-

tivity and experience added variety and a diversity of styles to the environ-

ment. The traditional Islamic city reflected a unity which related the architec-

ture of the mosque, the madrassa , the souq, palace and the home as a se-

quence of spaces... The identity of the city lay in the relationship of its ele-

ments. These relationships were generated by the harmonizing of the commu-

nity with the forces acting on it, that enabled the interaction of cultures, build-

ing methods and methods to evolve an Islamic identity in the same way a lan-

guage maintains its own identity even when it absorbs outside words."

Islamic architecture was in harmony with the people, their environment and

their Creator, Martin adds. Yet no strict rules were applied to govern Islamic

architecture. The great mosques of Cordoba, Edirne and Shah Jahan each used

local geometry, local materials, local building methods to express in their own

ways the order, harmony and unity of Islamic architecture. When the major

monuments of Islamic architecture are examined, Martin writes, they reveal

complex geometrical relationships, a studied hierarchy of form and ornament,

and great depths of symbolic meaning.

But in the 20th century, the Islamic concepts of unity, harmony and continuity

Islamic Architecture

The future of

Islamic

architecture

40 SFMagazine 11

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often are forgotten in the rush for industrial development.

Martin lists three directions contemporary Islamic archi-

tecture has taken.

1. One approach is to completely ignore the past and

produce Western-oriented architecture that ignores

the Islamic spirit and undermines traditional culture.

2. The opposite approach involves a retreat, at least

superficially, to the Islamic architectural past. This

can result in hybrid buildings where traditional fa-

cades of arches and domes are grafted onto modern

high-rises.

3. A third approach, Martin notes, is to understand the

essence of Islamic architecture and to allow modern

building technology to be a tool in the expression of

this essence. Writes Martin, "Architects working to-

day can take advantage of opportunities that new

materials and mass production techniques offer.

They have an opportunity to explore and transform

the possibilities of the machine age for the enrich-

ment of architecture in the same way that craftsmen

explored the nature of geometrical and arabesque

patterns..."

The forms that would evolve from this approach, adds

Martin, would have a regional identity, a stylistic evolution

and a relevance to the eternal principles of Islam.

In the Islamic and Arabic world, we find great architects

such as: Hassan Fat'hy is arguing for the nobility and wis-

dom of vernacular architecture in the face of imported

models that are alien to Islamic society. Moreover, there

is Rifat Chadirji whose entire life has been dedicated to

the search for a suitable contemporary architectural ex-

pression that is inspired by the authentic heritage of his

region. These, and many more such as: Basil Al-Bayyati,

and Abdel Wahed El Wakil are the gladiators in the arena

of competing concepts of architecture in the Muslim

world. They have contributed significantly to the evolving

patterns of the built environment, to the intellectual de-

bate prevailing in the Muslim world, and to the architec-

tural profession's image of its role as articulator and

promulgator of societal values.

SFMagazine 11 41

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The Mosque of al-Azhar was founded by Jawhar al-Siqilly, the Fatimid conqueror

of Egypt, in 970 as the congregational mosque for the new city of al-Qahira.

The first khutba was delivered from its minbar in 972 and a university was es-

tablished there in 988.

The core academic life of Al-Azhar has remained much the same for over a

millenium: its students study the Qur'an and Islamic law in detail, along with

logic, grammar, rhetoric, and how to calculate the lunar phases of the moon.

Most of this learning is done by listening in a circle (halqa) at the feet of a

sheikh and rote memorization. As students advance, they may engage in So-

cratic dialogue with their teachers or instruct their juniors.

Al-Azhar does not admit students who are not practicing Muslims but provides

training in secular professions; it is thus a unique combination of a theological

seminary and regular university, with faculties of medicine and engineering

established in 1961.

Al-Azhar is considered by most Sunni Muslims to be the most prestigious school

of Islamic law, and its scholars are seen as the highest scholars in the Muslim

world. Its stated objectives remain the propagation of Islamic culture and the

Arabic language.

To that end, it maintains a committee of ulemas to judge on individual Islamic

questions, a printing establishment for printing

the Qur'an, and trains preachers trained in da'wa

and the propagation of religious publicity. Al-

Azhar is run by a Supreme Council that estab-

lishes general policy, headed by a Grand Imam,

styled the "Sheikh Al-Azhar."

The original structure is a hypostyle mosque, with

the aisles defined by round arches on pre-Islamic

marble columns with Corinthian capitals, and with

the axis to the mihrab emphasized by a wide lon-

gitudinal aisle (transept), higher than the rest of

the prayer hall. The other aisles are transverse,

running parallel to the qibla wall. The termination

of the transept at the mihrab is marked by a

dome.

Among the original decorations are stucco panels and a window screen in the

original qibla wall, stucco representations of a palm tree on the piers of the

wall facing the original qibla wall. Also original are the stucco decorations on

the inside of the northeast wall of the sanctuary, including bands of Kufic in-

scriptions framing windows with geometric stucco grilles, and the Kufic inscrip-

tions and stucco carving in the hood of the mihrab. The stucco panels above it,

however, belong to the restoration of Sultan Baybars I.

The courtyard was originally enclosed with three arcades. Part of the work of

Caliph al-Hafiz (1138) is the addition of an arcade around all four sides of the

courtyard, displaying keel-shaped arches, roundels, and keel-arched niches.

The transept commences with a pishtaq, which is set in the courtyard's prayer-

hall facade and was also built in the time of al-Hafiz. Behind this pishtaq in the

first bay is a dome on squinches. This dome, the arches supporting it, the strik-

ing stucco decoration both on the spandrels of these arches and the interior of

the dome, and the window grille above the qibla side arch that is the earliest

extant example of stained-glass in Egypt, were also added by al-Hafiz.

The Shafi'i monopolized the law during the Ayyubid period, so the Friday

khutba in Cairo could be delivered from one mosque only. Consequently, the

Azhar lost its status as a Friday mosque, when the Mosque of al-Hakim, by vir-

Islamic Architecture

The Mosque of Al-Azhar

42 SFMagazine 11

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tue of being the largest mosque in the city, was chosen in

its stead. In 1266 during the reign of Mamluk Sultan Bay-

bars I, Amir 'Izz al-Din Aydamur al-Hilli restored the

mosque and elevated it to khutba status, and Amir Badr

al-Din Bilik al-Khazindar had a maqsura made for it.

Mamluk madrasas were established in the ziyada (outer

enclosure): Taybarsiyya in 1309 and Aqbughawiyya in

1340. The Taybarsiyya has two iwans, one for the

Shafi'ites and the other for the Malikites. Its mihrab is rep-

resentative of an early Bahri Mamluk combination of glass

mosaic and polychrome marble inlay. The mihrab's semi-

dome is set in an outer arch surrounded by a molding

which forms a loop at its apex, and continues horizontally

and then vertically downwards to form a rectangular

outer frame for the spandrels of this arch. This is the earli-

est occurrence of this feature in Egypt. The upper part of

the mihrab is framed by a band of white marble with a

decorative motif inlaid in black.

The Aqbughawiyya, with a minaret by the royal chief-

architect Mu'allim al-Suyufi (also 1340), had housed al-

Azhar's valuable collection of Qur'ans and manuscripts

since 1898, but has since been relocated to another build-

ing. For another minaret by tMu'allim al-Suyufi, see al-

Maridani. Originally a madrasa, it was later used for the

Sufi exercise of hudur. In fact, in the early 14th c.

mosques and madrasas were arenas for Sufi perform-

ances including dance and music. It is particularly noted

for its portal, adorned with red and black marble inlay,

and mihrabs featuring decorations in glass mosaic and

mother of pearl.

The foundation (madrasa and mausoleum) of Jawhar al-

Qunqubay, added in 1440, displays the earliest example

of arabesque foliage carving on the exterior surface of a

stone dome in Cairo. Additions by Sultan Qaytbay include

the main gate to the courtyard at the end of the passage

between the Aqbughawiyya and the Taybarsiyya (1469),

and the minaret above it (ca. 1477). Later restorations by

Qaytbay under the superintendence of Khwaja Mustafa

ibn Mahmud ibn Rustem al-Rumi were finished in 1496.

The double-finial minaret belongs to the works of Sultan

al-Ghuri (1501-16).

Later works include those of Mamluk 'Abd al-Rahman

Katkhuda (under the Ottomans), part of which is the main

portal and the expansion behind the Fatimid mihrab, in

1753, and those of Khedive 'Abbas Hilmy in 1894. This

mosque served as a model for the Mosque of the Qarafa,

a congregational mosque built by al-Sayyida al-Mu'izziyya

in 976.

The university's library (not open to visitors), which was

consolidated in 1897, is considered second in range and

importance only to Dar Al-kotob Al-Masriah in Egypt, as

far as the number of Islamic books and manuscripts are

concerned. The library comprises of 99,062 books consist

of 595,668 volumes of the most precious manuscripts and

rare books, some as old as the 8th century.

SFMagazine 11 43

Page 45: ISLAMIC BANKING -Shirkah-

Mission

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of Islamic banking and financial industry among Islamic Banking and Fi-

nancial Institutions and their western counterparts in accordance with a

spirit of collaboration.

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T

Issue 11

July /September 2010 | Quarterly

Publishing House

Shirkah Finance Ltd

www.shirkah-finance.com

Editorial Office and Editing

World Trade Center - via Lugano, 13

6982 Agno (Lugano) Switzerland - P.O. Box 317

Tel.(+419)6102250 - Fax (+419)6102101

[email protected]

Chairman & Publisher

Alberto Di Gennaro

Editor in Chief

Alberto Di Gennaro

Corporate Communication Manager

Sara Lugnani

Art, Fashion, Events Director

Nada Ramzi

Editorial contributors

Thom Polson, Muhammad Zubair Usmani,

Muhammad Taqi Usmani, Beata Paxford,

Ezry Fahmy, Mohammad Delwar Hosain ,

Louis Baeck, Abu Shariq,

Photographer

Alessandro Villa

Production Manager

Khaled Aljeeri

Design & Layout

Shirkah Finance Ltd Lugano

Printing

Multimediapublishing (Milano)

© All rights reserved. No part of this publication may be

reproduced in whole or part without permission from the

publisher. The view expressed in SHIRKAH Magazine are

those of the respective contributors and are not necessa-

rily shared by the magazine or its staff. SHIRKAH

Magazine wellcomes new contributors but can assume no

responsibility for unsolicited manuscripts, photographs or

illustrations.

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