Have Islamic Banks failed to do their desired jobs?

It is sometimes argued that the Islamic financial system that the Islamic banks and financial institutions, workings since last three decades, did not bring any visible changes in the economic set up, not even in the field of financing. This indicated that the boastful claims of creating distributive justice under the umbrella of Islamic banking are exaggerated.

This criticism is not realistic, because it does not take into account the fact that, in proportion to the conventional banking, the Islamic banks and financial institutions are no more than a small drop in the ocean, and therefore, they cannot be supposed to revolutionize the economy in a short period of time.

In addition Islamic banks are passing through their age of infancy . They have to work under a large number of constraints, therefore, some of them have not been able to comply with all the requirements of shariah in all their transactions, therefore, each and every transaction carried out by them can not be attributed to shariah.

Moreover, the Islamic banks and financial institutions are not normally supported by governments, legal and taxation system and the central banks of their respective countries. Under these circumstances they have been given certain concessions, on the grounds of need or necessity, which are not based on original and ideal principles of Shariah.

Islam being a practical way of life, has two sets of rules. One is based on the ideal objectives of shariah which is applicable in normal conditions, and the second is based on some relaxations given in abnormal situations. The real islamic order is based on the former set of principles, while latter is a concession which can be availed at times of needs, but it does not reflect the true picture of the real islamic order.

Living under constraints, the Islamic banks are mostly relying in the second set of rules mentioned above. Therefore, their activities could not bring a visible change even in the limited circle of their operations. However, if the whole world financing system is based on the ideal islamic principles, it will certainly bring impact on the economy.

Ramsha Amir