Islam News – Speaking at a recent forum on “The Future of Islamic Finance”, Mufti Faraz Adam, CEO, Amanah Advisors, explained the philosophy and vision of Islamic Finance, and what it intends to achieve.
Adam said “Shariah is a means to facilitate sustainability, the wellbeing of the society and financial market. The purpose of Islamic finance is to ensure we fulfill our needs without causing harm to others. Transactions are social interaction which Islam sees as an exchange of culture”.
He added that Islam has adopted unique principles of transaction management and governance.
Key Principles of Islamic Finance
Mufti Adam highlighted the following principles of Islamic Finance:
- Money: Money is the life-blood of any economy, and in the context of Islam interest is prohibited.
- Harmful Products: The second principle of Islamic finance is zero tolerance for a harmful product. Anything that can harm socially, morally, mentally, is not supported or promoted as investment options. These include activities like gambling, alcoholism, and the tobacco industry. all these have rare gamification impacts the society.
- Non-Interest Loans: loans are gestures of goodwill to help one another and are not for commercial profit-seeking contracts. The third principle of Islamic Finance is the promotion of non-interest loans.
- Equity and Debt Financing: The fourth principle of Isla mic Finance is equity and debt financing, which can be deployed for long-term financing of areas like Infrastructure.
Prohibition in Islamic Finance
- Islam prohibits interest also known as Riba, which is why Islamic finance is non-interest seeking the wellbeing of citizens.
- Gambling: Gambling is also prohibited because it is an act of gaming
- Ambiguity in Contracts: Islamic finance does not give room to contracts/transactions that are ambiguous. It promotes transparent financial activities.
- Short-Selling: Islamic Finance discourages short-selling in the financial market but encourages buying and trading.
Also, he said the core value of Islamic finance is to drive economic empowerment for people.
Speaking on the future of Islamic finance, the scholar was optimistic that Fintech was at the heart of Islamic finance evolution.
“It is the enabling of financial services. Fintech is the disaggregation of conventional finance such as entrepreneurship, innovation creativity, huge potentials from the millennials coming forward and developing amazing ideas, transparency, cost efficiency, better variety. All these are creating lower barriers of entry” he noted.
He added that the future of Islamic finance belonged to the young, bold, brave and entrepreneurial.
The webinar was hosted by EY Muslim Community in collaboration with CMS Muslim Network.