From: zsardar@ds5000.DAC.Northeastern.edu (Ziak Sardar)
Newsgroups: soc.culture.bangladesh,soc.culture.indian,soc.culture.pakistan
Subject: Re: Contradictions in Quaran
Date: 14 Aug 92 19:41:37 GMT
Followup-To: soc.culture.bangladesh
Organization: Northeastern University, Boston MA. USA 02115

In article <1992Aug13.230244.25745@uceng.UC.EDU>, mghayalo@uceng.UC.EDU (Manoj Ghayalod) writes:

 
> >> Which banks in Malaysia to Saudi are doing fine, please give some
> >> refrences. And what do you mean by fine. I have explained why they are
> >> obsolete. They being in existance does not prove a thing, to show a 
> >> country is Islamic there have to be such banks exist. If it cannot
> >> compete with the regular banks then the system is obsolete.
===================================================================
> >
> >Why?  Why do the regular banks have to exist as they do now?
> People who want to buy cars or something else and do not have
> money upfront, think they should exist. Investors who have great plans
> and do not have money upfront think they should exist. Industries who have
> something to sell and they have customers who do not have money upfront
> think banks have to exist. And bankers who end up making more money for
> their lending think that banks should exist.
> >

This is parts of an article in "The economist" April 4th 1992 p49

  --------------" However even among those westerners who know what 'Islamic
banking' really means--a system of finance based on the sharing of risk and
profit, rather than on payment of interest-few take it seriously as a way for
a modern economy to do bussiness. In some ways this is a mistake too."-----
---------------------------------------------------------------------------
---------------"Islamic banking is not merely consistant with capitalism (i.e.
 with a market-driven allocation of capital, labor and other resources), but in
certain respects may be better suited to it then western banking. On one view,
the mistakes that have led western banks and economies into there present 
financial troubles are precisely the errors that islamic banking is at pains
to avoid.
               Islam considers the charging of interest an injustice. Western
economists talk of an interest rate that reflects, among ohter things, "pure
time-preference"-ie, the notion that consumption today is worth more than
consumption tomorrow. Islamic scholars point out that mere hoarding of cash
ought, on that view, to warrent an economic reward. But an economic reward
becomes available for distribution only if consumption forgone is translated 
into investment that yields a real economic return. Lendres are entitled to 
part of any such return, according to Islam, but only to the extent that  they 
help to create wealth.
    That, in turn, means that they must accept a share of the risk. In Islam
this idea is not confined to banking. In general, Islamic laws of contract 
insist that risks should be shared: wherever there is uncertainitiy, contracts
that assure one party of a fixed return come what may are discoureged.
    Many muslim countries have banking systems that follow, at least in part,
Islamic principles. A variety of partnership agreements has developed to allow
lending without interest. Under schemes such as 'mudarabah'(often an equivalent
of short term commertial credit) and musharakah(longer term equity like 
arrangements), banks receive a contractual share of the profits generated by 
borrowing farms. Depending on the contract, this may be a share of all profits,
or a share in the profits created by a perticular investment project. The banks
depositors, in turn, receive a share of the banks profits."
     



> Manoj

Thus Manoj these banks are not as obsolete as you think and they can take care
of the needs that you mentioned. Hope I have answered some of your questions
through the western source "The economist".


Peace
Zia A Karim Sardar
Newsgroups: soc.culture.bangladesh,soc.culture.indian,soc.culture.pakistan