By John Foster, former editor, Islamic Business & Finance magazine
The Islamic finance industry has often battled with the question: How Islamic is Islamic banking?
The question’s pertinence was raised in March last year, when Sheikh Muhammad Taqi Usmani, of the Accounting and Auditing Organization for Islamic Finance Institutions (AAOIFI), a Bahrain-based regulatory institution that sets standards for the global industry, said that 85% of Sukuk, or Islamic bonds, were un-Islamic.
Usmani is the granddaddy of modern-day Islamic finance, so having him make this statement is synonymous with Adam Smith saying that free-markets are inefficient.
Because Sukuk underpin the modern-day Islamic financial system, one of its pre-eminent proponents arguing that the epicentre of the system was flawed sent shockwaves through the industry.
It also gave ammunition to the many critics who see Islamic finance as an industry more driven by cultural identity than practical problem solving: as a hodgepodge of incoherent, incomplete, impractical and irrelevant ideas.
The products that modern-day Islamic bankers have created are very similar to conventional products.
So similar, in fact, that to an outside observer they could be considered the same.
Islamic banks now offer Islamic mortgages, Islamic car loans, Islamic credit cards, Islamic time deposit and guaranteed return accounts, Islamic insurance and some even offer Islamic managed and hedge funds.
This point is conceded by Samir Alamad, Sharia, or Islamic law, compliance and product development manager of the Islamic Bank of Britain.
“The industry does not want to alienate its products,” he says.
“They have to be recognisable, produce the same outcome as conventional products, but remain within the guidelines of Sharia.”
The core of Islamic economics is a prohibition on interest.
This immediately creates a problem for Islamic banks, as conventional banks charge borrowers an interest rate through which they can reward their depositors and make some profit for being the broker.
With interest ruled out it is harder to make money.
The modern Islamic banker has found a way around this prohibition, however.
As in many Islamic products, the bank enters a partnership with its depositors and invests his money in a Sharia compliant business.
The profit from this investment is then shared between the depositor and the bank after a set time.
In many cases this “profit rate” is competitive with the conventional banking system’s interest rate for savers.
Alternatively, an Islamic banker might enter into a lease agreement for a car or a house with an individual.
The bank would buy a vehicle outright and then lease it back to the person who wanted it, over a time period that would ensure that the capital was repaid and the bank made a profit.
Alternatively the bank would enter into a partnership with a person wanting to buy a house. The bank would buy 70% of the house, the individual 30%.
The bank then rents its share of the house back to the individual until the house is fully paid for.
The bank makes a profit on the rent, which would be higher than equivalent rents in the area, but on an annualised percentage basis, would look very much like a conventional mortgage interest rate.
To the casual observer, a spade is a spade.
Whether the product is dressed up in Arabic terminology, such as Mudarabah, or Ijarah, if it looks and feels like a mortgage, it is a mortgage and to say anything else is semantics.
The potential wealth locked up in oil-rich Gulf states encouraged the conventional banks to enter Islamic finance.
HSBC established the Amanah Islamic Finance brand in 1998 and Deutsche Bank, Citi, UBS and Barclays quickly joined the fray, all offering interest-free products for wealthy Arabs.
However, this new generation of Islamic bankers had cut their teeth in the City and Wall Street, and were used to creating sophisticated financial products.
They often bumped heads with the Sharia scholars who authorised their products as Sharia compliant.
However, these bankers had a way of dealing with this, as one investment banker based in Dubai, working for a major Western financial organisation explains:
“We create the same type of products that we do for the conventional markets. We then phone up a Sharia scholar for a Fatwa [seal of approval, confirming the product is Shari’ah compliant].
“If he doesn’t give it to us, we phone up another scholar, offer him a sum of money for his services and ask him for a Fatwa. We do this until we get Sharia compliance. Then we are free to distribute the product as Islamic.”
This “Fatwa shopping”, which was carried out by some institutions, brings us back to the Sharia scholars.
Even these scholars do not agree all the time, which means that in some cases a product is deemed Sharia compliant in one market and not in another.
This is especially the case with Malaysian products, which are often deemed not Sharia complaint in the more austere Gulf.
“Often no rulings exist for modern day problems, such as use of narcotics,” Alamad explains.
“In Islam intoxication by wine is forbidden, but at the time of the Prophet Mohammed there was no crack cocaine.”
Modern scholars had to interpret the rules on intoxication, and the consensus was that crack should also be forbidden to Muslims, as it is a dangerous intoxicant.
“This is how we make rulings, whether in finance or societal,” Alamad says. “The consensus rules, which usually will become mandatory for all Muslims to follow, but there are some opinions and sometimes scholars are not in the consensus.”
Banking is banking
This makes it more important to be in the consensus, and so getting a favourable ruling from a leading Sharia scholar is important for a product manager.
That is why the top scholars can earn so much money – often six-figure sums for each ruling.
The most creative scholars are the ones in the most demand, says Tarek El Diwany, analyst at London-based Islamic financial consultancy Zest Advisory.
“To date, most Islamic financiers have been looking at examples of financing in Islamic history and figuring out how to apply them to today’s financial products.”
But banking is banking.
It is the taking of a deposit and then using it to finance a purchase or business.
The lender pays the depositor compensation for the opportunity cost of his money, and the person borrowing the money “rents” it off the bank.
The same symbiotic relationship occurs whether it is conventional banking, ethical banking, Islamic banking or Presbyterian banking.
As Majid Dawood, chief executive of Yasaar, a UK-based Islamic finance consultancy says: “Everything that is not forbidden in the Holy Qur’an is OK.
“Yes, the industry has to evolve, but it is only 40 years old and its competing with a conventional finance system that is over 800 years old.”
Source: BBC News
Highly Educated, Willingly Domesticated
Doctor. Engineer. Certified Nurse-Midwife. Writer and Literary Critic. Lab Technician. Parliamentary Assistant. These highly-trained, respected careers are the culmination of years of intense study, training, and self-discipline. Most people, upon achieving these esteemed positions, would happily dedicate the rest of their working years to putting their knowledge and expertise to use. They would gradually gain more experience, earn greater pay, and amass professional perks. Most likely they would also, over time, assume leadership roles, earn awards, or become sought-after experts in their field.
What kind of person has all this at her fingertips, but decides to give it up? Who would trade in years of grueling study and professional striving for an undervalued position that requires no degree whatsoever What type of professional would be willing to forgo a significant salary to instead work for free, indefinitely, with no chance whatsoever of a paycheck, recognition, benefits, or promotion?
Who else, but a mother?
While certainly not all mothers choose to give up their careers in order to raise their children, there is a subset of women who do. Stay-at-home-moms (SAHMs) may spend the majority of their days performing unglamorous tasks like washing dishes, changing diapers, and reading storybooks to squirming toddlers, but behind the humble job title are dynamic, educated, and capable women. They may currently have a burp cloth in one hand and a sippy cup in the other, but chances are, SAHMs have a mind and capabilities that reach far beyond the apparent scope of their household duties.
What motivates a capable and ambitious woman to give up her career and stay home to raise children? Is she coerced into it, or does she choose it willingly? What is her driving force, if not money, status, or respect? I had many questions for these women -my sisters in Islam and my stay-at-home “colleagues”- and some of their answers surprised me.
For this article I interviewed seven highly-educated Muslim moms who chose to put successful careers on hold, at least temporarily, to raise their children. Between them, they hold PhDs, MDs, and Masters degrees. While the pervasive stereotype about Muslim women is that they are oppressed and backward, these high-achieving females are no anomaly. In fact, according to her article in USA Today, Dalia Mogahed points out that, “Muslim American women are among the most educated faith group in the country and outpace their male counterparts in higher education.” Across the pond, The Guardian reports that “more young Muslim women have been gaining degrees at British universities than Muslim men, even though they have been underrepresented for decades.”
Ambitions and dreams
Every single one of the women I interviewed grew up in a household with parents who highly emphasized their daughters’ education. In fact, all of them were encouraged -either gently or more insistently- to pursue “top” careers in medicine, engineering, or science. Perhaps unsurprisingly, most of the women I interviewed were at the head of their classes at university.
In their school years, before marriage, all of the women I spoke with considered their career to be their main priority; motherhood seemed far-off and undefined. “When in uni,” explains Neveen, an endodontist who eventually put her career on hold to be a SAHM and homeschooler, “I never, ever thought I’d homeschool (nor did I believe in it), nor did I ever think I’d be a SAHM. I was very career-oriented. I was top of my class in dental school and in residency.”
“I absolutely thought I would be a career woman,” agrees Nicole, a mom of three in California who holds a Masters degree in Middle East Studies. “I never considered staying at home with the kids, because they were totally out of my mind frame at the time.”
“I expected that after graduation I would follow a research-based career,” adds Layla*, another SAHM in California who holds a PhD in Computer Engineering. “I never thought I’d stay at home because I believed it was fine for kids to be in daycare. I also thought SAHMs were losing their potential and missing out on so much they could otherwise accomplish in their lives.”
As young women, many assumed that if they ever chose to start a family, they would have assistants, nannies, or domestic helpers to lighten their load. Several of them believed they would put their future children, if any, in daycare. However, the reality of motherhood made each of these women change her mind.
“My child was highly attached to me,” explains Sazida, an Assistant to a Member of Parliament in England, “and I could not envision him being looked after by anyone else despite generous offers from relatives.”
“After I had my first child all I wanted to do was be able to care for her myself,” concurs Melissa, a Certified Nurse Midwife from New York.
It turns out that maternal instincts were not the only factor that made women choose to drop out of the workforce. Dedication to Islam played an enormous part in their decision-making.
“After having my first child,” explains Layla, “I decided that he was far more precious than working. He is a gift that Allah gave me to protect and care for.”
“After I became Muslim,” shares Nicole, “My goals changed, and I hoped to marry and have children. I do think it was beneficial for my children to have a parent always there to depend on,” she adds. “I feel like I was the anchor in the family for them, and I hope to continue that role.”
“What’s important to me,” asserts Neveen, “Is to raise my kids as good Muslims who love -and are proud of- their life and deen.”
Another reason many highly educated women choose to stay at home is because they have the opportunity to homeschool some or all of their children. Remarkably, out of the seven women who answered questions for this article, five reported that they chose to homeschool at least one child for a few or more years.
“I really enjoy my homeschooling journey with my kids and I get to know them better, alhamdullilah,” states Layla.
The opportunity to nurture, educate, and raise their children with love and Islamic values is the primary reason why these talented women were willing to put their successful careers on hold. “Hopefully Allah will reward us in Jannah,” muses Layla.
Although none of the women I interviewed regrets her choice to be a SAHM, they all agree that it is a challenging job that is actually harder than their former career.
One obstacle they must overcome is the negative perception others have about successful women who make the choice to put their career on hold. “I soon learnt that casual clothes, a toddler, and a buggy don’t give you the same respect as suits and heels,” says Sazida.
One would expect, given their faith’s emphasis on the dignity of mothers, that Muslim SAHMs would enjoy the support of their family and friends. Unfortunately, this is not always the case.
One mom explains, “My in-laws offered to look after my child, and my father-in-law couldn’t understand why I wanted to stay at home when there was perfectly good childcare that they were offering. After two and three years passed, he got more and more disheartened that I was not earning and complained about the lost potential income.”
“My non-Muslim mother told me that I wasting my education,” confides Nicole. “She did not support me staying home, though I think she appreciated that I was there for my children and have a good relationship with them. She was a SAHM as well, so I am not sure where that was coming from, actually.”
Melissa’s mom was similarly skeptical of her daughter’s decision. “My mother didn’t love me being fully dependent on my husband,” she admits.
“I was not at all supported by my family or friends,” laments Radhia, a Lab Technician with a BS in Microbiology with a Chemistry minor.
Other than being doubted and blamed for their choice, there are other challenges that SAHMs face. Accustomed to mental stimulation, exciting challenges, professional accomplishments, and adult interaction, many former career women find staying at home to raise youngsters to be monotonous and lonely. The nannies, assistants, cleaners, and other workers they had envisioned often never materialized, since hiring these helpers was usually too expensive. Husbands who spent the day working as the family’s sole breadwinner, were usually too tired to help with household duties. A few women admitted that they felt guilty asking for help in the home when their husband was already exhausted from work. To exacerbate the problem, most of the women I interviewed lived far from family, so they could not rely on the help one normally gets from parents and siblings. That means the bulk of the childcare and housework fell onto their laps alone.
“The main challenges for me,” states Nicole, “were boredom, and finding good friends to spend time with who had similar interests. I was also very stressed because the raising of the children, the housework, the food, and overall upkeep of our lives were my responsibility, and I found that to be a heavy burden.”
“I think the feelings of vulnerability and insecurity about whether I was a good enough mother and housewife was difficult,” shares Melissa. “All my sense of worth was wrapped up in the kids and home, and if something went wrong I felt like a failure.”
“It was not as easy as I thought it would be,” confesses Radhia. “It was overwhelming at times, and I did miss working. Emotionally and physically, it was very draining.”
“Staying home has been harder than I expected,” adds Summer*, a Writer and Literary Critic from Boston. “I didn’t realize how willful children could be. I thought they’d just do what I said. I’m still trying to get used to the individuality! It’s harder than my job was, only because of the emotional load, and the fact that the effort you put in doesn’t guarantee the results you hope for.”
Giving up their salary also put women in a state of financial dependency, which can be a bitter pill to swallow for women who are used to having their own resources.
“I felt very dependent on my husband, financially,” says Radhia.
“Alhamdulillah, my husband does not refuse if I ask him to buy anything,” explains Layla. “However, I felt like I was losing my power of deciding to buy something for someone else. For example, if I want to buy a gift for my mother or my sister, he never refuses when I ask him, but still I feel internally it is harder for me.”
“Alhamdulillah my husband’s personality is not one that would control my financial decisions/spending,” shares Neveen. “Otherwise I would never have chosen to be a SAHM.”
“Giving up my career limited my power to make financial decisions,” asserts Summer. “I could still spend what I wanted, but I had to ask permission, because my husband knew when ‘we’ were getting paid, and how much. He paid the bills, which I didn’t even look at.”
“Asking permission,” Summer adds, “is very annoying.”
Re-entering the workforce was difficult for some women, while not for others. The total time spent at home generally affected whether women could easily jump back into their profession, or not. Some of the moms felt their skills had not gotten rusty at all during their hiatus at home, while others felt it was nearly impossible to make up, professionally, for missed time.
Words of Wisdom
Although all of the women I interviewed firmly believe that their time at home with their children is well-spent, they do have advice for their sisters who are currently SAHMs, or considering the position.
“If I could go back and speak to myself as a new mum, I would tell myself to chill the heck out and just enjoy being a new mum,” says Sazida.
Melissa offers, “I wish people understood how talented you have to be to run a home successfully. It’s a ton of work and it requires you to be able to do everything from snuggle and nurture, to manage the money, budget, plan precisely, be a good hostess, handle problems around the home, manage time, and meet goals all while trying to look cute.”
“I would always recommend that women have their own bank account and money on the side,” advises Nicole. “You never know when you are going to need it.”
“Once their kids are in school,” adds Radhia, “I would suggest SAHMs start something from home, or take on part time work, or courses, if necessary.”
“For moms choosing to stay at home,” Layla suggests, “I would say try to work part-time if your time permits, and if you have a passion for working. Trust that Allah will protect you, no matter what. Remember, you are investing in your kids, and that is far more important than thinking ‘I need to keep money in my pocket.’”
Support, don’t judge
As a Muslim ummah, our job is to support one another as brothers and sisters. It seems people forget this oftentimes, and erroneously believe that we are entitled to gossip, speculate, and sit in judgement of each other, instead. In our lives we will all undoubtedly encounter women who choose to continue their careers, and those who put them on hold, and those who decide to give them up completely. Before we dare draw conclusions about anyone, we must keep in mind that only Allah knows a person’s entire story, her motivations, and her intentions. Only He is allowed to judge.
We must also remember that some women, for a variety of reasons, do not have the luxury of choosing to stay at home. They must work to the pay the bills. Allah knows their intentions and will reward their sacrifices as well.
It is my hope that this article will not cause more division amongst us, but rather raise awareness of the beautiful sacrifices that many talented and intelligent women willingly make for the sake of their children, and even more so, for the sake of Allah . They are the unsung heroes of our ummah, performing an undervalued job that is actually of utmost importance to the future of the world.
*Name has been changed
For the past decade, writer Laura El Alam has been a regular contributor to SISTERS Magazine, Al Jumuah, and About Islam. Her articles frequently tackle issues like Muslim American identity, women’s rights in Islam, support of converts/reverts, and racism. A graduate of Grinnell College, she currently lives in Massachusetts with her husband and five children. Laura recently started a Facebook page, The Common Sense Convert, to support Muslim women, particularly those who are new to the deen.
OpEd: Breaking Leases Into Pieces
Ali ibn Talib once said, “Know the truth and you’ll know who’s speaking the truth.”
I am based in Canada and was recently having coffee with friends. In the course of the conversation, a friend (who I consider knowledgeable) said that it’s okay to pay interest on a leased car because interest doesn’t apply to lease contracts. This completely caught me off guard, because it made no logical sense that interest would become halal based solely on the nature of the contract.
I asked him how this can be true and his response was that the lease contract is signed with the dealer and the interest transaction is between the dealer and the financing company so it has nothing to do with the buyer. Again, this baffled me because I regularly lease cars and this is an incorrect statement: The lease agreement is signed with a third party financing company who is charging you directly for the interest they pay the car dealership. Therefore, any lease contract that has interest associated with it is haram. This is the same as saying your landlord can charge you interest for his mortgage on a rental contract and this would make it halal. I tried to argue this case and explain to my friend that what he was saying was found on false assumptions and one should seriously look into this matter before treating riba in such a light manner.
Upon going home that night, I pulled out all my lease contracts (negotiated to 0% mind you) and sent them over to my friend. They clearly showed that a bill of sale is signed with the dealer, which is an initial commitment to purchase but the actual lease agreement is signed with a third party financing company which is charging you interest directly. If this interest rate is anything above zero it is haram (anything which is haram in a large quantity is also haram in a small quantity).
To my dismay, instead of acknowledging his mistake, my friend played the “Fatwa Card” and sent me a fatwa from a very large fatwa body in North America, which was also basing their argument on this false assumption. Fortunately for me, my friend pointed out the hotline number and the day and time the mufti who gave the fatwa would be available to answer questions.
I got in touch with the scholar and over a series of text messages proceeded to explain to him that his fatwa was based on a wrong assumption and for this reason people would be misled into leasing cars on interest and signing agreements with financing companies which are haram.
He was nice enough to hear my arguments, but still insisted that “maybe things were different in Canada.” Again this disappointed me because giving fatwa is a big responsibility – by saying “maybe” he was implying that full research has not been done and a blanket fatwa has been given for all of North America.
It also meant that if my point was true (for both Canada and the United States) dozens of Muslims maybe engaging in riba due to this fatwa.
The next week I proceeded to call two large dealerships (Honda and Toyota) in the very city where the Fatwa body is registered in the US and asked them about paperwork related to leasing. They both confirmed that when leasing a new vehicle, the lease contract is signed with a third party financing company which has the lien on the vehicle and the dealer is acting on the financing company’s behalf.
It is only when a vehicle is purchased in cash that a contract is signed with the dealer. This proved my point that both in the US and Canada car lease contracts are signed with the financing company and the interest obligations are directly with the consumer, therefore if the interest rate is anything above 0% it is haram. I sent a final text to the mufti and my friend sharing what I had found and letting him know that it was now between them and Allah.
1. As we will stand in front of Allah alone on Yaum al Qiyamah, in many ways we also stand alone in dunya. You would think that world renowned scholars and an entire institution would be basing their fatwas on fact-checked assumptions but this is not the case. You would also think that friends who you deem knowledgable and you trust would also use logic and critical thinking, but many times judgment is clouded for reasons unbeknownst to us. We must not take things at face value. We must do our research and get to the bottom of the truth. Allah says to stand up for truth and justice even if it be against our ourselves; although it is difficult to do so in front of friends and scholars who you respect, it is the only way.
2. There are too many discussions, debates and arguments that never reach closure or get resolved. It is important to follow up with each other on proofs and facts to bring things to closure, otherwise our deen will slowly be reduced to a swath of grey areas. Alhamdulillah, I now know enough about this subject to provide a 360 degree view and can share this with others. It is critical to bring these discussions to a close whether the result is for you or against you.
3. Many times we have a very pessimistic and half hearted view towards access to information. When I was calling the dealerships from Canada in the US, part of me said: Why would these guys give me the information? But if you say Bismillah and have your intentions in the right place Allah makes the path easy. One of the sales managers said “I can see you’re calling from Toronto, are you sure you have the right place?” I replied, “I need the information and if you can’t give it to me I don’t mind hanging up.” He was nice enough to provide me with the detailed process and paperwork that goes into leasing a car.
Finally, I haven’t mentioned any names in this opinion and I want to make clear that I am not doubting the intentions of those who I spoke to; I still respect and admire them greatly in their other works. We have to be able to separate individual cases and actions from the overall person.
May Allah guide us to the truth and rid of us any weaknesses or arrogance during the process.
Ed’s Note: The writer is not a religious scholar and is offering his opinion based on his research on leasing contracts in North America.
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