Saturday, February 25, 2012

Response to Conversation with a Journalist

Date: Fri, 24 Feb 2012 00:27:25 +0800
Subject: Re: [MCOBA:109091] Conversation with a Journalist
Salam, Bro Zahid, can you elaborate on what the journalist asked you to elaborate?

A clash between Muslim Consumer's Association and AIBIM, the Association of Islamic Banks. AIBIM Press Statement attached. The excessive profits charge by the Muslim Consumers Association here

 My comments is to a London based Islamic Finance publication. Coming out next week I believe.

The key issue I see in a dual banking system, is that Islamic banking benchmarks returns on investment based on the returns of a conventional banking system.

I agree that Islamic financial institutions are businesses, and that profit making is necessary. But benchmarking what 'poor' or 'good' returns are, both from the consumers and bankers point of views, based on the conventional system surely defeats the purpose of Islamic financing? On what basis, for example, does xxx bank Islamic financing justifies a premium of RM1million on a RM400,000 house loan that I'm taking now? Yes, the tenure is for 30 years, but still, that looks far too excessive to me. Will the value of my house really reach that price?

Yes I see your point Islamic banks should earn less profit being Islamic in nature. Issue here is the KPI set by the owners of Islamic banks. We need to tackle the owners before the operatives can change.

Thursday, February 23, 2012

Conversation with a Journalist

Assalamu ‘Alaikum,
Thank you Emmy. I am delighted you asked me to elaborate.
My views are that of a practitioner cum consultant who recently turned academician doing post graduate studies in Islamic Finance.
Actually the entire issue could be summarised by my recent thesis submitted to the International Islamic University Malaysia, entitled “The Negative Impact of Riba Banking on the Performance of Islamic Banking in a Dual Banking System like Malaysia.”

I am not sure whether the University can release the thesis yet but allow me to summarise as follows:
We are today actually guilty of failing to see Islamic banking in its proper context. To put it simply I posed that the true environment of Islamic banking as expected by the Shariah is that it should be operating in a riba free environment, in a riba free economy. In other words it should be a sole single system operating in an Islamic economy. I put aside the wider environment of Islamic law for the moment.

What we find today is an Islamic banking system enveloped and impacted by the riba banking system operating within a riba driven economy. Practitioners of Islamic banking understand these daily pressures imposed on them by riba banking but often they are not able to articulate the issues to the general public. This is the voice I tried to give them in my thesis.

Thursday, February 2, 2012


Assalamu ‘Alaikum


This city state seems to be coming up often in my life now, bidding me to come and teach today, and to speak also on Islamic finance, mid March God willing. Andrew and the software company for whom I will be teaching tomorrow have put me in this hotel in Marina Bay which is not too far from the Singapore Management University which will be the location of the class. I told Andrew I want to fly kelip-kelip* airways as the airport they operate from in KL is not too far from my home. Uneventful flight except to ponder how come the bag we buy to take into the cabin is always bigger than the permitted size. This seems a collective wishful thinking of all air travellers though the girl selling the cabin bag almost always never tell you that it will never be allowed on board, does she?