Islamic Finance
A: "I'll never sell my car, I'll give it away and take money in return"
B: "I have never met my mom but I have certainly met my father's wife"
C: "It never rains on Sunday but invariably on the day after Saturday"
So are you sufficiently confused, puzzled, non sequitured:-),. Well .. no worry you have just been Islamic Financed!
On a round table conference, I listened to a primer on Islamic Finance. Murahaba, Mudharaba, Ististna, Ijara ...zzzzzz. Islamic Finance is something which has left me totally puzzled. Products are structured according to the Sharia law which essentially requires no interest to be charged on customers. This raises the confusion, then how does the bank make money? Forget profit, how does it even cover its costs? Apparently ‘fees’ are charged, but no interest. Isn’t it the same thing. You can hold your nose from the front or twist your arm around the head to achieve the same result.
This is one topic I shall be researching in the days to come. Obviously I don’t understand anything.
PS: One interesting observation, I have been increasing writing about things which I dont understand.
B: "I have never met my mom but I have certainly met my father's wife"
C: "It never rains on Sunday but invariably on the day after Saturday"
So are you sufficiently confused, puzzled, non sequitured:-),. Well .. no worry you have just been Islamic Financed!
On a round table conference, I listened to a primer on Islamic Finance. Murahaba, Mudharaba, Ististna, Ijara ...zzzzzz. Islamic Finance is something which has left me totally puzzled. Products are structured according to the Sharia law which essentially requires no interest to be charged on customers. This raises the confusion, then how does the bank make money? Forget profit, how does it even cover its costs? Apparently ‘fees’ are charged, but no interest. Isn’t it the same thing. You can hold your nose from the front or twist your arm around the head to achieve the same result.
This is one topic I shall be researching in the days to come. Obviously I don’t understand anything.
PS: One interesting observation, I have been increasing writing about things which I dont understand.
3 comments
Well the idea of no interest came from the days of the prophet of not having any haraam. Went well for centuries. Till a capitalistic society, globalisation, shrinking profits and competition came in. And so the fees. Technically still compliant to Sharia law but to the end user it has no difference as far as the costs are concerned.
Its not too complicated- did my sgp on it. In the balance sheet the Interest earned is merely substituted with 'Profit' approved by the Prophet.
Simplio.
@Purnima - You actually remember your SGP?? Wow!!!
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