Islamic Banks, the Problem of Takasur

By Omar Javaid

[Takasur 102:1] The craving for excess wealth (takasur) kept you people neglectful.

[Takasur 102:2] Until you confronted the graves.

[Takasur 102:3] Yes certainly, you will soon realise!

[Takasur 102:4] Again, yes certainly, you will soon realise!

[Takasur 102:5] Yes certainly, if you had believed with certainty, you would not have craved for wealth.

[Takasur 102:6] Indeed you will see hell.

[Takasur 102:7] Again, indeed you will see it with certainty.

[Takasur 102:8] Then, on that day, you will surely be questioned regarding the favours.

This surah of Quran effortlessly destroys the driving force behind capitalism and free-market ideology... the story of this ideal gaining mass acceptance and becoming the driving force behind capitalism started from birth of protestantism, enlightenment movement in Europe etc. 'Theory of Moral Sentiments' by Adam Smith established the very notion of modern virtuous (or ideal) man as a wealthy and powerful. Pursuit of self-interest (which Adam Smith proposed in his 'Wealth of Nations') for this very purpose was also declared as legitimate and preferred in Europe during 17th century. Later the same ideas spread across the world by brute force during colonization period. 

Hollingsworth argues that Institutions in a society are gradually evolved / perfected to accomplish the objectives valued in a particular society. The modern form of banking system evolved therefore in europe to enable and facilitate the society to accumulate excess wealth (takasur) in an ever increasing amount. The banking system was also exported to all the world via the colonization process and the locals were forced to accept and live with it since many generation till the time they couldn't imagine any other alternative. Since the transactions made by the banking system were also interest based and involved other prohibited practices like Gharar or speculation etc, therefore after many decades after colonization a movement started in the name of providing a temporary cure in the name of Islamic banking, a first aid for temporary relief for the people immersed into interest based banking, these people were of course the privileged class of the society. 

This privileged class in the Muslim world are like 'Adha tetar adha bater' as they while being a Muslim idealizes western ways of living (in general of course, but there are exceptions as well). To gain acceptance IBs had to focus on the same class of people. Furthermore to compete with interest based banking industry in terms of profitability and market share they eventually had to recognize and acknowledge the same ideals... for examples in their marketing campaigns we hear things like 'buy your dream car or home the Islamic way'... Therefore while on the one hand they try to make an effort to eliminate interest and other prohibited elements from the transactions, whereas on the other hand encourage public to pursue their materialistic dreams. Not doing so might reduce their financial & market growth in comparison with conventional banking industry... 

It must be noted here that meaning of terminologies are established in a society by dominant trends and by those in power (see Michael Foucault's 'Will to Knowledge') so when an Islamic bank say 'Dream Car' or 'Dream Home' etc...  then it's meanings is established in the minds of the public already by someone else, and it is little surprise that this dream is very much inspired by the ideals imported from western societies, the local media keeps on pounding the public with the same ideals and its no surprize also that 'showing off' and 'glamorization of takasur' is its fundamental feature... so the eyes of a common man when sees his dreams being acknowledged with a label of Islam, then what message he would get regarding 'craving for excesses wealth/luxuries/status etc' or takasur *...

The problem isn't just limited to the personal lives of customers; a society where love of wealth is significantly present in the hearts and minds of the upper class, then pursuit of self-interest to maximize wealth becomes a priority and the rich class then focus more on spending upon themselves instead of sharing their fortunes with the lower class of society...

Its not at all Haram to be rich, rather Allah s.w.t test people by making some rich [Sûrah al-Anfâl: 28] and some poor  [Sûrah al-Baqarah: 155] , and has assigned the responsibility to the rich class to take care of the poor; but for that fear of Akhirah is the driving force, not love of wealth or takasur. However the financial institutions designed in the west provides all means to the elite class to limit their circulation of wealth among top lot of the society, instead of trickling it down toward the lower ends. 

The first aid in the form of Islamic finance was also not meant to solve this problem, rather it was suppose to be a short term cure for people stuck into interest based transactions in view of Mufti Taqi Usmani d.b. However this first aid is now being spread far and wide as if its the final cure for the disease. It is being perceived by many in the field of Islamic finance that while remaining under the shadow of conventional banking industry (which was designed to acknowledge and appreciate 'excessive love of wealth' or takasur across the globe') or walking on its footsteps, with the same institutional framework, the economic problems of wealth distribution, inflation, unemployment etc. would be solved. Mufti Taqi Usmani d.b however disagrees. 

From another perspective, one more drawback in such a partial approaches toward Islamization of an institutional system is that it allow lots of stakeholders to attach their economic interest with this half baked solution if it gains mass momentum. These stakeholders, the employees being the most significant ones, becomes dependent on it hence acts as barrier in any major change required. The spread extends even to the training institutions who are creating employees for such institutions. Vendors to perform various outsourcing jobs are also among the beneficiaries of the system.  

Keeping this in mind, dismantling the entire IB setup is no more an option, neither to change the dominant trends is in the reach of internal or external stakeholders of IB... a very simple and pragmatic solution problem is to change the name of Islamic Banking as 'Interest Free' Banking and totally remove the name of Islam and religion out of all communication materials being used by the Islamic banks... this might sound extremely absurd but its not as there are many business organization, for example a restaurant selling halal food, a tailor sewing cloths for Muslims, or a general store selling halal products doesn't need to title themselves as Islamic restaurant, Islamic tailor or Islamic general store respectively despite everything done there is as per sharia... if the purpose is to differentiate with conventional banks then 'Interest free banking' or any other better non-religious name would be good enough. It is true that Islamic financial institutions do have a shariah department which approves various transactions and new products, but thats the way of life for a Muslim, when using the name of Islam in a secular premise has the propensity to distort the image of islam itself then not using is the best thing to do, in authors view. Would doing this affect the goodwill of Islamic banks? well it depends upon the way its done, effective PR and public education strategies can be devised for that matter. Honesty is always more valued than distortions. This might be a 20 year project, but it should start ASAP. 

There are other things which needs to be done on war footings, one is changing the target audience: IBs should focus significantly more toward SME and microfinance then people sitting on the top or even government, if Grameen Bank (interest based) can do so with thousands of branches in Bangladesh, with billions of dollars of circulation and an excellent recovery rate since last 30 years then what's stopping Islamic banks, in Pakistan or other part of the world? Akhuwat is local yet another example of dealing with poor class sustainably! Musharakah & Mudarabad has also been widely used by IBs in Sudan, and thats the only country unfortunately! I have written about this in detail in last chapter of my MS thesis (for details please click here). 

So the only way forward for Islamic banks is that they reinvent themselves as interest free banks for poor and middle class, and focus on community development by help generating employment etc. If not then they should get prepared that in Akhirah Allah s.w.t might ask the concerned in IB industry that why they promoted takasur in the society to bring people out of Riba? 

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* Another translation of Surah Takasur by Muhsin Khan (from Quran.com) even denounce the idea of competition for materialistic and worldly success which is also very much dominant in the privileged class of our society and is recommended in western world, if this version of translation is more comprehensive than takasur would also include the competition people do to get ahead in worldly riches... 

"The mutual rivalry for piling up of worldly things diverts you; Until you visit the graves (i.e. till you die); Nay! You shall come to know!; Again, Nay! You shall come to know!; Nay! If you knew with a sure knowledge (the end result of piling up, you would not have occupied yourselves in worldly things); Verily, You shall see the blazing Fire (Hell)!; And again, you shall see it with certainty of sight!; Then, on that Day, you shall be asked about the delight (you indulged in, in this world)!"

Author is a Gold Medalist in MS in Islamic Finance and has translated Phd thesis of Dr. Mufti Ismatullah sb which has been published in book form  titled 'Money and Its form: An analysis in the light of shariah' by Darulishaat. Author is also a reader on Islamic and western history, philosophy, and political theory and frequently writes on the subject as well. He is also Vice President of a modest Interest free Microfinance organization called GEAR (www.gear.org.pk).