Inspite of the fact that islamic banks are trying to commit with Sharia rules, that doesn’t mean that they are achieving islamic objectives, such as ending poverty, unemployment and the suffering of the poor people.
Islamic banks around the world are facing some problems. From my personal observations, I can share with-
1. Most of the governments even in Muslim majority countries are secular and they do not provide any specific guidelines for the Islamic banks. For this, according to state rules and regulations, many Islamic banks failed to achieve the objective that you mentioned.
2. Islamic bank can not work fully to reduce poverty, unemployment and many other socio-economic problems because of their competitors in the conventional banking market. Maximizing profit has become one of the objectives instead of maximizing social welfare for conventional banks. In such an environment they are surrounded by, Islamic banks have significant deviation from their objectives, I think.
3. The owners of Islamic banks are also trying to compete with conventional banks instead of making themselves unique.
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Despite all these, Islamic banks have several other contributions that have no substitutes.
Zobayer Ahmed Thank you for your comprehensive answer, but do you agree with me that competition requires getting less profit from the poor people? I think that the owners of the islamic banks can not accept less profit , more risk, even if this will improve the standard living of the poor people.
In order to maintain its separate Islamic identity, Islamic banking should be more focused on maqãsid al-Shari’ah and high purposes of Islamic finance rather than on the Shari'ah compliance merely. The only way out is the promotion of participatory financing (i.e., Musharkah and Mudarabah) on the assets side. But, business and benevolence are separate things. Islamic banks being business institutions, holding depositors' money, have to honor the mandate of profit earning.
Some banking products are okay while some are still debatable (fiqh issues).
Muhammad Nouman Thank you very much for your reply, I agree with you that Islamic banks have to honor the mandate of profit earning. but it's also well known that the profit distributed ratio is very low.
Rafiq Idris Thank you very much for your reply. Even though, I think most of the Islamic banks do not achieve the purposes of Sharia.
I think this depend on the team who work in islamic banking and excuting the deals and RMs who attracts customers and the top level managment who is the decision-makers Who believe that Islamic banks a message and not only achieve the target.
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