Shares, Unit Trusts and the Shariah

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INTRODUCTION

Investment in the so-called ‘Islamic’ banks is a question which  concerns many Muslims who write to us seeking the directive of  the Shariah regarding the permissibility of investing in the deals  offered by these banks. The blanket sanction which some  Maulanas have accorded to investment in these banks have  thrown Muslims into confusion.

The deals offered by these banks and their methods of operation  make it clear that they are no better than the kuffaar riba banks.  Muslims are misled by the Islamic terminology which is  copiously employed by these banks to market their haraam  products. Terms such as Mudhaarabah, Mushaarakah,  Muraabahah, Ijaarah, etc., are the thin veneer under which the  riba is concealed. Unwary and ignorant Muslims are given the  impression that the investment deals offered by these banks all  fit into the scope of the aforementioned Islamic contracts and  agreements.

However, this claim of the Muslim bank entrepreneurs is akin to  a non-Muslim bank asserting that its leasing contract is Ijaarah,  its hire-purchase deal is Muraabahah, etc., etc. While it is  correct for a non-Muslim bank to aver that its leasing transaction  is Ijaarah and its hire-purchase deal is Muraabah, it is grossly  false to claim that such ijaarah and muraabah products offered  by the kuffaar banks conform to the Ijaarah and Muraabahah  deals of the Shariah. In exactly the same way do the deals of the  ‘Islamic’ banks conflict with the Shariah notwithstanding the  correctness of the terms ijaarah, muraabahah, etc. applying  literally to their haraam products.

To understand the proper Shar’i classification of the contracts  and agreements of these ‘Islamic’ banks, it is necessary to examine their products, deals and contracts. This we shall,  Insha’Allah, do in this discussion.

[Maulana A S Desai, Mujlisul Ulama]

CONTENTS

Shares, Unit Trusts and the Shariah – Part One

Shares, Unit Trusts and the Shariah – Part Two

←Back to Section on Mufti Taqi Saheb’s Serious Error on “Islamic” Banking

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