A few decades ago, when Islamic financial institutions (IFIs) were yet to be established, the idea that an Islamic financial system could potentially replace a usury-based financial system invited much cynicism and criticism. At that time, it was inconceivable that an interest-free Islamic financial system would come into existence, as the usury-based conventional financial system had been rooted for hundreds of years.
In spite of all the criticisms by pessimists, the world is currently witnessing the Islamic financial industry’s phenomenal and rapid growth — from zero to hero — at a rate faster than its usury-based counterpart. This is all thanks to visionary Islamic finance scholars and leaders of the past. Kudos also to the practitioners who have made Islamic banking and finance a reality which was perceived as impossible years ago. These visionaries have left great legacies for present and future generations.
At the initial stage, the main concern at that point of time was how to establish IFIs so that Muslims can be freed from being enslaved to the riba system. The elimination of riba, which is the soul of the conventional financial system, from the Islamic financial system is a must. Along with the elimination of riba, IFIs have to ensure that their aims, operations, businesses, affairs, and activities are Shari’ah-compliant.
They have to ensure that all financial transactions are conducted in a transparent and fair manner, with high ethics and integrity, and with the fulfilment of the requirements and sanctity of contracts and mutual consent of the contracting parties. Present-day IFIs have been operating with prudence and sound control, in congruence with Shari’ah. Throughout their operations, tremendous and continuous efforts have been taken to provide Shari’ah-compliant financial products as alternatives to their riba-based counterparts.
