Critical Muslim Intellectuals’ discourse and the issue of ‘Interest’ (ribā): Implications for Islamic accounting and banking

Abstract

This article introduces and employs Critical Muslim Intellectuals’ (CMIs) methodological approaches and debates to discuss the issue of bank-interest/ribā in Islam. It builds specifically on Fazlur Rahman's (Pakistan) methodology and debates and counters them with the traditionalists’ approaches to the issue of ribā. The paper highlights the displacement of CMIs’ discourses from mainstream Islamic accounting and banking literature and practices and argues that such displacement is hindering the emergence of genuine, innovative and critical debate on the issue of ribā in particular and Islamic accounting and banking in general. The paper elaborates on the need to incorporate the critical debates and thought of CMIs into the fields of Islamic accounting and banking if these fields wish to contribute to enhancing socio-economic justice and finding an alternative to their conventional, neoliberal counterparts.

Keywords:

• ribā
• Bank-interest
• Islamic accounting
• Islamic economics
• Islamic banking
• Critical Muslim Intellectuals
• CMIs

Notes

1 Mews and Walsh (2011) explain that the confusion on the issue of usury (ribā) and interest is widespread and goes beyond the Islamic world. In the Christian world similar confusion existed, especially after Jeremy Bentham wrote his piece on the Defence of Usury in 1787AD.

2 Fewer numbers of these ulamās adhere to the pragmatic approach.

3 Taqi Usmani is a former judge of the Supreme Court of Pakistan and the vice-president of Dar al-Ulum School in Karachi (Caeiro, 2004). Usmani has also written books on Islamic finance and held positions in a number of Islamic banks’ Sharīa Supervisory Board.

4 Similar views on the issue were given by influential leaders of the Muslim Brotherhood in Egypt and other parts of the Arab world (Saeed, 2011).

5 Even when the differences between these views and the idealists’ view are minimal, such as those made by Al-Azhar in the 1980s (cf. El-Gamal, 2003).

6 This is not to say that there are no differences in the conceptualisation of these opinions (cf. Saeed, 2011).

7 Saeed (2011) details a number of departures In the Islamic banking industry from the idealistic interpretation of ribā in his paper where many transactions and contracts offered by Islamic banks are interest-based in their economic substance but not in their legal form (see also El-Gamal, 2006; Kuran, 2006; Ebrahim et al., 2012).

8 Of course many of the actual civil codes in many of the Muslim countries are largely influenced by European Civil Codes (El-Gamal, 2003).

9 Amin identified many incidents in the history of Muslim societies where Sharīah rules were applied differently in different places, suspended or not obeyed. Yet Muslims keep claiming that they accept only Sharīah rulings and governments claim that they hold it and respect it (Abu-Zahra, 1998).

10 Here reference is specifically made to the use of narrow qiyās ‘linking a particular case with another particular case’ (Filali-Ansari, 1998, p. 168) method that was used in early Islam to resolve issues that the Qurān and Sunnah did not touch upon. CMIs reject these limitations and proposes that Muslims should instead utilize a broader ‘analogical analysis of the fundamental sources’ (Esposito and Voll, 2001, p. 130–131).

11 Rahman's work and methodology are very influential in the field of Critical Islam. His methodology, for example, have influenced a number of prominent Muslim feminists’ work like Fatima Mernissi and Leila Ahmed, who used his hermeneutical methods in their interpretations of Qurānic and sunnah injunction on the issue of women.

12 Muhammad Shahrour is considered on of the contemporary CMIs; born in Damascus in 1938 is a Syrian professor of civil engineering of the University of Damascus (1972–1999)^. Since 1990 Shahrour contributed five major monographs in Arabic expressing his radical views on the Qurān and the Islamic intellectual tradition in a serious attempt to accomplish a new understanding of the authoritative sources (Qurān and $\underset{\dot{}}{h}adīth$) in a modern and progressive context. Shahrour's contribution has been regarded as ‘impressive in that it offers both depth and range, virtually unparalleled in modern writings on the subject’ (Hallaq, 1997, p. 246).

13 Rahman (1964, p.21) cites the following story about the Prophet: ‘Abu Rafi [a client of the Prophet] said: the Prophet borrowed a young camel from some person, and when some camels from the camels of the sadaqah came to him, he ordered me to pay back the man his young camel. When I told him that I could find only an “excellent" camel in its seventh year, he said, ‘give it to him, for the best person is he who discharges his debt with something better’. Also Rahman (1964, p. 22) cites: ‘Muharib reported that he heard Jabir b. Abd Allah saying that the prophets owned him [Jabir] some money and at the time of the repayment of the loan the Prophet added [some money] in excess of the principle borrowed’.

14 According to Kuran (2011) conservative ulamā are failing to acknowledge that there was no point in time in the Islamic history or society where a genuine interest-free economy existed. The only aspect related to the prohibition on ribā that was strictly enacted is prohibiting enslavement for debt. Otherwise, Kuran (2011) maintains, dealers in interest in Islamic history have rarely experienced prosecution or convention. The Qurān itself does not prescribe punishment for dealing with ribā on earth. Forms of innovative contracts to conceal interest existed historically and gained the approval of Islamic jurists (Kuran, 2011).

15 Fazlur Rahman methodology has been criticized in that it does not provide answers to many other legal questions that fall outside the revealed texts (Hallaq, 1997).