Islamic Financing Products: Is It For Real?

I went for a meeting today and everyone talks about Islamic Banking (or better, Islamic Financing). I am not against the idea, but it seems the term is being abused from day to day. What makes it really different from other (current or conventional) product?

From Saving Account, Checking (I don’t know why Malaysian call it Current) Account, Home Loan, Auto Loan and other available financing tools are being differed from those available and known as conventional.

To add more, Credit Cards are also given in the options as Islamic Credit Card. As time of this writing, a new Islamic Debit Card being introduced, this adds to more abusive usage of Islamic Financing tools.

When the Islamic Financing became accepted for the world market and Malaysian claims to have the largest Sukuk (or Bond) issued, suddenly Hong Kong wants to follow the trend of operating their own Islamic Banking. In addition, Britain now becoming the first European country to have Islamic Bank (Islamic Bank of Britain), and France wants to follow suit and about to pass a new banking regulations to allow such bank to operate.

Hence, this shows that Islamic Banking is now becoming a money machine that people are looking forward to take advantage on. Thus, this brings on to another level of question: Those Islamic Banking offered and operated by non-Muslim (who of course doesn’t believe in Islam) and servicing those called Moslem, how does this implicate?

I tried to question many people about Islamic Banking, and popular answer contrary to what I believe would be: You are Moslem, hence you MUST use Islamic Financing tools.

When I want to buy an apartment last year, the bank’s agent (who is not a Moslem) asked me, which one do I like to use: Islamic or Conventional loan? Gulped! It made my brain stopped thinking for a while, and I throw this question to her: What’s the different?

Another experience when I wanted to apply for credit card, the agents (two non-Moslems) told me, it is better for me to use Islamic Credit Card. An experience when looking for personal insurance and I came up meeting with non-Moslem agent in USM – she told me that many people preferred Takaful related and that’s the main product that she pushed for everyone, be ones Moslem or not. Likewise my good-buddy who wants me to subscribe for Unit Trust that he is actively selling; he even promoted me Shariah-compliance unit trusts.

Gosh, Moslem are buying Muslim Financing from non-Moslem who knows the product better than them.

So, what is Islamic Financing really? It has created en masse atmosphere that everyone now rushing to sell Islamic related product. I bought a book: READING IN ISLAMIC FINANCIAL SERVICES (Printed by Publication Unit, Kolej Universiti Islam Malaysia, 2007) just to find some in-depth understanding.

What is Islamic Banking, Islamic Financing, Islamic Financial Services or what-ever names given? Basic understanding shows that every service; account, financing, insurance, unit trust are all derived from conventional which only adds some title or given in Arabic word.

And seriously, it is just another make-up with LITTLE changes. I do understand that first Islamic bank (Bank Islam (M) Bhd) established in 1983 (a few moths earlier, before I opened my eyes to set for this world for the first time) and Malaysia regulated dual-banking – now allowed banks to operate as another Islamic identity. Many more products are coming in with more Arabic names.

Please understand that I don’t against Islamic product (because I am Moslem [simply this cause?]), but why Islamic products have to be much expensive than those conventional? Take for instance, Home Loan – Islamic Banking makes more profits that conventional banking.

As Islam means prosper in peace – I do hope that Islamic term can be saved from more abusive marketing technique. Every product is becoming Islamic but people are not!


Mohd Shahirasul

PS: I am not against anyone, nor regulations as my knowledge may be limited. I am not being racist, or I am being chauvinist. But I believe, religion should not be use as a tool to fool people.

PSS: This article is based on personal thought hence it should not reflect or relate to company and/or organisation that I am attached to.