London: The “Islamic Finance Question Time,” a session of questions and answers about Islamic Finance system, was held by the Islamic Bank of Britain (IBB) PLC in which top Shariah scholars of the bank satisfied the queries of the people interested in fast-growing Islamic Finance system across the globe.
According to a spokesman for IBB, the aim of the session was to “demystify Islamic finance and provide an insight into how it offers a faith-based alternative to conventional finance and banking.”
There are top Shariah scholars of the United Kingdom in the Shariah Supervisory Committee (SSC) of IBB as it includes Sheikh Dr. Abdul Sattar Abu Ghuddah, Sheikh Nizam Mohammed Saleh Yaqoobi and Mufti Abdul Qadir Barkatullah.
The Chairman of the SSC of the British Islamic bank, Sheikh Dr. Abdul Sattar Abu Ghuddah, highlighted the importance of the Q/A session. He said, “Islamic finance is as old as the religion of Islam itself. However, there is still a lot of misunderstanding around how it works and the need for Muslims to manage their finances in Shariah compliant manner. The IBB SSC hopes the ‘Islamic Finance Question Time’ event has shed some light on the matter and gone some way to encouraging the further take-up of Shariah Finance amongst the Muslim community.”
Senior Manager of Shariah Compliance at IBB, Samir Alamad, who works closely with the IBB SSC on a day-to-day basis, also commented, “The feedback from attendees of ‘Islamic Finance Question Time’ has been very positive. The public welcomed the opportunity to engage with the IBB SSC so openly. The event is the first time a UK Islamic bank has given open access to its SSC, and this reflects the open and transparent way the Bank works with its customers.”
The Q/A session about Islamic Finance lasted for more than an hour and a half and marked the presence of over 150 participants who keenly asked questions about the Islamic Finance system. A lively and informative discussion was witnessed between the Shariah experts and their guests.
When the panel was asked a question that why Islamic banks do not use the rental market rate for Home Purchase Plan product, the experts’ panel answered in detail as saying, “Islamic banks use BBR or LIBOR to price their products as these are the most accurate, widely accepted and consistent benchmarks for financing. This allows Islamic banks to meet the important Shariah criteria of avoiding uncertainty. If rental rates were to be used as a benchmark instead, there would be too much variation. Not only would this go against the Shariah it would also be more costly for the customer. Rental rates fluctuate across a wide spectrum depending on location, condition of the property and other aspects, e.g. rent charged for a property in London would be three or four times more expensive than a similar property in the North. Hence, the Islamic bank would end up offering many various rental rates which would not be practical. The customer would also be disadvantaged by having to pay more if the rental rate was to be used as a benchmark.”
“Importantly, basing the rental rates of HPPs on benchmarks such as LIBOR or BBR does not affect the actual contracts that the product is based on. The rent or lease agreement are not rendered Haram (impermissible), or not compliant with Shariah. Established benchmarks such as BBR and LIBOR therefore play an important role. They allow the Bank to meet the Shariah requirements for a benchmark that is widely accepted, consistent, transparent and reliable which in turns eliminates any uncertainty around pricing,” they added.
At the end of the session, the guests acknowledged that they had gained remarkable knowledge about the Islamic Finance system in the Q/A session.
Islamic Bank of Britain is the only complete Shariah compliant retail bank in the UK. It has attracted over 50,000 customers since its inception in 2004.