Riyadh, Asharq Al-Awsat-The Islamic banking sector suffers from unsystematic efforts, lack of cooperation between institutions and the inclination towards self interest rather than the benefit of the industry as a whole. As a result, competition between these institutions has at times been unfair as it has hindered the unification of efforts and potentials towards raising the products and services offered by this industry to an international standard that meets the requirements of those who deal with the industry and to accomplish a real independent character that is expressed through the true religion.
The lack of cooperation is clearly seen in the lack of a standard model or contract to be circulated amongst Islamic financial institutions or institutions that offer Islamic financial services for any products within this industry on the local, regional or international levels. This could have been accomplished regarding standard products, the specifications of which are fixed except for pricing, profiting and guarantees for example Murabaha investment products between financial institutions, and which is used by many financial institutions nowadays to fund each other.
Like credit cards, direct individual funding and deposits, one would find that every Islamic financial institution or financial institutions that offer Islamic services has its own system regarding cards, funding products or deposits. However even if such private forms and contracts differ in shape or procedure, they are the same as there is no added value to this variation from which the industry or the customer could benefit. This variation in fact becomes an additional cost to the customer, and this has a negative effect on the efficiency of the Islamic banking product as well as competition with other conventional products available on the market.
In addition, such variation in standard products and the lack of an agreed form for these products between the Islamic financial institutions and the failure to meet international standards is a major challenge that the industry faces at present.
The reason for failing to unify these forms or contracts lies in the fact that each institution wants to use its own model or contract and this is extremely selfish. This causes institutions to refuse to cooperate with each other and to choose to work alone as they think that cooperation weakens competitiveness.
Cooperation between Islamic banking institutions is decisive as this industry is witnessing unprecedented and rapid expansion that requires creating solutions and tools with which they can achieve their noble goals and take on a distinct character.
This cannot be assumed by one institution alone because of the rising costs of renovation and modernization or because the cooperation of all Islamic banking institutions is a precondition as is the case with the Islamic Stock Exchange market, which requires coordination and the unifying of efforts of all Islamic banking institutions and monitoring bodies.
This cooperation can be achieved if an international financial monitoring body for Islamic banking is established to govern the work of the institutions that offer Islamic banking services on the condition that the decisions of the body are obligatory upon the institutions. Moreover, the financial institutions must be assured of the body’s decisions for there to be no conflicting interests.
With my belief that what Islamic banking has achieved thus far is a significant part of the holistic intent of Islamic law by distancing people from usury, which is forbidden in Islam and bringing them closer to what is permitted in Islam even if that is disputed amongst scholars, it is hoped that Islamic banking will achieve much more. Our criticism of it is out of nothing but love and compassion.