Middle-east Arab News Opinion | Asharq Al-awsat

Islamic Banking and Social Responsibility | ASHARQ AL-AWSAT English Archive 2005 -2017
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Each year, with the advent of the month of Ramadan, the Saudi Dallah Al Baraka group holds a jurisprudential seminar that brings together all the personnel and those concerned in the field of Islamic banking from all over the world. Held under the auspices of the Saudi Dallah Al Baraka group, this year’s seminar marks the 28th anniversary.

Twenty-eight years of achievements in the field of Islamic banking, the Dallah Al Baraka group has hosted scholars, researchers and economists, among others, over numerous pertinent and emerging issues related to the subject. Additionally, contentious matters that the legitimate bodies of Islamic financial institutions have disagreed upon are discussed with the intention of resolution.

The seminar lasts between two-to-three days in which a number of issues are brought to the table and debated. At the end of the seminar, recommendations are made and are the outcome of the scholars’ consensus following consultations over issues. They make recommendations that give the jurisprudential view of the issue at stake.

These recommendations have had an impact to the point that they have been adopted by the jurisprudential bodies, which examine them closely and issue various decisions based on them. Perhaps the most important of these recommendations were the ones that prohibited systematic ‘tawaruq’* banking and tampering with Shariah, issues that were discussed in the Dallah Al Baraka seminars before they were officially studied by the jurisprudential authorities.

Undoubtedly the credit goes to Dallah Al Baraka group, especially the businessman Salah Abdullah Kamel who is the chairman of Dallah Al Baraka group, for organizing the seminars every year since their inception, in addition to the group’s moral, financial and media support.

This proves the group’s awareness and dedication to fulfilling its social responsibility towards society, whilst paving the way for the dissemination of an outlook that values social responsibility among financial institutions and private sector companies in the Islamic world. The majority of these entities neglect their social responsibilities despite the fact that it is a crucial aspect of Islamic Shariah, which calls upon the community to unite and collaborate.

The Prophet (PBUH) said: You may liken the faithful having mercy for one another and in their love and kindness towards one another to the body; when one member of it ails, the entire body ails, one part calling out to the others with feverish sleeplessness.

How many of our major companies have made social responsibility part of their policies and targeted goals?! How many of our companies have programs dedicated to social responsibility?!

Without a doubt, social responsibility among companies is no longer a social aspect; rather, it has become an unwritten ethical code that companies must abide by and allocate a portion of their budget for. This approach aims to share the benefits with our societies, which would especially benefit the economies that do not impose taxes on companies, such as most of the economies in the Gulf States. Consider the number of Gulf companies that have devoted part of their budgets to nurture the gifted or grant scholarship opportunities to those who excel academically and for medical and academic research, in addition to environmental awareness programs, among others.

Social responsibility, or what is known as Corporate Social Responsibility (CSR), has become a basic component in major Western companies. However, this responsibility is not limited to financial donations for charity projects and institutions, but rather surpasses that to cover ethical management. Since everyone can reap the benefits when this approach is implemented, it follows that it serves all the different segments of society, which in turn serves the company through increased loyalty among the workers, thus resulting in more stability and productivity.

The United Nations (UN) has exerted practical efforts to set a universal code of standards for CSR, while some governments have established standards which they adhere to, such as Britain. Within this context of international efforts to establish CSR codes, I would like to take this opportunity to call upon the general council for Islamic banks and Islamic financial institutions to adopt a CSR code based on the Quran and Sunnah while benefiting from international experiences in the field.

* Lahem al Nasser is a Saudi Islamic banking expert

Tawaruq Finance

1) This form of Shariah-compliant finance helps businesses with their need for cash required to finance their operating capital and is based on the Tawaruq sale principles.

2) Tawaruq is a Shariah-compliant finance method, with which you can raise loan finance through buying installments in a local commodity, owned by the bank.

3) The customer buys a share in local or international commodity the bank owns. The customer then authorizes the bank to sell his share in this commodity, on his behalf, to a third party for cash and then deposit the proceeds into his account. (Source Riyad Bank)