Wednesday, October 5, 2011

Islamic Banking (8 ) Attitude Shifts towards Interest

Post 38--:
Both Christians and Muslims should be aware of the widening horizons of the global ummah. Like today’s Islam, it is widely held that pre-Reformation Western Christianity opposed interest and classified it as usury on basis of economic circumstances of the day. Though its secular Calvin-disdaining offspring have taken Calvin's positive attitude towards interest far beyond his so as to almost render their current buccaneering into something totally different, even contemporary Calvinists, including yours truly, accept the concept and necessity as a given without considering it the end of all things business. It would appear that a similar process is taking place among Muslims.

History of Usury-Interest in Western Christianity

The accuracy of the classical myth re. Pre-Reformational views on usury is doubtful: It is not nearly nuanced enough. In his chapter on “Western Europe before Islam,” Henri Pirenne (1862-1935), a Belgian described by his translator Frank D. Halsey as “one of the greatest authorities in the field of medieval history,” explained that “the Church, it is true, constantly forbade clerics, and even laymen, to charge usurious interest. However, both Christian and Jewish merchants commonly lent at interest. In fact, under some regimes it was considered lawful. “Everybody lent money at interest.” Even bishops paid interest. During the Middle Ages, Venetian merchants borrowed money at interest as high as twenty per cent, even though by this time the Church had adopted an ascetic attitude that made her very suspicious of commerce. It would appear that though the official church, the church institute if you will, had become negative towards interest due to an increasing asceticism, the church as organism, the members, used it rather freely.

It is widely understood that it was the reformer John Calvin who helped dissolve the ecclesiastical cloud over interest by initiating a more positive attitude towards the practice on basis of a more liberal, contextual and historical reading of the Old Testament. Over time, it became commonly accepted by all Christians, including those unhappy with the Reformation!

Developments re Interest-Riba in Islam

There is a move in a similar direction among Muslims today. In 2002, the Islamic Theological Research Committee of Egypt's Al-Azhar Institute, “seen by many as the philosophical centre of the dominant Sunni strand of the faith, has voted 21-1 to approve fixed interest rates.” Sheikh Saber Talaab, head of the research committee secretariat, reportedly explained, "So long as we do not go against what is written (in the Koran) or the Sunna (Islamic tradition)….” Besides, it was argued, “The decision was necessary. Religious jurisprudence means change, and it is illogical to remain frozen while the world changes around us.” “We have a clear conscience.” I have argued several times in the course of my series on Christian-Muslim Relations for a more liberal and historical reading of the Qur'an and other main Islamic sources. Well, this change appears to be the result of this more traditional cum liberal reading.

 Fixed versus Historical Interpretation

So, things are not as frozen and fixed as the literalists would have us believe. Before painting all Islamic banking with one broad brush, we must remember that, far from being a monolithic affair, the picture is one of diverse approaches based on dynamic interpretations of Islam and sharia according to local circumstances, meaning that there is room for innovation and change. The writer of the article from which the material in this paragraph is derived wrote about a report on Islamic banking. It “focuses on the role of Fiqh (Islamic jurisprudence), which is based on interpretation of the Koran, and secondarily, on ijma (consensus).” This approach “offers a lot of room for innovation, particularly with regard to Islamic rules that prohibit elements of financial transactions that are important for the banking industry to grow, prosper and connect to the global economy.” We have again stumbled on the issue of a liberal dynamic interpretation of Islam’s basic documents that is a prerequisite for
viable Islamic banking.

With this I close the discussion on Islamic banking. A lot more can and needs to be said—and most of it has already in books, journals and magazines. For a blog, this is sufficient for now. Perhaps more some other time. Get ready for a change of gears.