Quora Answer: Why is Borrowing Money with Interest Considered Forbidden in Islam, Even If It is from a Bank?

The following is my answer to a Quora question: “Why is borrowing money with interest considered forbidden in Islam, even if it is from a big bank and not an individual lender?”

The overwhelming majority position across all four Sunni madzahib treats any predetermined increase on a loan, riba an-nasi’ah, as categorically prohibited, regardless of the lender’s size, sophistication, or regulatory status.  What follows is the case a serious minority of modern scholars has built against collapsing “riba’” and “interest” into a single, interchangeable concept.

The Qur’an Prohibits riba’ in the strongest possible terms, in Surah al-Baqarah, 2:279. 

فَإِن لَّمْ تَفْعَلُوا۟ فَأْذَنُوا۟ بِحَرْبٍ مِّنَ ٱللَّهِ وَرَسُولِهِۦ ۖ وَإِن تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَٰلِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ

If ye do it not, take notice of war from Allah and His Messenger; but if ye turn back, ye shall have your capital sums; deal not unjustly, and ye shall not be dealt with unjustly.

What the Qur’an does not do is provide a technical, closed definition of the term.  Pre-Islamic Arabian riba’, as documented extensively in classical tafsir, operated as a specific exploitative practice: a debtor unable to repay on time would have his debt doubled, then doubled again on subsequent default, an escalating punitive structure targeting people with no leverage to negotiate and no alternative source of credit.  This is riba’ al-jahiliyyah, and its defining feature was not the mere existence of a return on capital.  It was the compounding, punitive escalation extracted from a vulnerable borrower who had no meaningful choice.

Shaykh Fadhl ar-Rahman Malik, the Pakistani Islamic modernist scholar who served as director of Pakistan’s Central Institute of Islamic Research, argued precisely this distinction in his 1964 paper Riba and Interest, published in Islamic Studies.  Shaykh Fadhl ar-Rahman contended that interest used in modern finance is substantively different from riba’ and functions, structurally, like any other economic price, one component of a functioning credit market rather than an act of predatory exploitation against the powerless.  Shaykh Muhammad Asad Leopold Weiss, the Austrian-born Islamic scholar and translator of the Qur’an, reached comparable conclusions in his own commentary, arguing the prohibition targeted exploitative, compounding usury rather than the fixed, transparent, and regulated interest a modern bank charges under statutory consumer protection law.  Neither man was a fringe figure.  Shaykh Fadhl ar-Rahman held one of the most senior Islamic scholarly posts in Pakistan before political pressure from traditionalist clerics forced his resignation in 1968, itself a data point about how contested this territory has always been within Islam, not merely between Islam and the West.

The Collapse of the “Wahhabi Only” Narrative

Sayyid Muhammad Thanthawy, Grand Shaykh of Al-Azhar, the most prestigious seat of Sunni religious authority in the world, from 1996 until he died in 2010, issued rulings distinguishing between the fixed, pre-agreed returns on certain regulated financial certificates and the exploitative riba’ the Qur’an targets.  This came from the head of the institution every Sunni scholar, Hanafi, Shafi’i, Maliki, and Hanbali alike, treats as a central reference point for mainstream orthodoxy.  A reformist position on riba’ is not, and has never been, the exclusive property of secular modernists or reformist outliers.  It has had backing at the very summit of Sunni institutional authority.

The economic argument underneath this theological one is straightforward, and it is the argument classical riba’ scholarship, working centuries before formal economics existed as a discipline, had no vocabulary to fully engage.  Money available today is worth more than the identical sum promised a year from now, because today’s money can be invested, deployed, or protected against inflation, while tomorrow’s promise carries default risk, opportunity cost, and currency depreciation.  Interest, in this framing, is not an exploitative extraction.  It is the price of time and risk, priced transparently, disclosed in advance, and subject to competitive market pressure between lenders, none of which describes the compounding punitive debt-doubling the Qur’an’s language was responding to.

Why the Shari’ah-Compliant Alternative Frequently Fails to Escape This Logic Anyway

Murabahah, the industry’s dominant Islamic financing structure, has historically priced its profit rate against the London Interbank Offered Rate, and continues pricing against successor benchmarks such as the Karachi Interbank Offered Rate today.  Academic reviews describe Islamic banks as replicating conventional instruments by making them more complicated, while remaining exposed to the same underlying risks as the system they claim to replace.  A murabahah markup and a conventional interest charge, benchmarked to the same index, financing the same asset, are not two different economic realities.  They are the same number, wearing a different Arabic label, and frequently sold at a premium for the privilege.  In June 2017, Dana Gas PJSC unilaterally declared its own US$700 million swukuk non-shari’ah-compliant during a liquidity crunch, a claim the English High Court rejected outright, in a case that exposed how negotiable “shari’ah compliance” has proven to be for the very institutions selling it.  If the shari’ah-compliant alternative to a conventional loan is structurally identical to that loan, priced off the identical benchmark, and occasionally repudiated by its own issuer when convenient, the Muslim borrower has not avoided riba’.  He has paid a premium for the theatre of avoiding it.

While this remains a minority position against the overwhelming traditionalist consensus, Islamic finance will be stuck in the past and never actually address the issue the Qur’an Prohibited.  Modern Islamic scholars cannot even agree on the definition of riba’.  We are left with preachers who never understood how banking and finance work taking a literalist, simplistic position.  Anyone treating this debate as settled, in either direction, is treating a live, decades-old scholarly disagreement as though it were already closed.  It is not, and pretending otherwise serves nobody’s honest understanding of the text.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code

Shari’ah Finance: A Niche Wearing a Bigger Industry’s Clothes

The infographic contrasts Dar al-Ifta’ of Egypt’s case-by-case pragmatism with the systemic-replacement ambitions of Islamic finance proponents.  The contrast exposes exactly why the systemic project has failed on its own terms.  Global Islamic finance assets reached roughly US$5.98 trillion in 2024.  Global banking assets sit above US$180 trillion.  That places the distinct Islamic financial system at barely 3% of global banking assets, after fifty years of institution-building, billions in regulatory investment, and the enthusiastic backing of entire sovereign governments.  There is no demand at civilisational scale for wholesale replacement.  What exists is a niche product line, not a rival architecture.

Murabaha, the industry’s dominant financing structure, has historically priced its profit rate against the London Interbank Offered Rate, and continues pricing against successor benchmarks such as the Karachi Interbank Offered Rate today.  Academic reviews of the practice describe Islamic banks as attempting to replicate conventional instruments by making them more complicated, while standing exposed to the same underlying flaws as the conventional system they claim to replace.  Research by Shaikh in 2013 found that Islamic banks bear political risk, currency risk, default risk, and country risk in a manner indistinguishable from their conventional counterparts using the same benchmark.  A murabahah markup and an interest rate charged on the same loan, benchmarked against the same index, are not two economic realities.  They are the same number wearing a different Arabic label.

Even AAOIFI’s own standard-setting body concedes the point implicitly.  Its Financial Accounting Standard No. 2 governs how murabahah profit gets recognised over the credit period, a proportional allocation method.  That is an accounting convention, not an independently derived economic theory of the time value of money.  Current fiqh has no mechanism of its own for pricing deferred payment risk or hedging inflation, so the industry defaults, quietly and consistently, to the exact conventional interest rate indices its founding premise claims to reject.  Every hukm and every fatwa built on top of that default inherits the same unresolved gap underneath it.

The Scandal That Should Have Ended the Debate

In June 2017, Dana Gas PJSC, a UAE-listed energy company, unilaterally declared that its own US$700 million mudharabah swukuk had ceased to be shari’ah-compliant, and therefore claimed the certificates were unenforceable under UAE law.  The timing was not subtle.  The declaration arrived when Dana Gas faced a liquidity crunch and wanted to restructure the debt on more favourable terms.  Swukuk holders took the matter to the English High Court, which in November 2017 upheld the contractual obligations regardless of the shari’ah non-compliance claim, ruling in Dana Gas PJSC versus Dana Gas Sukuk Ltd & Ors that the payment obligations were governed by English law and enforceable as such.  A company effectively told the market that its own shari’ah board, the very body it had paid to certify the structure as compliant, had been wrong all along, conveniently at the exact moment that finding suited its balance sheet.  White & Case described the episode as a potentially destabilising development for the entire swukuk market and the Islamic finance industry as a whole.  The market’s own response confirmed the critique: swukuk issuers scrambled afterwards to insert clauses explicitly waiving any right to challenge the shari’ah compliance of their own instruments, an industry-wide admission that shari’ah compliance had functioned, in practice, as a negotiable legal position rather than a fixed religious commitment.

Why This Matters Beyond One Company’s Bad Faith

If shari’ah compliance were a genuine, load-bearing economic distinction rather than a labelling exercise, no issuer could plausibly argue its way out of a payment obligation by disputing that compliance after the fact.  The very possibility of the Dana Gas argument existing, and needing an English court to slap it down, confirms that the underlying instrument was never economically distinct from a conventional bond in the first place.  It was a conventional obligation, wrapped in a shari’ah-compliant structure, and the wrapping proved as removable as the wrapping on any other financial product once removing it became commercially convenient.

The Better Path Exists

Dar al-Ifta’s contextualised approach does not pretend an alternative economic system already exists.  It asks what shari’ah permits within the real economic conditions people actually live in, drawing on maqaswid ash-shari’ah rather than insisting on wholesale substitution.  That is evolutionary, not experimental, and it does not gamble ordinary people’s livelihoods on an ideal system with no proven demand, no independently derived economic theory of time value, and, as Dana Gas demonstrated in open court, no reliable commitment even from its own issuers when the commitment becomes inconvenient.

The proponents of shari’ah compliance have, in large part, dressed conventional financial instruments in Arabic terminology, benchmarked them against the same interest rate indices conventional finance uses, and charged clients more for the privilege, frequently for comparable or lower risk-adjusted returns than the conventional equivalent offers.  Something about attaching the word “religious” to a financial product appears to switch off the scrutiny that same product would face under any other label.  That is not piety.  It is marketing, and marketing deserves exactly the scepticism any other unverified sales claim receives, regardless of which language the label is printed in.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code

Quora Answer: Is the Principle of Banking in Islam Possible?

The following is my answer to a Quora question: “Is the principle of banking in Islam possible?” 

Islamic banking has two primary principles: the equitable sharing of profit and loss in any venture, and the prohibition of riba’, usury.  In principle, these are equitable considerations, and praiseworthy.  The contentions of Islamic banking is not the principles, per se, but the reinterpretation of their application within the context of conventional financial practices, and the creation of near equivalent financial instruments.  This is where is falls short. 

Islamic banks make a profit through equity participation, which requires a borrower to give the bank a share in their profits rather than paying interest. 

For example, we consider mudharabah, where one party, the bank, provides the capital, and the other party, the business owner, provides the expertise and labour.  The problem with most such contracts is that, in reality, the loss is borne by the business owner, while the profits are shared.  The bank is still a bank.  It is not a conventional business partner, and it would be impractical to consider them a silent partner in every business venture that capital is provided, and still have oversight and manage compliance.  That makes the bank another mudharib, and losses are passed on to depositors.  This system can also be abused by the business, since profits are shared.  The business simply declines to declare a profit.  This results in the bank reverting to the practices of conventional banking to get their return. 

The other common contract system is musharakah, where both parties contribute capital.  A simplified example would be a housing loan with a balanced loan to value ratio.  What it does is make the bank a partial owner of the property, which has its own legal complications.  This means that the owner does not gain ownership of the property even if he pays it all off, in some contracts, and the bank gets a portion upon sale.  In other contracts, the owner gains full ownership upon repayment of principal and interest, which is labelled “profit”.  In the case of a loan to company, the capital invested is tied to a floating rate, which are still benchmarked to conventional banking rates such as LIBOR.  This means any shari’ah-compliance is cosmetic. 

Finally, we consider the problematic definition of any and all forms of interest as riba’, usury, which is illogical.  For example, if money is lent out by a bank, we must consider that there is an inherent infrastructure cost involved on the principal lent out.  The staff need to be paid, the building needs to be maintained, the utilities need to be paid.  The bank has a right to charge some form of interest to cover that cost.  That does not inherently make it riba’.  One of the conditions of riba’ is zhulm, oppression.  For it to be riba’, there should be a financial instrument structured in such a way that the underlying asset has no value, such as what happened during the subprime crisis.  Or, in a case where the interest of the loan is well in excess of the principle paid such that the debtor would find it difficult to pay off, and the interest on that loan is well in excess of the principal lent out.  An example of the latter would be student loans from the US Federal government. 

Islamic banks, just like conventional banks, have the same limitations and considerations.  In the case of Islamic banks, they use variations of the same business practices and products as normal banks, but white label them with Arabic phrases.  They bend over backwards to “Islamisise” the same financial instruments and transactions.  They play musical chairs with the same practises.  They then appoint their own shari’ah-compliance boards, which are not independent of these same banks.  There is then a cost for two levels of compliance.  This makes Islamic banking more costly, and less efficient than conventional banking. 

We do not actually need Islamic banking as it is.  What we do need is ethical banking, a shared framework which can be utilised by banking in general, for the benefit of all.  “Islamic banking” is branding, not a reality.

Quora Answer: Why Do People Find Islamic Finance Attractive?

The following is my answer to a Quora question: “Why do people find Islamic finance attractive?” 

It is an overstatement that people find Islamic finance attractive.  Islamic finance is projected to grow to around US$2.05 trillion by the end of 2019.  This is after two years of stagnation.  The global financial markets is estimated at US$80 trillion with a 6% growth for most of those years.  This means that even as the Islamic financial market grows every few years, growth in global finance itself outstrips it by a lot.  At that rate, Islamic finance is actually losing market share.  It is a niche system for a niche market. 

The people who do find Islamic finance attractive generally come from the segment of the Muslim population that falls for the so-called “Islamic” branding, and its promise of no riba’, usury, which is not the reality.  As long as banks are leveraged and lend more than they hold, all their manipulation of individual financial products is irrelevant. It is still built on a foundation of riba’.  There are Islamic finance evangelists who push this nonsense that Islamic finance is shari’ah-compliant, when all they are doing is making it up as they go along.  They have created products that are more expensive for the consumer, have lower yields, and is unable to give a better return on investment.  People find it attractive because they are gullible, or because they have inklings of piety without knowledge, or they are invested in it as “experts”.

Quora Answer: What Do You Think about Islamic Finance?

The following is my answer to a Quora question: “What do you think about the Islamic Finance?”

We have to make a distinction between the jurisprudence of transactions and assets in finance, and the branding that people call “Islamic Finance”.  They are not always the same thing.  When we consider the fiqh, the jurisprudence, there are many contentions that need to be unpacked, to be considered, to be updated.  There are very few true ahkam, rulings, and a lot of fatawa, legal opinions.  Even at a fundamental level, a great many contentions and foundational principles of modern finance have not been defined in terms of their relationship with fiqhi principles.

The primary problem we have is that many of the so-called experts on shari’ah are not actually experts in finance.  They are often ruling on transactions, protocols, and even modern economics, they do not fully understand, and avail themselves to the simplistic and literalist interpretation.  Those are the better ones.  For example, when you transfer $100 from one country to another, there is a cost.  Is that riba’, usury?  Most would say it is.  However, it does not consider the fact that there is a cost in transferring funds.  This includes the cost of administration, and transaction.  The next question is that if this is not riba’, when does it become riba’?  This is the state of the fiqh.

We must also consider the fact that many of these so-called religious authorities on “Islamic” finance sit on these shari’ah accreditation boards and councils, and get compensated by the very banks and institutions whose products they are supposed to accredit.  That is an unacceptable conflict of interest.

I am not convinced by Islamic Finance.  It is branding exercise, where they take conventional banking products, rebrand them using convenient Arabic phrases and terms to create the illusion of halal, and then sell it to the gullible who want to play at being religious.  These are not the best products.  They are selling them based on appeals to emotion, not the performance of the product in comparison to similar products.  If they were to sell on the merit of the product, there would be no real sales.

As of 2019, the size of the Islamic finance market is US$2.5 trillion.  This is a 3% growth on the previous year.  The size of the world financial industry is US$26.5 trillion, with a 6.5% growth.  This means that not only is it a tiny market, but it is a tiny market that is losing market share.  It is growth based on hype, and largely confined to the retail market because institutional fund managers are not going to put significant funds in an underperforming sector.

What we should be growing is ethical finance, which is not tied to the opinions of semi-educated mullahs that can be bought off for a pittance, by putting them is cosmetic shari’ah councils.  Ethical finance is based on defined values and principles.  These values are universal, and have broader market appeal.

Quora Answer: What are Swukuk Bonds?

The following is my answer to a Quora question: “What are swukuk bonds?  How do they work, and how are they Islamic?” 

Swukuk is not a bond.  The financial press calls it an “Islamic bond.” The financial press is wrong.  A conventional bond is a debt instrument.  The issuer borrows money.  The investor lends it.  The issuer pays interest.  The investor earns a yield on the loan.  The entire transaction is denominated in debt, generates interest, and sits squarely within the category of instruments that classical Islamic jurisprudence treats with suspicion — specifically the prohibition of riba, usury or unjustified increase, and the broader concern about gharar, excessive uncertainty. 

Sukuk sidesteps both problems by restructuring the transaction entirely.  The issuer does not borrow money.  Instead, it sells investors a certificate of ownership in an underlying asset — real property, infrastructure, a leasehold interest, a portfolio of receivables, or some other tangible asset base.  The investors do not become creditors.  They become partial owners.  The proceeds of the certificate sale fund the acquisition or development of the underlying asset.  The investors receive a share of the profits generated by that asset — not interest, because interest requires a debt relationship that does not exist here.

At a predetermined future date, the issuer buys back the certificates at par value.  The investor exits.  The asset reverts to sole ownership by the issuer.  The certificate is therefore — in structure if not always in economic substance — a certificate of ownership, not a loan agreement.

The jurisprudential basis rests on two principles.  First, bay’, legitimate sale, is permissible.  Purchasing a fractional ownership interest in a tangible asset is a sale, not a loan.  Second, ribh, profit from ownership, is permissible.  Earning a return because you own something that generates value is fundamentally different from earning a return because someone owes you money.  The prohibition of riba targets the latter.  Swukuk, properly structured, delivers the former.

Several structures exist.  Swukuk al-ijarah are the most common — the underlying asset is leased back to the issuer, and the rental income constitutes the investor’s return.  Swukuk al-murabahah involve a cost-plus sale structure.  Swukuk al-musharakah represent a partnership interest.  Each structure requires a real underlying asset, real economic activity, and a return tied to that activity rather than to the passage of time and the outstanding principal.

The global swukuk market reached approximately US$900 billion in outstanding issuance by 2025.  Malaysia remains the dominant issuer, accounting for 40% of global sukuk outstanding. Saudi Arabia, the UAE, Indonesia, and Turkey are significant issuers.  Non-Muslim-majority countries — including the United Kingdom, Hong Kong, and Luxembourg — have issued sovereign swukuk to access Islamic capital markets.  The UK government issued its first sovereign swukuk in 2014 and has returned to the market subsequently.  The instrument is no longer niche.  It is a mainstream capital markets product with a distinct investor base and growing secondary market infrastructure.

Not every scholar agrees that every swukuk structure is genuinely shari’ah-compliant.  The buyback obligation — the issuer’s contractual commitment to repurchase the certificates at par — troubles some fuqaha’, jurists, considerably.  If the investor is guaranteed to receive par value at maturity regardless of what the underlying asset does, the ownership is nominal, and the economic substance is a loan with a fixed return.  Muhammad Taqi’ Utsmani, one of the more prominent shari’ah scholars in Islamic finance, issued a critique in 2007 estimating that 85% of swukuk structures at that time were not genuinely shari’ah-compliant.

The industry has evolved since that critique.  The debate has not been fully resolved.  The distinction between a swukuk that genuinely transfers ownership risk and one that merely renames a bond in Arabic is not academic.  It is the difference between an instrument consistent with the philosophical framework of Islamic finance and one that satisfies the letter of the screening criteria while contradicting their spirit.  Islamic finance, at its best, is not about renaming Western financial products and adding a shari’ah board.  It is about structuring transactions that reflect genuine risk-sharing, genuine ownership, and genuine economic activity.  The swukuk that achieves all three is a genuinely distinct financial instrument.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code

Quora Answer: Why is Islamic Finance Popular?

The following is my answer to a Quora question: “Why is Islamic finance so popular?”

According to Morgan McKinley and others, the Islamic finance sector is expected to be worth US$6.5 trillion by the end of this decade.  This is substantially larger than the approximately US$300 billion or so at the turn of the millennium.  But does this necessarily mean it is getting more popular?  The global financial market itself is projected to be worth about US$900 trillion in 2020.  Going by those numbers, it can be argued that rather than Islamic finance being more popular, the growth of the sector is in line with the overall growth of the entirety of the financial markets.  In terms of global market share, it is still tiny, and it will take a lot more than this for it to be qualified as being “popular”.

Islamic finance is a fad.  What they have done is take existing financial products, and rename them with bombastic Arabic terms to give these products a veneer of religious adherence, that is, in many cases, far from the reality.  These products are based on fatawa, legal opinions, by scholars such as Muhammad Taqi Usmani, which are often impractical, or of questionable intent due to conflicts of interest.  For example, Muhammad Taqi Usmani sits on the following, and gets paid: Chairman, Shariah Board, Citi Islamic Investment Bank, Bahrain; Chairman, Shariah Board, Amana Investments Ltd., Sri Lanka; Vice-Chairman, Shariah Board, Abu Dhabi Islamic Bank, Abu Dhabi; Member, Shariah Board, Dow Jones Islamic Market Index; Chairman, Shariah Board, Al-Meezan Commercial Bank Ltd; Vice President, Darul-Uloom Karachi; Deputy Chairman & Permanent Member of Islamic Fiqh Academy, Jeddah; Chairman, Centre for Islamic Economics, Pakistan; Chairman, Shariah Council AAOIFI; Chairman, Shariah Board, IslamiQ.com; Chairman, Shariah Board, Saudi American Bank, Jeddah; Chairman, Shariah Board, HSBC, Global Islamic Finance, London; Chairman, Shariah Board, Robert Fleming Oasis Fund, Luxembourg.  This is not even a comprehensive list.

He sits there.  He gets paid, and he declares their products halal.  This is the same with all other scholars sitting on these boards.  In normal banking, this would fail compliance, and be a conflict of interest.  Islamic banking has less compliance strictures because it is still new.  People like Muhammad Taqi Usmani claim all “interest-based” banking is haram, because they simplistically declare any and all form of interest is haram.  However, due to the way all banks are structured, in adherence to Basel II and Basel III conventions, they are all lending out funds that are no hundred percent backed.  This is real usury, and they are quiet about this.  If the bank is only backed up to 17%, meaning that only 17 cents out of every dollar lent is “real”, that is massive riba’, usury, according to the principles of shari’ah.  This includes the so-called Islamic banks.  And yet, that 0.017% interest per annum on your savings account is “haram”.

Islamic banking products, whether swukuk, or takaful, underperform the market, and equivalent products.  The proponents of these products emotionally blackmail Muslims by claiming that these losses are God’s Will.  As such, only the gullible and the simple-minded actually buy these products.  Due to the convoluted structure for some Islamic loans, for example, you actually end up paying more, and the bank shares ownership all the way.  This has legal implications that most homeowners never consider.

In summary, many Islamic finance products have serious issues that have yet to be fully addressed; the definition of what constitutes riba’, usury, ins inconsistent; and the products are inferior to the market.  Islamic finance will always be a niche market.  It is a branding, not a viable alternative to conventional ethical banking, with its more robust compliance structure.

Quora Answer: Is Islamic Banking Viable?

The following is my answer to a Quora question: “Is Islamic banking viable?”

If by viable, you mean to ask if there is a market for it, then it is because enough people believe in it for it to exist.  It is a growing field, and it is evolving.  If by viable, you mean to ask if it will ever be a credible alternative to normal banking and finance, I am extremely sceptical.  There are structural issues for many of the products, and the investment products do not perform as well as equivalent products in normal banking.  In some areas, it is far too inferior to be viable for a wider market.

One of the problems is the definition of riba’, usury.  Does it include any and all forms of interest?  If I send you money in another country, and the financial institution charges more than the principal, is that riba’, when we understand that there is an infrastructure cost involved?  Another issue is that Islamic finance products, such as the swukuk are essentially the same thing as normal financial products but with an Arabic name, and higher distribution costs.  There is the normal distribution costs, and then there is the distribution cost of the “Islamic” accrediting authority.  We can also argue that there is a credibility issue with the accreditation of so-called Islamic products when the shari’ah compliance committees are not independent regulatory authorities, but paid for by the banks themselves.

Before Islamic banking, there was a movement towards ethical banking.  Instead of reinventing the wheel for cosmetic and vanity purposes, it would make more sense to revisit ethical banking, and make it a standard throughout the industry.