Islamic Banker Islamic Banker Islamic Banker Islamic Banker Islamic Banker Islamic Banker Mufti Aziz Ur Rahman has over 22 years of experience Islamic Bankerin CHAT WITH MM ASIA
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Mufti Aziz Ur Rehman ASIA
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I am glad to have entered in to this area as it is reassuring to see Islamic Finance enter in to an area that would benefit the majority of our Muslim brothers and sisters.
MM: As one of the world renowned and dynamic Shari’a Scholar, what are your expectations for Islamic Finance industry in 2014? Mufti Aziz: I expect it to carry on as it has been for the last 40 years, by that I mean it will grow, diversify and launch ever more progressive products. I think till now and for me, 2014 has been the year of on the retail side; Islamic Micro Finance and Credit Cards and on the Corporate Sukuk. I say this as I have been very busy myself in these areas compared to others, so have firsthand experience. I must say out of all three, the newest product for me was Islamic Micro Finance, but I am glad to have entered in to this area as it is reassuring to see Islamic Finance enter in to an area that would
benefit the majority of our Muslim brothers and sisters. While this is a very noble area, it is still very important to ensure compliance after the product concept stage, especially with the volumes involved and the need to meet customer demand and TATs, processes have to be robust and have the proper resources allocated to make it work properly. MM: As you are serving in Shari’a
Supervisory Boards (SSB) of various banks and institutions, how do you see their products in terms of compliance to Shari’a including the other aspect of operations such as marketing, HR, etc from the academic, banking and Shari’a perspective? Mufti Aziz: With stringent
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Muath Mubarak
Shari’a and Islamic banking, advisory & Consultancy positions and represents a rare breed of Shari’a scholars, who is able to combine the best of contemporary finance with Islamic Jurisprudential principles. A certified trainer (Islamic Banking and AAOIFI Standards) by AAOIFI, Mufti Aziz is a dynamic Sharia scholar qualified to issue religious edicts (Fatwa) and also a qualified Mufti from Dar Ul Uloom Haqqaniya specialises in Fiqh Ul Muamalaat (with a specialisation in Islamic commercial transactions). He is presently working as Shari’a Manager with a leading Islamic Finance company and also as an Shari’a Advisor for Islamic GDP (Global Distribution Platform) London-UK. He also worked as an External Consultant for for Dar Al Istithmar-London, which is a subsidiary of Deutsche Bank and is a specialist Shari’a advisory firm based in London.
CHAT WITH MM I MUFTI AZIZ UR REHMAN
controls during the development and then deployment stages as well as regular audits, Islamic Banks are proving to be very good at ensuring Shari’a compliance. Of course, there are individual violations, but making sure you train staff to appreciate the reasons behind the actions and their stages, goes a long way to prevent systematic abuse. While we as Scholars do not condone such behavior, as banking professionals we also understand that accommodating a customer can prove tricky at times especially in emergencies and time sensitive offers. In this regard, profit to charity is accepted by the institutions as a cost to maintain a customer relationship. Of course, any institutionalised indiscretions are not tolerated and are punished more harshly than just giving to charity. As we all know, there can be a stark difference in professional life between the theory and practice and I think it is part of Shari’a to actually instill the skills of judgment in to staff by raising the awareness of Shari’a as an integral part of operations throughout the institution and product’s life cycles, so it does not become an afterthought or just a box to be ticked. MM: What are the main challenges
faced by the Shari’a Boards and is there any cooperation among all the SSB of different banks and nonbanking institutions to identify the common difficulties and solutions? Mufti Aziz: This is a yes and no answer. Yes, there is cooperation between SSBs but sadly only in an informal manner. Meetings at conferences, personal connections mean that points that may be “hot topics” are discussed and of course help is always forthcoming, but this is all done on personal efforts and
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What are the expectations of Islamic banks from a Shari’a Scholar?
Mufti Aziz: I can answer these two questions very simply; no and too much. Alhamdulillah, there are now Islamic Banks and Financial Institutions in nearly every corner of the globe and not just one or two. They all need guidance and ratification services. Being a Shari’a Scholar is not an easy job. I have met very capable professionals who have great knowledge of Shari’a, but that simply does not make you a
Mufti Aziz Ur Rehman
communication channels of the Scholars. This cooperation is also unavoidable and indeed another social benefit guaranteed by Islam, In that Shari’a being a universal law, there are no trademarks or copyrights. Any development in the field of Shari’a must be shared with the Ummah. Of course, product features and benefits can remain particular to each organisation, but Islamic Law cannot be restricted for the benefit of just one person or a commercial organisation. That said, should a product be developed, as I have recently for Credit Cards, using a pioneering method of Murabaha not practiced in the market, this is a commercial adaptation and need not be made public as they say. Of course, once this hits the market, there is no barrier to any other institution using the same principles, but that’s a commercial, financial and their Shari’a board decision. MM: In your opinion, do you think
that the world has got enough qualified and experienced Shari’a Scholars?
Being a Scholar is a Lifestyle and life time occupation. People forget that to be an Islamic Finance Scholar you must know about Shari’a related to all areas. This is not a simple task. It is not enough to know the Islamic modes of finance or what is halal and Haram to eat.
MM: Is there any common Shari’a
compliance code to be practiced by
the Islamic banks in UAE and how to bring the uniformity in Shari’a matters for the products globally?
Mufti Aziz: This is a very important question and something I have spoken about at a conference. First, is to tackle the question about the UAE Shari’a compliance code. Due to the UAE being the pioneer in the (continuous) Islamic Finance industry, certain standards have come in to existence. These are not applied at a regulatory level, but based on the widely accepted Scholarly agreement on how a certain Islamic Financing mode must take place i.e. Murabaha etc. So this applies some uniformity. Is there a scope for the Malaysian model where a Central Bank Shari’a Body ensures such uniformity at a regulatory level, well that’s another question, one you have also asked so I will reserve my answer for that. Now, for Global “standardisation”. As far as the method is concerned it is very simple. One of the leading Islamic Finance bodies such as IDB or AAOIFI can both set up a project or new body tasked with providing guidelines based on input from all the leading financial Centre’s; London, NY, Saudi, UAE, Private and pertinent Govt. Bodies to come up with products that would meet with their universal demands. Nothing more is needed but to bring together the right people and get them to think on how to work together. Of course, this is easier said than done, but it’s just a matter of intent and resources rather than some ideological barrier. Islam being a universal religion it only makes sense there will be some shared aspects of life be you in Tokyo or Timbuktu. At the same time, Tokyo and Timbuktu are very different and therefore also have different specialized needs. As such each market, country, institution must
also practice its own “tailored” finance alongside the Global standards. The two must go hand in hand and it is up to the customer to select his preferred option based on means or need. Global standards must not be the only standard. MM: What do you think of National
level Shari’a boards? Is there any necessity that a board or group of scholars who should be supervising or advising from the Central Banks’ capacity?
Mufti Aziz: I think the example of Malaysia shows that this is a workable model and in my own opinion I do not have anything against it. Malaysia shows that while a national body is approving across all competing banks, they can still be individual and compete on product features that are based on their customer segments and demands. MM: If there is anissue between
the customers and Islamic banks regarding a product or Shari’a compliance how it will be dealt with? Is there any special arbitration centre to hear these issues in any country?
Mufti Aziz: If there is an issue between customers and banks on a Shari’a point then yes there are many options for the customer to have their concerns fully answered. Firstly, the customer should have full access directly to the banks Shari’a to voice their concerns and have the bank’s Shari’a respond to the customer to the best of their abilities. The channel and communication type is up to each individual bank but the customer must be able to reach and interact with Shari’a and not see it as some backroom, hidden and secretive decision making power. As all of Shari’a’s decisions are based on
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Scholar. Being a Scholar is a Lifestyle and life time occupation. People forget that to be an Islamic Finance Scholar you must know about Shari’a related to all areas. This is not a simple task. It is not enough to know the Islamic modes of finance or what is halal and Haram to eat. One must appreciate how a financial transaction and its consequences can affect each part of the individual outside of the purely financial realm. Bankers can be very clever in putting across concepts that seem on the surface to be 100% Shari’a compliant, but on closer inspection and with full understanding of the implications involved can onesee an aspect that may be contrary to Islamic principles. One example to convey the same to non-Muslims could be that of similarity to Confucian Scholars in Ancient China. It took a lifetime of study and devotion to be able to be called a Scholar and maintain this high level till the end of your, at least, professional life. My Job, as you could say, does not stop at 5pm or can be left behind like a jacket on your office seat. I am a Scholar 24/7 and am always attending professional and non-professional events, study circles and meetings to continue, develop and enhance my skills. Sadly, there are, at the moment, fewer and fewer people capable or wanting to make such a life style choice. But before we see this as a dying form, not its not and I am sure as Islamic Finance and Islam spreads, there will be a resurgence in Scholar levels and as such it is only a short-term issue. In the meantime, I speak for all the Scholars in saying we will and do work to our utmost to not deny any person or company looking for our assistance.
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CHAT WITH MM I MUFTI AZIZ UR REHMAN
Nothing more is needed but to bring together the right people and get them to think on how to work together. Of course, this is easier said than done, but it’s just a matter of intent and resources rather than some ideological barrier. reasoning (Qiyas, Ijma’a) apart from sharing sensitive commercial information, the customer can view the Islamic deductions (not actual, but communicated in appropriate means) the Shari’a basis for its answers. Now, the customer accepting this or not is not up to Shari’ah, but at least he/she can be shown the reasoning. Should this not suffice for the customer and, or it reaches a stage where legal gets involved than there is the International Islamic Centre for Reconciliation and Arbitration (IICRA -Dubai). Indeed, being a certified Arbitrator of IICRA I can vouch for the integrity of the institution and processes. So you see there is the same level of recourse to an
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Islamic banking customer as to his/her conventional banking counterpart. MM: As you have authored many
articles and delivered presentations in various countries, what is your outlook for the future of Islamic Economy? What are the resource requirements to fuel the growth globally? Mufti Aziz: Alhamdulillah, the future is very bright, if true Shari’a and Islamic tenets are adhered to. The main reason for this is that apart from Muslims, it is non-Muslims who are realizing that Islamic Finance is a true and viable alternative to conventional finance. All people, Muslim or otherwise are fed up of schemes and traps posed by incomprehensible complex financial products with no real value creation. To meet this growing demand we need more and more trained professionals who are committed to ensuring Shari’ah compliance at all times. As volumes grow the temptation to make processes easier may become stronger, but I pray that with the proper dedication, man power, guidance and Scholars support, In Sha Allah, we will aim to limit any improper conduct. MM: Finally, What is your advice to
the industry stakeholders of Islamic finance, especially your fellow Shari’ah scholars and bankers, as a prominent dynamic Sharia Scholar having exposure from different countries? Mufti Aziz: Remain true to Islam and everything else will follow and flow in to position by the Grace of Allah. As a Muslim and as a Scholar in particular, we cannot forget that our only reason in life is to worship Allah. Worship as Allah has described can be your work, done honestly and to the best of your ability. If we keep the true
tenets of Islam in Islamic Finance the industry can only grow and truly assist in providing the world with a much better financial system compared to the conventional, where benefit is not just financial but social too. In addition to this, we must not fear change or debate. Islamic Finance professionals must keep pushing the boundaries and testing Scholars to ensure products are at the very best. Products from different markets, viewpoints and reasons must be studied to see where and what aspects can be adopted to improve your offering. This exercise will keep the institutions and practitioners at the cutting edge and lead to development of true Islamic Finance.IBA