Muslim Money Talk
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Muslim Money Talk
How ISLAMIC Is Islamic Finance? | Najib Al Aswad - MMT Ep 33
In this episode of Muslim Money Talk, host Areeb Siddiqui is joined by Najib Al-Aswad, Director at IFAAS, and co-host Ali Siddiqui to discuss the intricacies of Islamic finance. They delve into whether Islamic finance is truly different from conventional finance, the challenges it faces in the UK, and why misconceptions persist. The conversation explores regulatory hurdles, awareness gaps, and the role of Sharia scholars in defining what is truly compliant.
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Show Notes:
0:00- Opening
10:53 -Comparing Islamic Windows in Conventional Banks
16:56 - Evolution of Islamic Finance Principles
31:53 - Challenges in Islamic Finance Marketing
41:56 - Embracing Islamic Finance for All
51:29 - Navigating Sharia Compliance in the UK
How Islamic is.
Speaker 2:Islamic finance. If you go to fiqh al-mu'amalat right, which is Islamic jurisprudence of transactions, which is human interactions, which involve commerce, trade, you know finance, business, these are ever-evolving and if Islam was not contextual in this, it would not survive. What is the objective really, ariba, when you do anything in the Islamic finance space, you're trying to address, you know, riba, you're trying to eradicate riba in one way or another. So there are different strategies. You can work from the outside, by setting up your own full-fledged institution, or you can work from the inside and start the you want the commercial war from within. Realistically, you know, muslims today, are they leading or following? Let's not fool ourselves. Are we leading or following? We're following changing position from leadership to fellowship. You know it takes centuries and generations. I actually take, you know, a video of david cameron in the world islamic economic forum where he is saying never again should a Muslim in the UK feel unable to take a loan simply because of their religion. Never again. So he talks about financial inclusion.
Speaker 3:Today we're joined once again by myself, Ali, as well as Areeb Siddiqui and a very special guest, Najib Al-Aswad. Director at IFAS, he's worked with 15 years of rich and diverse expertise in the field of Islamic finance and across 50 different jurisdictions, bringing Islamic finance solutions and advice to them. He's also a trustee of the Dibba Free Foundation, of which I'm a member, and very pleased to say that he is with us today. I will not be here for the first half of this podcast for reasons that are hitherto unknown. However, I will be here about half an hour in, so, if you would like to skip to the best part of the podcast, you know where to go, and on that I shall see you shortly.
Speaker 1:As always, I'm your host, Areeb Siddiqui. I'm joined by him for some reason today, and this is Muslim Money Talk. Before we begin, we actually noticed only about 10% of you are subscribed to the podcast. So if you like what you're listening to and you want to hear more from us and see more things Muslim and money related, then please consider subscribing and, of course, leaving this episode a like and share it with your friends. Leave us a or a review, because it really really does help us out and help more people to find us. Thank you. Now back to the show najib assalamu alaikum and welcome to the show.
Speaker 1:Thank you for having me, my dear brother, thank you for making the trip down from birmingham today. Was it okay?
Speaker 2:well, alhamdulillah I think um the overall infrastructure is getting better, so now you have probably 50 chance of missing your train. But okay, at least I managed to be on time today, alhamdulillah I don't.
Speaker 1:I think, before we start, we should make reference to why there's an empty chair next to me. He should join us at some point and he'll slide on in and and yeah well, you know, alhamdulillah, I mean, uh, I've seen the first 20 episodes or so.
Speaker 2:You guys were having one sadiki and suddenly, subhanallah, after episode 30 we doubled down on sadiki, so maybe, it's, it's my, it's my, uh, you know, luck today that I managed one sadiki for now, until the next one until you get the second.
Speaker 1:Maybe we'll get a third soon, who knows? Najeeb, I want to cast your mind back to when we first met. I don't know if you remember, but I think we first met at an IFN conference, maybe three, four years ago. Yes, yeah, I think IFN is Islamic Finance News. They do a big conference in Mansion House, london, every year. Free shout-out to IFN. Yeah, shout-out to IFN.
Speaker 2:Hopefully you'll get a speaking spot for free in the next.
Speaker 1:I did it last year First time in a few years that I haven't, but I remember I've always thought of you as one of the most outspoken individuals when it comes to defending Islamic finance. You always go into bat foric finance when the question comes up as to how islamic islamic finance is, whether it's at forums like that or indeed we were at a round table together last week and I've always admired how passionately you defend this subject. So I mean it's off script a little bit, but first question in in is Islamic finance effectively the same as conventional finance?
Speaker 2:We're starting with a very difficult question. Bismillah ar-Rahman ar-Rahim wa salatu wa salamu ala Sayyidina Muhammad wa ala alihi wa sahbihi ajma'in Rabbish rahli sadri wa yassir li amri wa ahlul uqtam min lisani yafqahu qawli, there is no khutbah, it's just me preparing and opening up about this. I mean, I'll take that outspoken as a compliment from you.
Speaker 2:It is. It is. I hope you took it that way. Yeah, because some people look at it differently, Alhamdulillah. You see, sometimes you have to believe in something and then you start acting upon it.
Speaker 2:So I was blessed in the early years of my career where I focused a lot on Sharia compliance type of work, Sharia audit, Sharia governance, working closely with a lot of Sharia scholars, and I don't come from a classical Sharia background. So you know this intimate experience of like three, four years. It really helped me in understanding I wouldn't call myself a scholar, but it really helped me in understanding you know what is happening beyond just a contract, what are the basis of these rulings. And as I was going through these experiences, I wanted to have some professional qualifications. So I went for a Yofi certification for Sharia advisor and auditor and I didn't do it to pass or for people to call me a certified Sharia advisor or whatnot. I was reading actually the appendices on the back of every Sharia standard to know where actually this is coming from. It's not like you know this is allowed, why this is allowed.
Speaker 1:So I go back and look at the primary text and just just in a personal capacity. It wasn't almost like a career move, it was for your own personal understanding.
Speaker 2:No, it was part of my career and also part of my research as well.
Speaker 1:So, for example, when you say things you're researching, one of the common things is okay, a office standards say that you can invest into a stock if it meets a certain threshold of how much interest it holds.
Speaker 2:You're swaying the conversation too much, but.
Speaker 1:I'm just saying that's one of the things people look up. Yeah, let's spark that Just providing a bit of context.
Speaker 2:Yes, but that's one of the things you really need to understand why it was allowed, on what basis on Sharia it was allowed. So that intensive experience early in my career and before that in my postgraduate studies, where I focused on, helped me to appreciate the work and the basis where Sharia scholars, if you want you know, allow or permit certain structures or products. So later on, you know, in my work, I started again. It was, alhamdulillah, a blessing of time where the business was developing. Then we looked into product development. We actually started working on drafting contracts, operational procedures, looking at systems. People think it's just this piece of paper they look at, but how much work needs to be done to translate that all the way till it reaches the final consumer.
Speaker 1:All the legal proceedings, all the way till it reach the final consumer. All the legal proceedings. I think some people say when you lift under the hood of an Islamic finance deal, the fundamentals are so different from a conventional finance product.
Speaker 2:I mean yes, yes and no, Probably the question that we will park as we go along.
Speaker 1:Let me write down these parked questions.
Speaker 2:Yes, so that's something I do usually when I do a training, when I get a lot of things that will be moving discussions to different directions. I just say, you know, let's put it in the parking lot and we'll come back to it. But yes, you know, there are differences, there are similarities at the same time, and it's really how you approach this, and when you really study and work in this, you'll be able to appreciate the differences.
Speaker 1:Okay, sorry for opening on such a key question of it, but I just wanted to try and get a soundbite of that. So let's go back to your early career, or even before that. Is this what you imagined you'd be doing as a child or when you were at university working in the space. You've had maybe 18 years experience now in Islamic finance.
Speaker 2:I think around 15. 15, okay, yes, you know. It's just like asking someone now who is 20 year old have you ever dreamt of being an AI prompt engineer? Because 30 years ago probably, when I was a child, to be honest with you, the job of an Islamic finance consultant wasn't that popular like an engineer or a doctor or even an economist. So this is not something that was on the table, but it started to crystallize in my early years of the university. I actually wanted to study information technology and engineering, but I met one of my friends and he showed me the thickness of the books they had to study, which all mathematics and algorithms and all of that, and I said, no, that's probably not for me. So my initial feeling that I wanted to study something about economy, finance and accounting. So I moved to that path and as I was, you know, going through my bachelor degree, I felt you know, there was something wrong in this banking and finance and I started reading about Islamic finance and started to dedicate all my research work towards Islamic finance. So when I moved to my postgraduate studies in finance and banking, I did a study of establishing an Islamic index in Damascus Securities Exchange. You were studying in Syria. I was studying in Syria. Yes, I'm originally from Syria. It was interesting because at the time the Securities Exchange was established for like two or three years old, and there was like 20 companies or so. So I put a feasibility study of establishing an Islamic equity index and worked with one of the data providers there. It was a kind of an applied research. Yeah, so that was one of my real exposures to the Islamic finance industry early on.
Speaker 2:Did that could lead to anything? Well, I remember presenting this to one of the investment banks. Yes, and I remember sitting in a meeting. It was a conventional investment bank, so he was very happy with the proposal. He said actually, this is something we can offer to our investors. And then he asked me a question towards the end of the meeting. He said will our bank pass as Sharia compliant? And I said no. I said why should I promote this? So I didn't see the light, but at least it's stored in the, you know, honorary list of studies in the university.
Speaker 1:But on that point, there are many conventional banks that open up Islamic windows.
Speaker 2:Yes.
Speaker 1:How do you feel about that as a business model for conventional banks out there today? Even in this country we had HSBC Amana for the longest time. Lloyd's bank had their own islamic arm yes, do you think that's a viable route in countries like syria?
Speaker 2:interestingly, islamic windows are not allowed in syria as of today really, but they are considering changing this. Okay, now, generally, now, generally speaking, if you think of leading jurisdictions like Malaysia, indonesia, bahrain, saudi Arabia, it's allowed.
Speaker 1:Yeah.
Speaker 2:So what is the objective really, Aribe? When you do anything in the Islamic finance space, You're trying to address, you know, Ariba. You're trying to eradicate Ariba in one way or another. So there are different strategies. You can work from the outside by setting up your own full-fledged institution, or you can work from the inside and start the you know, if you want the commercial war from within. So, technically speaking, strategically, both are achieving similar purpose. And there are, you know, experiences where some banks started as a window and then they converted to full-fledged Islamic banks. I think Bank Al Jazeera is one of them. That was the first full-fledged in the GCC. That's correct.
Speaker 1:We had on the chief strategy officer in one of our first episodes.
Speaker 2:Interesting, yeah, yes, so that was probably one of the first converging cases. Okay, another, I think very recent case we have in the UK was the first converging case in the UK. It was Kuwait, I think, ahl al-United House. Yes, it had an Islamic window, but, to be honest with you, that was due to an acquisition by Kuwait Finance House by Kuwait Finance House and that has led to having a full-fledged Islamic bank. So from a strategic point of view, it's very important. From a Sharia point of view, you're actually helping someone to do tawbah in a sense.
Speaker 1:Yeah, that's very interesting.
Speaker 2:Because I have seen even very recent histories here in the UK where Islamic windows, you know, in a very short span of time they managed to get a substantial percentage of, they managed to get substantial percentage of the business, substantial percentage of the business.
Speaker 1:Do you think that's because the Islamic window has been created to cater directly to local Muslim populations or because the Islamic window itself is actually creating a better product which could appeal to anyone?
Speaker 2:I mean the Islamic windows have some unfair advantages, Really, yeah, If you compare them to a full-fledged institution. Take, for example, branches, no-transcript, 100 branches and they launch these products in 100 branches. You immediately have that advantage when you set up a window from my experience I've set up, probably I've been in projects where we set up windows 10 to 15 in the UK, in France, in a number of African countries, in the GCC this project takes at least one year. I would say One year, yes, one year. People think, oh, just press a few buttons and that's a very good timeline. No, I think that's really fast.
Speaker 1:Yeah, I think that's really fast. That's very that's yeah.
Speaker 2:Ideally, ideally, ideally, or probably more realistically. It's up to two years, but you can do it in one year.
Speaker 1:We've done it in one year. So there's definitely an unfair advantage of a window compared to a new bank starting from scratch, just because of the distribution and the brand name.
Speaker 2:We haven't even spoken about the liquidity.
Speaker 1:Okay.
Speaker 2:Because you are already an established bank, you have access to millions of current accounts funding. So, while a full-fledged Islamic bank, you know they're starting now, they start with their paid-up capital. They have to attract deposits and so on and so forth. So liquidity, outreach, brand trust, you name it. So they definitely have an advantage. You'll see a lot of in a number of jurisdictions Islamic windows have done.
Speaker 1:you know very well yeah absolutely, I mean even in this country. We're have done, you know very well. Absolutely, I mean even in this country. We're seeing people like Maybank they have an Islamic window, you know, habib, habib Bank, ag, zurich, all these others. They're there and they do have these customers which are coming up. I'm just going to pause briefly because it seems Ali is in the building. I think he went completely off script.
Speaker 2:I don't mind, larry, but that's going to take you some time.
Speaker 1:No, it's okay, it's okay. I'm just. It's genuinely what's interesting to me. Yeah, about having someone like you in the room, um, so we'll just continue and Ali's gonna just keep. Just just walk in, it's fine. This is all going to be on camera the uber took you to the studio, not because you told it to take. Come sit down, take your coat off.
Speaker 2:He told the Uber take me to where Areeb is sitting. That's how lawyers function. Unless you show them the text, they will persist on their understanding of the text. We have to give you a special welcome, because whoever will be watching the episode will know that you were missing for a reason.
Speaker 3:Yeah, I know, we did say why Ali is usually quite punctual oh my gosh, no, no, you can't, you can't expose me, I have already you did the whole intro ali, it can be edited.
Speaker 2:It can be you can put it can be, you can put pressure from your dad, from your mom, whatever it takes exactly.
Speaker 1:Let's, let's move on to where we find ourselves today. It's the most common question when it comes to islamic finance, at least in this country. Perhaps it's becoming more, more so in the us, in north america, in parts of europe, but we don't really see this question coming up in malaysia and saudi arabia. The idea of how islamic is islamic finance? The other phrase that is thrown around is that islam, islamic finance, is contextually halal and that it is the best that we can do within the current system. But it is not ideal and were we to go back to the time of the Sahaba, they would not recognize what we're doing as Sharia compliant. So I'd love to hear your rebuttal to that. You know you're famously on footbuzz, which we love and we enjoy, and you're very well known for that. When we told mutual friend of the podcast, omar Khalil, that you were going to be on the podcast, he was like oh, I hope you booked out three hours for which I think is rich coming from Omar.
Speaker 2:But yeah, absolutely, it's very rich. I mean subhanAllah. You see, what does the word contextual really mean? What does it really mean?
Speaker 3:Yeah, I guess just that the implication is that it's only halal as a result of the context in which we operate.
Speaker 1:The lives that we live today, the world that we're in right now, the financial system, which is inherently we haven't welcomed Ali properly.
Speaker 2:I think I don't require for people who know do I want to introduce?
Speaker 3:yourself. Oh okay, well, I'm ali. Those of you who know me know me. Those of you who don't I'm I'm a lawyer.
Speaker 1:Uh, I'm hella legal at kestrel um three-time appear on the kestrel podcast and it's my fourth and yeah, really gonna get stuck in the conversation yeah, but he's also a lawyer who specializes in pensions insurance, but he's also done a lot in Islamic finance and is a student of Mufti Faraz Adham, who appeared on our podcast a couple of weeks back indeed back to the show.
Speaker 2:what really happened is Arib was struggling with me so he wanted another Siddiqui to double down the pressure. I think that was the plan, and you guys know each other as well.
Speaker 1:We should have that.
Speaker 3:Yes, I should say my first introduction to Najeeb was actually on the Majalla course, where you guest lectured for us, I believe, on the topic of Wakala actually, and then Amin Khalil subsequently reached out to you and brought you on board later on as the trustee of the Reba Free Foundation.
Speaker 2:So we can get on to that later on. Well, you see, look at the chain of hair. Like Mufti Faraz has kindly invited me to provide, the lecture. Then I met these brothers, and then one thing leads to the other, and I'm with them on this journey for the Reba Free Foundation.
Speaker 1:I didn't realize. That's how you joined Reba Free, no Got it.
Speaker 3:So we'll come back to Rubber free, but in terms of that, the contextual issue, the great debate Around Islamic finance.
Speaker 2:So you know, the first point I wanted to make is when we talk about contextual, even linguistically, it's about looking at the circumstances, looking at the features, the you know the surrounding environment of something to make an interpretation of it. So the word using contextually, halal, if you try to dig deeper into Sharia, for instance, we have in Sharia, which is the Islamic jurisprudence of rituals, that's by nature, doesn't change largely, like you know, the Islamic jurisprudence of rituals, that's by nature, doesn't change largely, like you know, 20 years. Last time I checked, dhuhr prayer is four raka' it's not going to change. Now there are, of course, some things that are contextual in that, but it's largely, you know, constant. It will remain whatever it is. If you go to fiqh al-mu'amalat right, which is Islamic jurisprudence of transactions, which is human interactions which involve commerce, trade, you know, finance, business, these are ever evolving and if Islam was not contextual in this it would not survive. So fiqh al-mu'amalat, by the nature of it, it has to be contextual. And if you look at one of the sources of sharia, it's urf, it's customs, you know, it's widely acknowledged that you know what people do, you know as a custom, it can be a source of sharia. It's like a precondition, even if you don't agree. Of course, there are sharia conditions for that. For instance, this urf custom needs to be consistent, needs to be accepted by people, you know. So, all these, if you look at it, you know, fith al-mu'amalat in of itself has to be contextual Before we go about, you know, banking and finance and so on and so forth.
Speaker 2:We can take simple examples of things that we are doing today that probably wouldn't be acceptable, you know, 200 or 300 years ago, for instance, a limited company, a very simple structure. What is a limited company? What makes it very unique? It's privately owned, yes, by a group of focus on the name, limited by shares, limited by responsibility, right. So if something goes wrong, you know, it would not touch your financial, personal, financial, as a shareholder, right, unless there's a proven negligence or fraud, which is becoming very difficult with good lawyers. Now, historically, in classic text of Sharia shariqat, or partnerships, or musharakat, they used to be personal liability, fully liable for what you do as a business person, right. But this has changed Now, if you think about it, if Sharia scholars had to make a decision whether we say all LTDs are haram, so Muslims are outside the LTD like, imagine, you know Kestrel would be, would not be an LTD.
Speaker 1:No, no companies would be able to function Exactly.
Speaker 2:Or they'd say you know what? We can use LTD as a structure and we have to put Sharia requirements. For instance, if you are a Muslim owner, you need to make sure you don't take people's money unrightfully. If the business is not performing well, you have to try your level best. Another example for instance, financial rights. They have a certain time where you cannot claim them anymore. I think in some jurisdictions I can't remember the exact legal termally. Please if you can dig it out in your head, like if I take money from you and there is like after 20, 20 years there's a limit where I cannot really come back.
Speaker 2:Yeah, yeah, yes right, but this is in sharia haqq never dies your right never dies. Yeah, right. So that's one example. Think about even stocks. You know you mentioned this example of. You know if Sharia scholars, you know as IOFI, for instance, sharia standards was a standard setting body in the industry. If they have said any company that has nanogram of anything non-compliant will be prohibited. Probably you know Muslims pensions in the West west, investments in the west in public equity will be all probably down to 10, 15 companies probably not even the west just everywhere yes to.
Speaker 1:To counter that, though, some people might say okay, but if we were to be really, really hardline about our stance and say, look there's, the threshold is zero, then that would encourage more muslim entrepreneurs and founders to build businesses that were entirely river free, and we would actually work towards changing the system step by step in that way sorry, I'm playing devil's advocate here look, I mean it.
Speaker 3:We can't say devil's advocate arguments are carter.
Speaker 2:Arguments are definitely valid for discussion but, realistically, muslims today are they leading or following? Let's not fool ourselves. Are we leading or following? We're following changing position from leadership to followership. It takes centuries and generations. So you need something to work as of today and you need something to aim in the next maybe 100 years. So I I can say okay, guys, everyone, every muslim in in the united kingdom, you only have 10 companies to invest for the next 100 businesses until kestrel and many other businesses becomes mashallah listed and then we can all invest in them. Is that in the short, mid term? Is it something we can live on? Is it viable? No, no, no. So they work together. I think the problem sometimes we can be this or that. It's like window or full-fledged, purely Sharia compliant Islam is always about understanding, contextual when people think about it as something like a second class Islam is always about understanding contextual when people think about it as something like a second class.
Speaker 2:Actually, I find it very meaningful because whatever we do in the fiqh al-mu'minah, it has to be contextual. Of course, within the borders of sharia, within the borders of fiqh and this is something not my own words if you look at it, it's actually a legal maxim, legal fiqh maxim. You know that fatwa change by time, place and circumstances.
Speaker 1:Thank you for listening to Muslim Money Talk. If you like what you've heard so far, you might be interested in checking out what we do at Kestrel, the Muslim money app. Kestrel is a service that helps Muslims who want to grow their wealth without having to compromise, whether it's on their belief or user experience or price. I founded Kestrel because of how fed up I was at how poor Islamic financial services were in this country. Often people didn't use them because of how bad the user experience or customer service and indeed, how high in price they were. So Kestrel was the answer to that. If you download the Kestrel app today, it can help you by creating a budgeting plan. Plug in whatever bank account you have and it will create an auto budget just for you. You can then tell us what goals you're saving for, and we'll save towards them automatically into pots and then, crucially, link you towards Sharia-compliant investment and savings products as well. So download Kestrel today and try it out for yourself.
Speaker 1:Now back to the podcast. And is that really the crux of the issue? Because Ali and I were speaking with Mufti Faraz about this and he was very adamant that he feels that it's not the domain of non-scholars to opine on these issues, to weigh in on whether a mortgage is sharia compliant or not. Yes, so that if a scholar has deemed it to be sharia compliant, then it's not for the practitioner, the lawyer or anyone else to come in and question that, unless you've gone in and studied it for 10 years and to become a scholar yourself. Do you agree with that?
Speaker 2:viewpoint A hundred percent. I mean to a certain extent. I think we live in a very socially loose kind of intellectual I would say abilities where people just feel like they can, they have the liberty to give an opinion on each and everything, but opinion in the context of Sharia and saying something that is not Islamic, it falls under something called fatwa. Then you are, it's like you go into the court and saying you know, I think this is not legal, who brought you here? So it's absolutely fine for people to have an opinion, but when you sit in the public, right the first of all, you sit in the public, speak on something that is Sharia compliant or not, and even if you say at the end, this is not a fatwa, you just made it a fatwa. If you say something and there is a very interesting guide, you know because people for me call it a Muslim guide for dealing with Islamic finance or any matter you know.
Speaker 2:First a question are you a scholar or not? You know. If you are not a scholar, then go and look and ask for someone you trust. It doesn't matter who is that person, just go, follow the advice. Then consult your heart. Providing your heart is, you know, hoping that this heart is still you know. I would say, have the purity required, because sometimes our desires move things around. Many people, just before I move that, many people don't know what is a Sharia scholar, and I've seen there is an increased knowledge of self-learning, self-knowledge. But you know Sharia scholars, I think Imam Al-Shafi'i said you know, العلم لا يتعلم من بطون الكتب وإنما من أفواه العلماء. So, and I think there is another saying by another Sharia scholar as well- you want to translate that.
Speaker 2:Yeah, I'll translate that. So, basically, you don't take knowledge only from the books. You learn it from. You know the people of knowledge. Otherwise you will start mixing up things.
Speaker 3:And that's how the Prophet if that was the right approach.
Speaker 2:Allah would have just given us a Qur'an without a Prophet. It was mentioned in the Qur'an. He was a teacher and he taught his Sahaba. You have people, sharia scholars today. So people ask me what is the definition of Sharia? I say peer recognition. Peer recognition, yeah, peer recognition. And you have somebody who is trusted to tell you that this is actually a Mufti. So Mufti goes from a Mufti. Some people are very proud that they have a chain all the way to the Prophet peace be upon him, absolutely.
Speaker 1:So I agree with you on that aspect. I think awareness is one of the biggest issues in Islamiclamic finance awareness for what's out there, awareness for what is sharia compliance or not and a respect and awareness for the sharia process yes, where, how we arrive at fatwas, what a sharia scholar is, the amount of work that has gone into it and you know I'll be the first to admit that until I'd sat down and spoken to mufti for hours, not on that podcast, but before then I wasn't quite aware of what it went into becoming a Mufti.
Speaker 1:Right, it's not part of the Muslim zeitgeist, if you will. That's something that we talk about regularly, but it's kind of fallen out of that consciousness. So I definitely have a new appreciation for that.
Speaker 2:Yeah, and you know the example I told you about Imam Al-Shafi'i he traveled to Medina to learn under Imam Malik right, and then he learned. He traveled again to Iraq, I think, as of today, and he learned under one of the students of Imam Ibn Hanifa. Imam Hanifa, it was Muhammad al-Shaibani. Muhammad al-Shaibani, yes. So these, how, these people who laid down the foundation of fiqh for us?
Speaker 1:No, I definitely I get that like the appreciation for knowledge and how it's created. But no, I definitely get that like the appreciation for knowledge and how it's created. But coming back to the issue at hand, there's something wrong here where you have a public that is so disconnected, for the most part, from these products that people worked really hard to create institutions like banks and wealth managers that were created for the sake of the Muslim public and yet you have Muslims in the UK and in the Western world who don't really understand it, who are now questioning whether it's even Sharia compliant or not. Where do you think Islamic banks went wrong?
Speaker 2:Where Islamic banks went wrong. Maybe let's take a little bit of a journey in the stakeholders' expectations, really. So if you look at the consumer today, you know what they expect from a savings account they want their money to be protected and they want some return Sure, Right. If you look at a home finance product, they want, you know, an ability to own their home in certain amount of years and they have an expectation of paying some money. So I think, from the starting point again, it goes back to the point of following and leading.
Speaker 2:So Islamic finance is a reflection of the status quo of us today. It did not start largely as something creating the trend. Even if you look at green finance, it started conventional finance, then we started picking it up. Look at ESG it started conventional finance, then we started picking this up. You know there are some exceptions. By the way, there are very interesting experiences, like Khawat in Pakistan, if some of you heard of it, which is eventually creating a proper financial institution on the basis of interest-free loans. The interest-free loans, the interest-free loans, yes. And that capitalized on the spirit of cooperation among the community, where it has been able to sustain itself through donations, not through interest payments. So that's something unique. That's something a leadership example. But these are exceptions, but the rest of it really is. You have a model that everyone is comfortable with it and they want a sharia compliant alternative. That doesn't mean you fulfill or you reach and meet every single, you know expectation of every stakeholder. You're starting with a ground where everyone is expecting something similar.
Speaker 1:So so let me put this out to you then. Do you think this idea of how islamic are islamic banks or islamic finance in general? Do you think this question mainly comes up because of the islamic banks? In the uk at least, they're more expensive than conventional alternatives when you look at islamic mortgages, and the customer experience and user experience of is usually quite poor. Their apps are not on the same level as the likes of Monzo, and I'm sorry for anyone listening, but it is true, right, and Ali talked about.
Speaker 1:there's a famous example where poor Ali was in a restaurant trying to pay for some food and his debit card wasn't working and in the end they just said take it for free because it was.
Speaker 2:At least he got something for free, Ali. That's the benefit of having an Islamic bank they.
Speaker 3:At least you got something for free, ali. That's the benefit of having an Islamic background. They knew they were trying to encourage sadaqah. Yeah exactly.
Speaker 2:We have always to look at the positive side of things.
Speaker 1:But my point is Do you think that these hurdles that come up Precipitate people then questioning and saying, oh, it's not really Islamic anyway, and that's why I'm going to go and use X, y and Z conventional products? Do you think that's the main reason that people raise this? Because we don't see these debates raging in in malaysia or saudi arabia or bahrain, or it seems to be a uniquely uk issue which is now like traversing the rest of the western world. You know, I saw a. There's a podcast I'll find the clip, armor and we can put it in where it was. Just some comedians talking and somehow they came up with islamic finance and and it's watched by like hundreds of thousands of people and one of them just said oh, it's basically just interest and they've relabeled it as profit yeah, yeah, I've seen that yeah, how have we?
Speaker 1:how have we gotten to this point?
Speaker 2:yes, I mean, there is always things we have to acknowledge again. So it's not all perfect or rosy and as people think it's. You know, we reach where we want to be, but unless you have that exposure at different levels. So if you look at legislation, if you look at regulations, if you look at everything, everything is against you and then you are starting to work from that level and then all the way to consumer population and understanding and what's going on really in this particular field.
Speaker 2:I'm not going to sit here and act like the defender of Islamic finance or banking. I have one concern really, you know, and that concern is to making sure there's an alternative that someone who is trustworthy said it's Sharia compliant and that's. You know, in the day of judgment, it is very critical, should be for all of us, you know, being able to have or create products banking, non-banking, whatever that people of knowledge say there are Sharia compliant. Beside, beside this, I'm not too bothered whether this perfectly fits with. Whoever thinks is this is the best way of doing it. We really have to think of the bigger purpose we want. We have people Most of Muslims, I think, now in the UK are indulging in riba-based mortgages and whatnot.
Speaker 1:I think you.
Speaker 2:Kestrel have done a lot of research on that.
Speaker 1:Yeah, the vast majority, even though in a survey that we did recently, we interviewed over 3,000 people, 95% said that they desired an Islamic financial product. Mortgages were the number one thing they desired. After that it was student loans, after that savings accounts current accounts.
Speaker 2:Going back to your point of complaining, I talk a lot with people with inside banks and they told me they have never received a complaint, at least. I'm speaking about five of the top institutions, largest institutions.
Speaker 1:Islamic banks in this country.
Speaker 2:Let's call them Islamic banking providers, because it's very easy to start knowing them. But they told me they rarely receive the Sharia compliance complaint about their saving products. That's the thing because… these saving products are paying the best rates in the market, the savings products absolutely.
Speaker 1:I mean many of our shareholders who are not Muslim.
Speaker 2:they bank with the likes of Gatehouse and Orian because they're paying out some of the best rates and you know I'll probably link this later on to your question about the branding of Islamic finance. Yes, yeah, but the thing is, if I speak to people who are leading on these Sharia issues, issues within these financial institutions, they don't receive complaints about that. The only complaint comes with, which is the cost of the mortgages, which has loads of issues, you know, related to scalability to access to funding.
Speaker 2:Like simple example, a bank today you know for the last, probably 15, 16 years, islamic Bank of Britain started maybe 20 years ago, I think. Just three, four years ago they started to have access to a high quality liquid asset by the Bank of Britain. Started maybe 20 years ago, I think. Just three, four years ago they started to have access to a high-quality liquid asset by the Bank of England, which is Sharia Compliance the alternative liquidity facility?
Speaker 2:Yes, which is only open for banks, while conventional banks have loads of options. Imagine there is 300-plus conventional banks, so imagine how many treasury counterparties you can deal with liquidity while you have five, six full-fledged banks and the rest are Islamic windows.
Speaker 1:So which, we have to say, a huge credit to ash and and his team over at absolutely at the Bank of England. Yeah, we're setting up that, that facility, nothing like that. You'll be so you'll be surprised.
Speaker 2:A lot of Muslim majority come to still don't have it. Really I am working, you know, with a number of jurisdictions in the last five years helping them in doing something around these lines, like Central Bank of Oman have done this a few years ago as well. We've worked with them on that project. So the actual infrastructure is not visible to people. What they see is just the very, very final product.
Speaker 1:Yeah, and I think that's it right. Like people look at the final product and when they're not fully happy with it, they then find a way and some sort of loophole and find a discussion as to why it may not be Sharia compliant. I think that's often what happens when we speak to the public, because, even though 95% of people said they desired this product, fewer than 3% of them were actually engaging in existing Islamic products today products today. A big part of the reason was they just didn't know what was out there. Yeah, even though these savings accounts like they, pay really good rates of return today, um, most people didn't know that there were such thing as sharia savings accounts in this country.
Speaker 1:Awareness is a huge issue, so that comes on to, I suppose, the next point does islamic finance have a marketing problem? And Mohammed Parajah made this good point a couple of episodes ago. He thinks that when Islamic Bank of Britain called itself Islamic Bank of Britain, they immediately cut out 95% of the country who might otherwise have just looked at it as a good product just for anyone, for anyone to use, and they thought, oh, it's Islamic, it's not for me. And then, when they started going after Muslims, you're dealing with a community who, unfortunately, for a number of reasons in this country, is more financially illiterate than the vast majority of other religious and ethnic groups here, so it was almost like cutting off their legs before they even started. It's also contextual.
Speaker 2:Yeah, because a country like Saudi Arabia? It will be an advantage. Sure, of course, it's always a question of context. To be honest with you, Generally speaking, we need to look at what the French call the days and death. The reason for the existence of Islamic banking and finance is to serve Muslims. Right, Of course? Is that the reason For me, if you think about the starting point, we're not saying it's limited to them. Why did it start In the first instance?
Speaker 3:In the first instance in this country.
Speaker 1:But I suppose the idea of it Ali said it, you said it on this right. Do you want to? Yeah, yeah Well.
Speaker 3:I guess it was that. Yes, that is the case, that obviously, primarily it is for Muslims, but ultimately the system itself Under that is one which you know is genuinely just and fair. You know to all, and so, ideally, what we want to try to reach is a Economy where this is can be accessed by, you know, by everyone.
Speaker 1:You know, like if Islamic finance was done properly, Then the last few financial crises would never have occurred. The subprime mortgage crisis would never happen. You can't be bundling up debt and selling it to other people, so should we be marketing it as just a better system?
Speaker 2:You know, you raised a very important point and there is actually a lot of research evidence that shows Islamic banking, despite all the criticism they get, they were more resilient during financial crisis. Yeah, they were more resilient during financial crisis. Yeah, they were Because of their lack of involvement in all these toxic and exotic products of derivatives and so on and so forth, at least in their complex. Now, what I mean? Really going back again in terms of branding of Islamic finance and banking, it really started to serve a market that has been financially excluded, even outside the UK, even in Muslim countries.
Speaker 2:The fact that we call Islamic banking Islamic doesn't mean it's limited to Muslims, and this is an awareness issue. Just like we have to work on awareness with Muslims, we have to work on awareness with non-Muslims. Like we cannot change the name of Islam so everyone accept it, it's Islam and it's open. It's, you know, a mercy for all mankind. So, essentially, if we think, okay, you know what? Maybe because of our context today, that Islam is looked at as something in a negative eye, that we want to go away from it If we were in a different position. Islamic bank of it and go on.
Speaker 2:Oh, wow, these Muslims are doing great, we have to start a look at this I'll give you an example On my recent trip to Ethiopia we were doing a project there with one of their government entities. Perception of Muslims among the non-Muslims are people who are tech savvy, who are business savvy right Because they were deprived from the financial system so they had to look for other alternatives. So when we were talking about financial inclusions, a lot of the leadership in government saying these guys were out of the system, but they're leading in business, really yes.
Speaker 3:Okay.
Speaker 2:See the perception of that. So the problem is not the branding as such, it's how Muslims are faring in that society. Look at the Rayyan Bank today. You can get some of their figures. They said around a third of their customers and that's two or three years ago a third of their customers are non-Muslims.
Speaker 1:Yeah, I can believe that.
Speaker 2:Yeah, nothing stopped these people. When they looked at the Rayyan Bank and they've seen Sharia compliant, they haven't stopped saying, oh, this is not for us, that's on their savings products.
Speaker 2:They're saving the product, some people will argue, because it's given the most return. Even they have done some innovative product, which is home finance for expats. A lot of high street banks were not daring to touch this, of course, so they went for it. A lot of non-Muslims living in the GCC wanted to buy a house. They found an option. So, really, for me, islamic branding as Islamic banking or halal banking. This is a debate I've seen in many countries around the world. By the way, some countries call it participatory finance, really Like in Turkey, in Nigeria, I think, in Ethiopia as well. In the banking side In Ethiopia and Nigeria, they call it interest-free finance, which is another misleading.
Speaker 1:Yeah of course.
Speaker 2:Because people thought when they went for interest-free finance, everyone thought that's like interest-free loans, so cost-free loans, and that's one of the issues of perception among Muslims as well when they see Islamic bank or that's been a charitable institution. So context plays a big role. I don't see personally the reason we need to change it as an Islamic finance. But we need to capitalize more on what we bring on the table than just focusing on religious sentiments and emotions, because that's how you appeal to non-Muslims, it's not by calling it Islamic or whatever. It's what they see. Like the Rayyan Bank, they have seen real benefit. They don't care what you call it.
Speaker 1:A good product is a good product. Yes, like what?
Speaker 2:Brothers of Fayda is doing. You know you'll, it's Sharia compliant. Sharia is clearly mentioned there, but you know it's a concept that is appealing.
Speaker 3:Yeah, yeah, yeah yeah.
Speaker 2:So I would actually be More favoring of Keeping it Islamic, because I want the Muslims To know it's Islamic and I want the non-Muslims, if they get a good experience, to have a good you know feeling of Islam. So it adds more responsibility, whether you want to call it Islamic. Or you want to call it Islamic, want to call it halal, that's another story. But you need to flag it to the non-Muslim, as you mentioned now people are struggling to find these products.
Speaker 1:I do wonder how Islamic finance maybe would have flourished, had an event like 9-11 never happened. You know, because I don't know we're old enough. I don't know we're old enough. I don't know if you are Ali that we remember. I remember a time where people didn't know what a Muslim was in this country, or they didn't know what halal food was in certain countries.
Speaker 3:I remember pretending to be a pescatarian so that I didn't have to explain why I am not having meat in school.
Speaker 1:Yeah, I do remember that as well, that was like 1999, 2000. Yeah, that was a very common occurrence, Whereas now everyone knows what a Muslim is, whether they really know what a Muslim is. They've heard the name, they've heard the word. So I guess there's an argument to be made that we need to reclaim our name and our heritage and our in-brand.
Speaker 2:Absolutely. I firmly believe that we have to embrace the name and we have to make it work for everyone. Yeah, yeah. It's not like we shy away from the name, so it's Islamic banking and that's what it really means. It's Islamic finance, and that's how it will help everyone.
Speaker 1:Very interesting. We'll have to make like a compilation episode showing Najib's view, Muhammad Paraj's view, Mufti Faraz's view yeah, what Mufti.
Speaker 2:Faraz said.
Speaker 3:Well, he interestingly said that, look, we call it Islamic finance. It does need to retain that name insofar as, at the very least, people need to. It needs to communicate what it is actually trying to do, and if you don't even call it Islamic, then it's going to be confusing to Muslims as well.
Speaker 2:So there is like a logistical purpose of it as well, because that's the reason for it to be.
Speaker 1:In the first place yes. I mean when we first started Kestrel I always tell this story, so sorry for the listeners who have heard this a few times, but kestrel is just the name of a bird, it's nothing inherently islamic. And the idea was oh, let's capture everyone. But bizarrely, we really struggled with muslims customer growth yeah, in the early days, because muslims were coming there and not seeing anything that was targeting them so they weren't signing up.
Speaker 1:Non-muslims were coming there and seeing like the slightest hint of halat, they'll see like oh yeah, the sharia approved in the terms and conditions, and then they would. They would run a mile.
Speaker 1:So we were kind of becoming no one to nobody in our effort to become everything to everyone so then we were like look, let's, let's become kestrel the muslim money app, double down on on our heritage and say that we're built by muslims for muslims, um, for this purpose, and that's why we we did that at the time, but it does. I do get like. Muhammad parash's point really struck a chord with me where he said in order, if our real intention is to scale and grow this industry as quickly as possible, then why let that name get in the way and trip us up? Why not focus the conversation on, rather than it being, inclusivity and participatory finance? We change it, change the discussion a little bit to foreign direct investment and he wrote a great paper on this as well that if we appeal to governments and legislators and and regulators and say that this could be an incredible way of enticing foreign investment into this country, then perhaps more people in places of power would get behind Islamic finance.
Speaker 2:Well, I can't agree more with that. This is something I do for a living. Yeah, of course, because we work a lot with governments. We worked, I think, alhamdulillah with 40 plus governments Whoa, you know in Africa, in Asia, and we deal with jurisdictions where they are not Muslim majority. And you know what I usually do in these presentations.
Speaker 2:Maybe some of the people who would see they will know remember I actually take, you know, a video of David Cameron in the world Islamic economic forum when he is saying never again should a Muslim in the UK feel unable to take a loan simply because of their religion. Never again. So he talks about financial inclusion. I remember that and he said the message is simple. I was sitting there in the audience in 2013. 2010. 2013,. Yeah, he said the message is simple Britain is a country that welcomes your investment, values your relationship and open for all and would not discriminate anyone. So I put this in the front, for instance, of a government in kenya when we worked with them. It's a majority non-muslim.
Speaker 2:I said look, david cameron is saying islamic finance is not about religion. It's about financial inclusion for your kenyans, muslim kenyans. It's about foreign direct investments. When you build the infrastructure, you will have a kuwaiti bank coming and setting up. You will have an indonesian investment company investing in this. It's also about building bridges and economic ties. So boosting financial inclusion, attracting foreign direct investments, broadening the economy, deepening the financial sectors, creating more opportunities for everyone.
Speaker 2:So this is Islamic finance when you don't want. That's why I said, focus on the economic values when you talk about Islamic finance, not only about the Sharia emotions and sentiments. When you talk to everyone, when you talk to Muslims, then you can double click on that and say what does it mean to be Sharia compliant? And how can you differentiate? Because sometimes for many people they don't see on the top surface what makes the difference, the economic difference, between a conventional Islamic product, like as simple as an Islamic savings account. They don't really see it. But if I sit down and go through with you on these differences, you will realize. But for them I put the money, I get back the money with a return.
Speaker 1:So let's do it right, so what is the difference between an Islamic savings account and a normal savings account? One is labeled profit, the other one is interest.
Speaker 2:Yeah, so one would say you'll go. I think I've heard this joke from one lawyer. He said you'll go to the document. You put control and F search. Put interest, replace profit, replace all the job is done.
Speaker 3:No, no, no no, I repeat that.
Speaker 2:We have a lawyer who is informed, who has never done that before. So let's take a savings account. Yes, first of all, contracts. Contracts are of key essence in Sharia In the fixed term. Let's take a fixed term deposit. Conventional sense, it's a loan. Loan contract in Sharia is protected for social purposes. You know Qart Hasna I think it's called in Urdu, in Arabic, qart Hasan. You don't use that contract for business, qart Hasan. Interest-free loan is for social cohesion, for people to support each other, with absolutely no expectations of getting returns. So Sharia protected that contract when it's not option. Now you have to move to a different contract. So, while the fixed-term deposit is an interest-bearing loan, the contract of deposit, for instance in the UK, is majorly based on a structure that I came to the class of. You know, al-majalla. It was an investment agency arrangement.
Speaker 1:That's good Known as.
Speaker 2:Wakala, yeah, wakala. Now I was explaining a few days ago this to a lawyer. You know an English, non-muslim lawyer. He said actually this takes the product completely off banking. Yeah, regulatory space.
Speaker 1:It's an investment.
Speaker 2:It's an investment, yeah. So he told me how can we navigate this? So I said okay, there are still areas that we need to look about. If you just ask a lawyer, changing the contract does not mean anything. He will just be laughing. He said that's what we do, so that's just one thing. But then you look at the nature of return Because you change the contract. So a loan with excess on it is interest. An investment agency, right where you have a fiduciary responsibility, you generate profit. You know the capital is not guaranteed contractually. If you contractually guaranteed, it's a problem. And that's one of the issues we have in the UK where savings by banks. They have to be protected, they have to be guaranteed the financial services compensation scheme so people don't know this.
Speaker 2:But if they read the terms and conditions say we as a bank have to tell you that we will guarantee it, but if something goes wrong, our Sharia scholars say this is not Sharia compliant.
Speaker 1:So if an Islamic bank offers you a fixed deposit but by law they have to provide an FSCS guarantee to it yes. Is there not an issue of Sharia compliance here?
Speaker 2:I think this is one of the reasons where Some scholars in the early days said we cannot work around this. Some scholars said, no, we have to put a disclaimer. Reasons where you know. Some scholars in the early days say we cannot work around this, some scholars said, no, we have to put a disclaimer. Sometimes you have a sharia problem that would not trigger until you have it. So you had an option either we do these products or because the regulators were very firm about this. So if the minute you remove the unconditional guarantee, it will become outside banking completely. We cannot accept that. So you have two options Either we have a banking savings product, with this caveat that if things go wrong, that becomes a Sharia issue right.
Speaker 1:So you mean, okay, we have this clause in there, but, to be honest, unless the bank goes under, or something crazy happens, sort of great macroeconomic event, then we don't need to worry about it.
Speaker 2:That's the concession that sometimes Sharia scholars need to deal with In other jurisdictions you don't have them Like, for instance, in Bahrain.
Speaker 1:Yeah, there's no FSAS.
Speaker 2:They don't have it. Even if there is a protection, there is a Sharia. By the way, we've done something similar to this protection scheme, but based on Takaful cooperation for the Central Bank of Oman. So that is a different structure. You can achieve that objective, but completely in a different way. So you see, the capital is not guaranteed, the return is different, the contractual relationship is different. Now, where you place the funds is different. Because a conventional bank, they can go and put your money in gambling, they can finance a pub locally, they can do whatever they want. They have no restrictions In Wakala, they have restriction on where this money will be used. So when we talk about Islam or where money and the purpose and so on and so forth, that's one of the selling points for many Islamic banks, where they say you know, it's focused on doing the right things.
Speaker 1:Yeah, some way of enriching the community around us as well.
Speaker 2:And on top of all of that you have the Sharia governance. So you're creating that system at the institutional level, where you have scholars reviewing, you have Sharia orators. So it's not like a rubber stamp like some people think. Oh the Mufti just and that's it. You have people who are working on day to day answering questions. And end of year come that's something I do with financial institutions we come to the year end. We challenge them on what they've done. If they have made a change in one of the terms and conditions, we'll go back and see is this Sharia compliant? Did you get an approval from the Mufti on that? We look at their system, you know. I remember we're looking at one banks and they have.
Speaker 2:There was a case of early termination of a deposit. Did you give them profit? Right, because in sharia if the client terminates, you know you cannot first of all take a penalty, like you cannot take out of their capital right in fixed-term deposit. They may do it like you deposit 1000 you want, after one month to terminate, they will take 90 pounds or 50 pounds. Some of them may right, or some of them will say you know what, we will reduce, reduce your interest rate or we will do something, you have to give them profit. Some conventional institutions will say they will give you nothing. This is not acceptable. If you use their money and you've generated profit, you have to give them something. They do the return that you give them. Now, what you will give them, is now negotiable because they have not fulfilled their obligation.
Speaker 1:They've broken the clause.
Speaker 2:Yes, so, instead of, let's say, expected profit rate of four, maybe you say, okay, you want to take the money? Now I'll look at the six-month rate. Because you stayed for seven months, I'll give you 2%. You're happy? Say bismillah, you take your money.
Speaker 3:I just want to just quickly weigh in on that as well, because I don't know if I told you this, najeeb, but financing, uh, in my day job at cms and what struck me during that in terms of structuring it contractually, was actually just genuinely the difference, the real substantive difference, between that product and just a conventional financing arrangement, a conventional facility agreement, just like the interaction between you know, we had a master baccala agreement which was documenting the actual appointment of the agents and the fiduciary duties, and then you had a investment agency agreement, which is more, more on the mechanical side and they were interacting together and you had like the process fee, that's it. And I was just thinking to myself like there's no way that if anyone read this in good conscience that they would say, oh, this is just interest under a different name, like it's fundamentally structured differently.
Speaker 1:Is that the same for mortgages?
Speaker 2:That's probably what they will say, because they haven't read the contract. But they will look at the end outcomes Exactly. It's always like you know okay, what is the end? What did I do? I gave them money, they gave me. If you use that mentality, you know everything in your life can be like the same.
Speaker 1:Everything. To be fair, the debate doesn't really come up around savings accounts as much. It's more around the mortgage, because I think that's where you're that's, that's.
Speaker 2:That's another shakshuka. I'm happy. I'm happy if you don't, if you want to go for like three hours we don't.
Speaker 1:Unfortunately, we've only got 10 minutes. We have someone covered the topic on other I have many times.
Speaker 2:We have many times I have I don't mind to do a five minute on that, because that's something also that has a lot of it in the background. Yeah, if you want, we can spend two, three minutes.
Speaker 1:Let's do a couple minutes on it because that's probably one of the most controversial things but people don't understand it for sure, and I think that's it. When you look under the hood of a conventional mortgage and an Islamic mortgage, many people just say, well, it looks like the same, except the Islamic mortgage in this. You know what's?
Speaker 2:going on. If it was cheaper, would anybody would complain, no one would.
Speaker 1:I don't think so.
Speaker 2:I really don't think so like do you think people would actually go and buy a more, more you know expensive option because they were not comfortable with an Islamic option? Like you have two Islamic options no, I don't think so yeah, somebody would say okay, the cheap option is not too Sharia compliant like a very, not too sharia compliant like very.
Speaker 1:It's the pizza express halal chicken problem. Pizza express, it was. They were outed, I think, by daily mail was the best part of a decade ago that all their chicken was halal. I don't know if outside is the right word no, but they were.
Speaker 2:It was like an expose. This is off the record, right? No, I think it's public. It's public off the record what you're doing now.
Speaker 1:It's in we'll keep it in. But yeah, they were. They were outed as having their chicken as halal and there was a. There was a backlash from call them what you will, far right, whoever. Oh, you know, not my chicken, not my pizza express. You know all of this and um, but it turns out it was just a cheaper product, so why wouldn't a restaurant go?
Speaker 2:yeah, for the same the same thing where somebody was saying his son becoming radical because he ate halal chicken, or it's a different story. What I'm saying is a serious thing. I've read once, really, there was a guy who was, you know, his mom or dad complaining to the police that he's been eating a lot of halal chicken. He's becoming more, you know, like radical. Got to watch what you eat.
Speaker 1:Yeah, you are what you eat.
Speaker 3:Anyway, on the mortgages thing, before you dive too deep on the mortgages, I do want to touch, because we sort of touched earlier on. Okay, yes, muslims in the UK have these kind of criticisms, even if they're not scholars. Muslims in Malaysia or other jurisdictions which are even just marginally majority Muslim majority, they don't right, even if the product is exactly the same. No, they do, they do, they do and there's debates.
Speaker 2:Yeah, but not the same debate, that's something you can do online if you want.
Speaker 3:Okay, they have different debates.
Speaker 2:Yes, but look, awareness is. I'm telling you this is something we've done in 50 plus countries, but awareness is definitely a problem. But countries like Malaysia and Saudi Arabia, it's much less than others because they have matured. It took them time. People talk about Islamic finance being in this for 50 years, but that's when the first ever experience was started down in Egypt or Dubai. It's not like in the UK.
Speaker 2:The first proper, I would say, experience of Islamic finance was the Islamic Bank of Britain, which is like 20 years ago. Forget the first five years where we were struggling. 20 years ago you would say that was the first proper. Before that there were just a little bit of small transactions for high net worth individuals and stuff. But Islamic Bank of Britain was the first experiment for retail. Before that the transactions were for this guy from the GCC who wants to buy a property, maybe from a guy in Pakistan or Bangladesh who wants to buy a house in London. They were very private banking type of products probably before that. But the first actual experiment of retail banking, islamic banking, even Islamic finance, was the Islamic bank of Britain and around this time there was Al-Buraq and HSBC Amana. It's in this period right. So around 20 years, 20 years of time, more or less, and even with that, to be honest with you it was very basic, would you say.
Speaker 3:it's fair, then, to say that the reason Muslims in countries like majority and Muslim majority jurisdictions have different types of debates rather than fundamental debates around the Sharia compliance of the products is simply because the economy is more developed in this space, rather than it being because we're somehow more skeptical inherently here in the UK or we're somehow more spiritually rigorous. Do you think that that's fair?
Speaker 2:I think that's a very bold claim to make, but in general, I would say, you know the issue of I'm speaking of experience, alhamdulillah, in working in 50 plus countries. You know, in our company we worked in 60 plus jurisdictions actually, so I didn't manage to work in all jurisdictions, wow. So in IFAS, basically, basically, one of our first key issues that we observe is the awareness and among the community, it's always there, right. So the issue of awareness of Islamic finance really Islamic, but awareness. Once you are aware, you adapt, once you update, you consume. So there are different levels. So you might have people in Saudi Arabia who are aware this is halal or haram and they adopt and consume. Maybe they are not aware of the fundamentals of it, but you will not have.
Speaker 2:You know, I think what is unique in the UK now is not Islamic finance or halal or not. It's Islamic banking versus the rest of it, which is, you know, something that has been happening for the last few years. And simply because you know, islamic banking started what we call Islamic finance in the UK. But then in the last few years, there was a lot of fintech movement and then people started to debate, which is, you know, a fair debate. You know how these things would work together. Is this more Sharia compliant or less? And sometimes, to be fair, there were very good arguments made. Sometimes things went off the record. That kind of debate I haven't seen in any other countries, where people say this is Haram and this is Halal. That's unique to the UK and it's driven by the emergence of new FinTech. Banks have never indulged in this conversation. You've never seen an Islamic bank Going and saying what the FinTechs are doing is less Sharia compliant and more Sharia Banks are focused on what they are doing.
Speaker 2:But it was something unique to the UK which I haven't seen other jurisdictions. In other jurisdictions you will see people not aware is this Sharia compliant? Whether it's a bank, a microfinance company, an insurance company, a fintech, all of them would have legitimate question about whether this is Sharia compliant or not. But also, I think, being in Europe and the UK, people are more, you know, trained, even in their education, to be more critical. Sometimes this play a role. When you are, you know, nurtured, maybe in a Muslim majority country, you get more acceptance of okay, this Sharia compliant. There are people of knowledge who said this Sharia compliant. I should stop there. So that may play a part.
Speaker 1:The trust in the fatwa. Yeah, you have centralized bodies.
Speaker 2:Like, for instance, when you have in Indonesia, you know, the central council, set up by a central bank, saying this is Sharia compliant. You have a governance at a national level, while in the UK, if you have individual scholars working in different places, that may lead to issues. But again, if you remember when we discussed the Muslim guide of dealing with these issues, people have to understand difference of opinions is not a crisis, it's actually something good. Ibn Qadamah Rahimahullah said اجتماعهم حجة قاطعة واختلافهم رحمة واسعة. So their consensus is a conclusive evidence and their differences are expansive mercy. So we should look at it this way.
Speaker 2:Yes, you know, go and look who approved this product. If you're happy with the people who approved it, بسم الله, product. If you're happy with the people who approve it, bismillah, use it. If you're not happy, ask the people who are happy with them. Make sure you approach the people who you trust, consult your heart and say bismillah. There is difference of opinion. Let the Sharia scholar deal with that difference of opinion and celebrate it, because the difference of opinion gave us all these beautiful, you know, school of thoughts, all these differences of understanding how Islam, you know I've heard once, islam is like water, you know, whenever it goes, it can survive and it gets you know it can accept the colors of different cultures and different surroundings. So I think that's very important to keep in mind when we deal with Sharia matters.
Speaker 1:MashaAllah. That's a beautiful way to finish because unfortunately we're out of time. Yeah well, well, we went there was so much more we could have gone into, I feel like, about the future and your work with the River Free Foundation and indeed with IFAS, but I feel like it warrants probably a part two. So unfortunately, I think, najeeb, we're going to have to wrap up there, but thank you so much and Assalamualaikum, assalamualaikum, oh, but before we, so much and As-salamu alaykum, as-salamu alaykum.
Speaker 1:Before we wrap up, is there anything you'd like to say to the audience, any parting message?
Speaker 2:I think I've probably done that piece of advice, but generally speaking, we should all think of what we are accountable for. So sometimes it can be very overwhelming to think, oh, the entire financial system is riba based, everything is against us, the odds are not in our favor. Let me use the cheapest product in the market. Allah would not ask you about the financial system. Allah will ask you about your current account, about your savings account, about your pension pot, about your home finance product. This is your responsibility, and then leave the rest to the hands of people of knowledge, because Allah mentioned in the Quran as the people of knowledge if you do not know. So this is our responsibility individually. This is what Allah will ask you for. You will not be asked about the central bank reserve and fractional reserve bank, and that's not your business. It's the Shukriya scholar who's looking into this. They will be answered, you know fromah, and for that particular input I think that's my parting message thank you so?
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