Banking in Islam – II

I.A. Farooq

If we make a deep probe, it coincides and appears as direct answer by God as having accepted prayers of Ibrahim (AS) that he begged of God while obeying command of God to leave his son and wife in Makkah. These trade routes then get linked up to other trade routes on the face of this earth connecting the then known world. These customs of trade followed a process called Bai allowed by God. This was based on cash or credit and later developed to be supported by Modarbah or Musharkah for expansion or to suit events and circumstances. In this journey, riba also entered the scene and gradually became most important factor. As Islam spread in Makkah and Madina, God sent his message through his messenger (PBUH) to leave this practice.

The finance system of Islam was trade and agriculture. With the coming into existence of the state of Madina the following components appeared on the economic scene to support and sustain expansion of the Islamic state under the Holy Prophet (PBUH).

Bai, Agriculture related professions and produce

Addition of Modarbah, Musharkah, Amanat

Further addition of sadqat, ghaneemat

Further addition of Zakat, voluntary contributions

Setting up of bait-ul-mal

Regulation of functions of this institution by divine order

Regulation of trade and commands to eliminate riba

Expansion of state of Madina to the whole of Arab

Total prohibition of riba

Responsibility of Ummah increased to the end of time and space

Completion of religion, its codes in all respects

Death of the Holy Prophet (PBUH).

The writer is an ex-Advisor Banking State Bank of Pakistan

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