Editing Islamic banking and finance (section)

====Imitation of conventional finance====
A number of scholarly supporters (such as Taqi Usmani, D.M. Qureshi, Saleh Abdullah Kamel, Harris Irfan) and skeptics of Islamic banking (Muhammad Akram Khan, Muhammad O. Farooq, Feisal Khan, Mahmoud El-Gama, Timur Kuran) have complained of its similarity to conventional banking.

Taqi Usmani argues that the industry has "totally" neglected the "basic philosophy", undermining its own ''raison d'être'';<ref name="IIFTU1998:166">[[#IIFTU1998|Usmani, ''Introduction to Islamic Finance'', 1998]]: p.166</ref> so that non-Muslims and the Muslim "masses" have now gotten the impression that Islamic banking is "nothing but a matter of twisting documents ...."<ref name="IIFTU1998:166"/>

This has happened first by the sidelining [[Profit and loss sharing|risk-sharing finance]] in favor of ''[[murabaha]]'' and other fixed-markup financing of purchases,{{sfn|Khan|2013|p=303}} and further by distorting the rules of that fixed-markup ''murabaha'' (see also '''Ignoring required commodities''' below){{sfn|Khan|2013|pp=xv-xvi}} to effectively provide conventional cash interest loans with "profit rates" that follow conventional interest rates,<ref name="IIFTU1998:165-8">[[#IIFTU1998|Usmani, ''Introduction to Islamic Finance'', 1998]]: p.165-8</ref><ref name=Qureshi_(2005)/><ref name=Fadel_(2008:656)/>{{sfn|Khan|2013|pp=xv-xvi}}{{sfn|Khan|2013|p=400}} the "net result" being "not materially different from interest based transactions".<ref name="IIFTU1998:165">[[#IIFTU1998|Usmani, ''Introduction to Islamic Finance'', 1998]]: p.165</ref> (Another violation is the use of ''ijarah'' (leasing) without the "lessor either assuming "the liability for his ownership" or offering "any [[usufruct]] to the lessee".)<ref name="IIFTU1998:167"/>

In March 2009, Usmani,<ref name="FosterMM2010"/> (as chairman of the board of scholars of the [[Accounting and Auditing Organization for Islamic Financial Institutions]], or AAOIFI), declared that 85% of Sukuk, or Islamic bonds, were "un-Islamic".<ref name="ab-22-11-2007">{{cite news| title=Most sukuk 'not Islamic', body claims| date=22 November 2007| url=http://www.arabianbusiness.com/most-sukuk-not-islamic-body-claims-197156.html#.V4KDEtIrLq4| access-date=10 July 2016| agency=Reuters| publisher=arabianbusiness.com}}</ref> 
Others (Hassan Heikal) have also criticized the authenticity of sukuk.<ref name="Corbett-2007">{{cite web |last1=Sergie|first1=Mohammed Aly|last2=Corbett|first2=Christina|date=17 August 2007|title=Banking on piety |url=http://www.arabianbusiness.com/banking-on-piety-57460.html|website=Arabian Business|access-date=9 November 2017}}</ref>

*Other pioneers of Islamic banking, have called it "a labeling industry" (D.M. Qureshi),{{#tag:ref|at the First Pakistan Islamic Banking and Money Market Conference<ref name=Qureshi_(2005)/>|group=Note}}<ref name="Khan_Bhatti_2008:73">Khan M. Mansoor and M. Ishaq Bhatti. 2008. ''Developments in Islamic banking: The case of Pakistan''. Houndsmills, Basingstoke: Palgrave Macmillan, p.73</ref>
*or complained that the industry was "busy searching for ways to make it ''similar''" to conventional banking, when it should be demonstrating its differences ([[Mohammad Najatuallah Siddiqui]]).<ref name="Siddiqi_(2006:8)">Siddiqi, M.N. 2006. Islamic banking and finance in theory and practice: A survey of the state of the art. ''Islamic Economic Studies'' 13 (2) February p.8</ref> (a Sharia committee at one bank – Lariba – even issued a fatwa in 1990 stating "no objection to using the term "interest" as an alternative to the term "profit" or "rate of return".)<ref>{{cite web |url=http://www.lariba.com/fatwas/qaradawi.htm |website=Lariba Bank |title=DOCUMENTED SHARI'AA – JURISPRUDENCE – OPINIONS |date=1990 |access-date=27 November 2017}}</ref>{{sfn|Farooq|2005|p=26}}
*that the industry uses "a whole host ruses and subterfuges to conceal" rather than eliminating interest (Muhammad Akram Khan).{{sfn|Khan|2013|pp=xv-xvi}}
*complain of the industry charges higher fees for financial products that have "all the economic features of that conventional product"Mahmoud Amin El-Gamal,{{#tag:ref|a professor of economics at [[Rice University]] (United States)|group=Note}} and Mohammad Fadel<ref name=Fadel_(2008:656)/><ref name="MeGIFLEP2006:20">[[#MeGIFLEP2006|El-Gamal, ''Islamic Finance'', 2006]]: p.20</ref>
*has the same "formulas for SLR (statutory liquidity requirements), capital adequacy ratio, and risk management standards" as those of "interest-based banks" (Sayyid Tahir).<ref name="(Tahir_(2009:69)">Tahir, Sayyid. 2009. Islamic finance: Undergraduate education. ''Islamic Economic Studies'' 16 (1&2) (January) 53–77</ref>
*is the same as conventional banking other than in "the technicalities and legal forms", keeping interest but calling it "by another name, such as commissions or profits ...`" (A. W. Duskuki and Abdelazeem Abozaid).<ref name="Dusuki_Abozaid_(2007:146,147)">Duskuki, A.W. and Abdelazeem Abozaid. 2007. A critical appraisal on the challenges of realizing maqasid al-shariah in Islamic banking and finance. ''IIUM Journal of Economics and Management'', 15 (2) 143–165</ref>

=====Explanations=====
Explanations for the similarity between Islamic and conventional banking include: 
*The pressure on Shari'ah boards (which serve as a sort of modern-day equivalent of the medieval "court ulama") to approve the products of institutions that pay their salaries (M.O. Farooq).{{sfn|Farooq|2005|p=25}}{{#tag:ref|M.O. Farooq cites Monzer Kahf as pointing out how the shariah board of one bank (Bank al Taqwa) defended that bank's management after its failure in 1998 "stating that ... the board of directors and the management did their best and took sound finance and investment decisions", when in fact the management had "invested in one single project more than 60 per cent bank's assets .... in violation of well-established banking rules".<ref name="[Kahf in Henry and Wilson, note #18, p.35]"/> Monzer KAHF. "Islamic Banks: The Rise of a New Power Alliance of Wealth and Shari'ah Scholarship," in Clement HENRY and Rodney WILSON (eds.). The Politics of Islamic Finance [Edinburgh University Press, 2004], p35</ref>{{sfn|Farooq|2005|p=27}}|group=Note}}
*The clash between the large demand by pious Muslims for Islamic financial products and practices, and the impracticality/inefficiency of the Islamic products and practices proposed by Islamic finance evangelists, resolved by use of highly paid (but scarce) scholars "willing to certify conventional instruments as being Shariah-compliant", and the adding of an additional layer of transaction costs on those products (Feisal Khan).{{sfn|Khan|2015|p=114}}
*The lack of training of sharia experts in the deeper meaning of the sharia, and in the long-term economic consequences of the widespread use of complex financial transactions (Farooq quoting Mohammad Nejatullah Siddiqi).<ref>{{cite web |url=http://www.siddiqi.com/mns/Role_of_Shariah_Experts.htm |title=Shariah, Economics and the Progress of Islamic Finance: The Role of Shariah Experts |last1=Siddiqi |first1=Mohammad Nejatullah |date= 21 April 2006 |access-date=28 November 2017 |publisher=SEVENTH HARVARD FORUM ON ISLAMIC FINANCE }}</ref>
*The motivation of the evangelists of Islamic banking, which is to reassert "the primacy of Islam" rather than advance fundamental "economic change".<ref name="IMEPITK2004:5">Kuran, ''Islam and Mammon'', 2004: p.5</ref>{{sfn|Khan|2015|p=113}}