To promote Islamic Finance is a challenging job, which needs great leadership and management qualities to make it possible in the arena of interest based conventional monetary system of the world. Interest is the soul of conventional banking system, while Islam prohibits interests categorically, in all its forms. To think out interest free monetary system in the modern times after the Islamic monetary system took its last breath in the wake of Ottoman Empire’s fall needed great faith and skills of leadership and management.
Islamic finance is an interest free system of finance based on the Musaharaka and Mudarabah. Musharaka means A joint enterprise or partnership structure with profit/loss sharing implications that is used in Islamic finance instead of interest-bearing loans.
Mudarabah means A silent partnership between a fund manager/entrepreneur (Mudarib) and a capital provider (Rab-ul-Mal)
The investment comes from the first partner who is called Rabb-ul-Maal (Investor) while the management and work is an exclusive responsibility of the other, who is called Mudarib (Working Partner) and the profits generated are shared in a predetermined ratio. The Concept of Mudarabah by Dr. Muhammad Zubair Usmani in Islamic banking the bank becomes one of the active partners of the joint enterprise, either as capital provider (Rab-ul-Mal) or Working Partner (Mudarib)
To make people believe that the system of Islamic finance works and it works better than the conventional interest based monetary system is the area which is a challenge for the executives of Islamic banking. The universities, which impart the education of Islamic finance, need to work for leadership development in this field of Islamic finance to produce leaders to lead Islamic finance in the great competition with the conventional monetary system prevailing in the world for centuries.
In this regard the hidden money of the Muslim masses matters a lot. It needs special attention of leadership and management of Islamic finance a great number of the Muslims, conscious of their religion; avoid depositing their money in the conventional banks to avoid usury. Due to interest based banking system in the Muslim countries, this considerable amount of finance of Muslims is not available to banks. This hidden money if utilized by the bank can add to the economic activities in the Muslim countries and enhance business of the Islamic banks.
Such religion conscious people, if find necessary, prefer to deposit their money in the current account. The more conscious ones are not ready to deposit their money, even, in the current accounts so that they may not become a silent partner and supporter of interest based monetary system and hence stand sinners. So they either keep their money at home or invest in their private business. If they keep their money at home and Zakat claims a portion of their money every year, their savings keep on reducing. If they invest their money in their private enterprises they avoid taking loans from the banks for their business to refrain from usury. So they run their business according to the means available to them.
This is the test of their leadership and management skills and here the education of leadership development should focus. They should convince such people, and they are in great numbers with great wealth at their disposal, that they have got a Halal (lawful) alternative in the shape of Islamic banking. They can invest with complete satisfaction of conscience that they would earn profit with no traces of usury. Also they can have loans from bank, and the bank will not claim interest but will be a partner of theirs in their business on the bases of profit sharing and loss bearing. Such practical, sympathetic, approach can not only convince the religion conscious people but other ordinary muslins and non Muslims, too, to start and enhance their business with Islamic banking.
The conservative Islamic scholars still raise doubts about modern Islamic banking system. And in the countries where they have enough influence they are listen to and the Muslim masses hesitate to make investment through Islamic banks.
The executives of Islamic finance needs to address the conservative Islamic scholars and convince them by telling what is modern Islamic finance is and how it is in accordance with Islamic economic laws and if they find any inconsistency that can be corrected. The more they are successful in convincing the scholars the more response they will receive from the Muslim masses.
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