Book Review: Islamicity And Banking Modes Of Islamic Banking In this book the author tend to say that

the Islamic banking and its operation are in doubtful validity. He has suggested some way to restructuring it where we can see the further details later. The author also have some doubt either the interest is riba or not and how to conduct interst free banking. In this book review, I will give some of the opinion from my own point of view in order to reviewing this book. In this book, the first thing that the author writes is about riba itself. He stated the AlQuran verse give up whatever is left in lieu of riba if you are indeed belivers. If you do not do so then take a notice of war against you from Allah and His prophet (2:278-279). This is where we can see the prohibition of riba in the quran. But there is some opinion that interest is not riba. From the interest it defined as extra charges by bank to customer which is the same as riba. So we cannot deny that interest is not riba. The sentence of islamization of banking institution catch the attention where the author is trying to say that the banking operations are just mimicking conventional bank as the only reason it is permissible because of it halal or compliant with shariah perspective. In my point of view, the reason Islamic banking existence is to cater the demand of customers that want bless from Allah in every way. The other reason also wants to help the poor from being burdened by the extra charges given by the bank to them. Islamic bank have many instrument if the customer wanted to deal with the bank from personal loan until car or home financing. The author has provided the evidence that Islamic bank can be the competitor for the conventional bank as the Islamic bank have fared much better than the interest based bank. He also stated that Islamic bank as a group out- performed the former in almost all area and in almost all year. But, the author also stated that Islamic bank manipulated the financing modes in way to retain their identity as lenders rather than entrepreneurs.

The quranic verse stared that and Allah has permitted that trade and forbidden riba
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From this verse, they say that trade is similar to riba but Allah has permitted trading and forbidding riba. The reason why riba being prohibited is because to protect the human welfare and help the poor and trading being permitted is because this is the way that can be implemented in order to eliminated riba. So it is not true that they say that Islamic banking has manipulated the financing modes because as it been said over and over again that Allah has permitted trade and prohibited riba. It is true that both of Islamic bank and conventional bank issue credit to seek for return. Where return is the profit gained to standstill the bank in order to keep growing. The statement by the author is wrong where Islamic bank does not interested to do trading instead of prefer loan money to the entrepreneur. It is obviously been proved in the Quranic verse that Allah has permitted trading. In order to giving loan without charging riba Islamic bank has imposed trading and with that, the elimination of riba can be done. The entire instrument introduced by Islamic bank is permitted and comply with shariah point of view. So there shouldnt be any doubt in validity of the Islamic bank. Most of the operations are using trade concept and with that the bank can gain permissible profit and customers are not being burdened by the excessive charges. For example like Bay Al Inah where the transaction may reverse the buying and selling role. For every contract to take place there should not be any fraud, duress or misunderstanding. Both parties should have the mutual consent and the contract can be executed. But from the author example, the stated that in the case of murabahah, the Islamic bank trying to make contract with the customer under duress because the customer lack of fund to buy the house. The truth is, in the case of mudharabah, the profit that the bank gained is already being disclosed since the first time it been executed. The customers know and willing to pay to the bank. It is not contract under duress because there is mutual consent between both parties and conditions as well terms of this contract are clearly being said. There are no differences between both bank and Islamic bank is operating on the basis of time value of money which is riba. This is been said by the author. From my point of view,
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clearly and obviously that both Islamic and conventional bank has huge differences. Conventional bank which as know from earlier time charging interest, but on the other hand Islamic bank used the alternative given by Allah to eliminate riba which is do trading. Because in doing so, the bank can gain halal profit from it without any doubt from any parties. Qard al Hasan is not the forgone interest. It is the benevolence loan that being imposed to help the poor and the needy person. This type of contract occurs when the customer make loan to the bank and they only need to pay the amount of loan given without any service charges by the bank. The interest here is not being called as Hassan because there is no riba being imposed in this contract. And it is true that Qard al Hasan is one form of sadaqah. From overall of discussion from the author, he stressed on the doubt in Islamic bank validity due to the reason of manipulating the financing mode, make contract under duress because of inability of customer to have huge sum of money and others. But the views of this author can be accepted with valid reason. But there are no reasons that can approve what hes been said. Every of the instruments or contract introduced by the Islamic bank has its own operation system that complies with shariah perspective. It is because there are shariah panel who observed the Islamic banking operation. The system cannot be run unreasonably or without any monitoring from the above. Furthermore, in banking institution should has Ihsan where Allah can always see what we do and do like one. There is no way in Islam that permissible something that already being prohibited such as riba. Banking system we can say as sacred place where all the trusted people are behind it to control a lot of thing. It is the same as the operation. Trading, which is permitted is being used and any profit gained is permissible. The reason why trading is permitted because it already being said in the quran and the other reason because trading is the mutual consent occurs between two parties in order to get what they demand for. Unlike riba it is forcing people to pay sum of money that excessive and burdened them without they know in earlier time. So it is unreliable act to burdened people especially the poor and the needy person.

The author in this book stated that there are two ways of government can finance the deficit if it occur which are borrowing by issuance of additional bonds and printing additional high powered money. The issuance of bond is like what the Islamic capital market introduced which is Islamic bond where it is compatible with shariah perspectives and Malaysia is one of the largest hubs for sukuk. So the issuance of sukuk can be one of the way of government to gain capital in order to finance the deficit. Printing additional high powered money is also one of the ways has been stated. Money is the medium of exchange that accepted by most of people. But money has time value of money where the value of todays money is different with future value of money. And as being said, the injection of the money will make the economy condition in the state of seignorage or in other words represent the transfer of ownership from the holders of money to the creators of money because of inflation. This is where the customer does not have the purchasing power anymore. Due to this reason, the people money has been channelled to the authority and it is prohibited because it been said in the quranic verse that do not eat up your property among yourself by foul mean nor channel it to the authorities wrongfully and knowingly. In the Islamic perspective, money cannot give birth to money and it has no value. So the use of gold should be implemented. At the last chapter of the book, the author has write the measures toward enhanced islamization of banking where he write and analyse that banks provide high powered money whereby they devour the people property wrongfully. This may happened in conventional bank and not the Islamic bank because of the ethic and shariah rules banks must follow. So in order to islamize the commercial banks there are three steps which are creation of fiat money by the central banks, creation of money supply by the commercial bank and lastly the main objectives is elimination of riba component from Islamic banking transaction which is actually no riba transaction in Islamic banking. the transaction of Islamic banking is based on trading and no riba. As the conclusion, the Islamic banking operation is no derived from the riba transaction or manipulating the financing modes but the operating system is based on the
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trading. In a nutshell, there should not be any doubt in Islamic banking validity as stated by the author because every transaction is being approved and observed by the shariah panel and the objective of Islamic banking is to cater the demand of customers in bless by Allah at the same time help the welfare of people and achieving falah.

Book Review: Fatwa On Islamic Banking And The Use Of Interest Received On The Bank In this book the issue arise when the customer of bank thinks that in the case of interest fall under the category of darurah. They claim that in this modern world of banking institution interest cannot be resisted. The issue here concern about the interest that the customers received upon their bank deposits. The author stated that they have three options which are keep the interest as part of the darurah situation, give the interest to the charity or return the interest to the bank directly or arrange a special non interest account. The option oneand two may benefits the beneficiaries or the needy person but option number three will enrich the bank. From my point of view, the situation arise is not in the condition of darurah. It is because there is another choice that the customer can choose. It is because there are no interests gained if they do the transaction with the Islamic bank. And this point, this is the reason of Islamic banking institution existence. It is because to cater the need of customers demand as well as comply with shariah perspective. First of all lets understand the exact definition of riba. From the author, he said that riba represent the opposite meaning of trading; it is the corruption of trading. There reason of prohibition riba based on quranic verse 274, surah alBaqarah Allah has permitted trading and forbidden riba. There cannot be trading with riba nor riba with trading. Yet we can see that riba is core of todays kufr which is capitalism. From the above quranic verse, all has prohibited riba due to many reasonable reasons as riba will bring many harms than benefits. The example is like in the situation of capitalism. Capitalism is a profit oriented economy system. The rich become richer and the poor become poorer. The capitalism burdened the needy people and oppressed the middle income employee. Although it been said that capitalism is give and take economy system, but usually the capitalist will only take without any sympathized. It can be apply to riba because without the customer acknowledgement, the conventional keep taking their money and in the end, the person will be burdened by the loan and others. So the islamisation of each bank will justify the condition of riba and it will be the compatible of shariah compliance.

In this book, the author stressed on the capitalism which is the same as riba. Capitalism had been said overrides religion rather than interacting with it. It represents absolutes expression like taxation and interest rates command more certainty than the existence of Allah. As in riba which is prohibited, but the bank still apply it can did not care about the Haraam or Halal things. The resolution of this as I said before is the existence of Islamic bank. But the author wrote that Islamic bank still the same as the other bank. Islamic bank still charges interest but only with the different name. They called it as profit. It is because most of the contract introduced by the bank used trading as main principal. In the case of fractional reserve banking where the entire bank both conventional and Islamic bank should have their reserve requirement to ensure it safety or liquidity. And because of that, every transaction required interest. Murabaha as stated is cost plus profit contract whereby most of the bank used is it as one of the operation in banking institution. The author wrote that murabaha is two sales in one and being disguising mechanism which presents usury as if it was profit. The definition of murabaha is a sale contract which means that there is an offer and acceptance of the price of a particular item of goods in a single transaction. The typical disputes arising from the murabaha contract are related to the definition of the basic price on top of which he adds mark up. Murabaha is actually based on trading sytem where the mark up is upon to get the profit. The profit is being disclosed to the customer they accepted it in the earlier of contract. On top of everything stated above, murabaha as being said by the author is deception and not acceptable in Islamic law. It is simply a trick to present something haram as something halal Mudharaba and musyarakah are contact that validated by the Islamic Fiqh in the form of profit sharing. Both of the contact used the equity financing where they share the profit and loss sharing in term of capital contributed. Both of this contract are being encourage to be used because with this contract both parties will be benefited and. According to the author, the Islamic banking contract mostly in disguise to make it halal in the eyes of the customer. The contract has been undergo the islamization process. One of the scholar, Muhammad Abduh who legalised interest on the basis of it similarity to the other forms of profit- taking in Islam which is mudharabah. The scholar also said that the modernist
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analogy, the spirit of mudharabah is to share profit from legitimate business and from legitimate business we can offer some form of restricted profit or interest. In the actual structure of mudharabah, there is no interest gained in regard of the profit sharing. It is because there is no interest gained as the profit gained is based on the pre-determined agreed ratio between the mudharib and capital provider. The capital provider only received a little portion of the profit because all the work is been done by the mudharib who has provided the energy, skills and others. So, the profits earned by both parties were fair and there is no interst disguise in the form of mudharabah. The second stage of islamization as stated is dividend. It is regarding the legalisation of dividend as legitimate profit. His analogy said that dividend is just like a kind of practical profit although the dividend are decided by majority shareholders and they are independent result of the company. From my own point of view, the dividend received by the depositors is not riba or interest. It is because in Islamic banking where we knew that the process of deposits is compliance with shariah. When the customers deposit their money in the bank, the bank needs to reserve portion of money. It is to ensure the liquidity if the depositors need the money. The other portion will be used to finance the other people in need. So in this case, the depositor entitled the dividend. And the dividend is not interest because the process of the money and the bank is in line with shariah perspective. In the case of paper money, we already know that paper money is the medium of exchange that accepted by all banks. But money has no intrinsic value and it has time value of money. The present value of money is not the same as the future value of money. For example if we buy candy for rm0.05 each now, in the future the prices will be changed. The reason of this time value of money is inflation where the people have more money due to money creation but at the same time the prices also increase. So, paper money is not valid money in islam. But, for today economy system paper money is widely accepted as the medium of exchanged instead of gold dinar and silver dirham. As mention by the author, Islamic has it owns economic model. It is neither capitalism nor socialism. The Islamic economy model that protect and acknowledge the private property as well as property of Allah (awqaf) and it based on Islamic contractual law. So in the Islamic economy, the model used gold and silver that it does not have the multiplier money like the

paper money. Gold and silver is a fundamental that preserve the value of money and the value themselves do not fluctuate and do not suffer inflation. In the Islamic business contract there are two types of contract on the equity financing that being encourage using which are mudharabah and musyarakah. With these two types of operation, it will effect on how the society develop. While on the commercial transaction where all the transaction cannot avoiding riba. The commercial transaction can be in the right track if the elimination of riba is done. As stated by the author, it should be equity where the value of the goods given must be equal to the counter value of the goods received. As the conclusion, in this modern globalize world, we cannot abandon interest completely. It is because as the author said we are in the darurah circumstances. And there goes the role of Islamic banking with musyarakah and mudharabah, the partnership contract of profit and loss sharing. There is also the introduction of trade based transaction in order to eliminate riba. This is the most important as riba is prohibited while trading is the alternative way given by Allah to avoid it. It is the choices of muslim either to go on the permissible way or to go on with riba. There are many paths that people can choose, there are also many choices given. But it all depends on the hand of the Muslim themselves. And as the future assets to the country we ourselves the youth who had been given the intellectual can actually change the system to be more blessed by Allah.

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