Sharaiyyat al-Muamalat allati taqum biha al-Bunuk al-Islamiyya al-Muasira
- Author died
- 1442 AH
- Editions
- Majallat al-Jāmiʿah al-Islāmiyyah bi-al-Madīnah al-Munawwarah
Sharaiyyat al-Muamalat allati taqum biha al-Bunuk al-Islamiyya al-Muasira (The Legitimacy of Transactions Conducted by Contemporary Islamic Banks) is a critical legal treatise by the Islamic scholar Abd al-Rahman ibn Abd al-Khaliq (d. 1442 AH / 2020 CE), evaluating the financial practices of contemporary Islamic banking institutions . Published in the Journal of the Islamic University of Madinah in 1403 AH (1983 CE), the work examines whether modern banking contracts conform to genuine Islamic commercial jurisprudence or serve as legal stratagems (hiyal) for interest-bearing financing .
Background and Context
The treatise was addressed to scholars and practitioners convening at the Second Conference of Islamic Banks held in Kuwait . In the opening sections, Ibn Abd al-Khaliq states that establishing Islamic financial institutions is a legitimate obligation and aspiration for Muslims . He notes his early involvement in advocating for Islamic banking since 1966 under the guidance of Dr. Isa Abduh, whom he describes as the pioneer and founder of the first Islamic bank . Ibn Abd al-Khaliq clarifies that his critique does not aim to undermine Islamic banking, but rather to offer sincere counsel and reform practices that deviate from authentic Islamic commercial principles .
Core Arguments
The Foundational Purpose of Islamic Banks
The author distinguishes an authentic Islamic bank from a conventional interest-based bank:
- Conventional banks: Act solely as financial intermediaries between depositors and borrowers, lending capital at fixed interest rates without assuming enterprise risks .
- Islamic banks: Are conceived as direct commercial actors—engaging directly in trade, agriculture, industry, construction, extraction, and leasing—sharing actual profits and losses with depositors .
Ibn Abd al-Khaliq contends that modern Islamic banks allocated barely five percent of their deposits to real productive enterprises, while directing the remaining funds toward artificial financing schemes .
Critique of Murabahah to the Purchase Orderer
A major portion of the treatise focuses on murabahah financing (al-murabahah li-l-amir bi-l-shira'):
- Legitimate murabahah: Classical murabahah occurs when a seller openly discloses the acquisition cost of an owned commodity and adds an agreed-upon profit margin, which is valid by consensus .
- Bank murabahah: In banking operations, the bank does not own the goods beforehand. Instead, a customer seeking funds identifies a commodity, signs a "promise to purchase" (wa'd bi-l-shira'), and the bank purchases it solely to resell it to that customer at a marked-up deferred price .
The author argues this structure is prohibited for several reasons:
- Intention of Usury (qasd al-riba): The underlying intent is money lending for interest rather than genuine trade .
- Selling What One Does Not Possess: The bank contracts to sell items before owning or taking possession of them, contravening the explicit prophetic prohibition لا تبع ما ليس عندك ("Do not sell what you do not possess") .
- Two Transactions in One (bay'atayn fi bay'ah): The arrangement interlocks two distinct contracts to circumvent usury prohibitions .
- Binding Nature of the Promise: Despite claims that the promise to purchase is non-binding, the bank's contractual clauses impose actual damages on defaulting customers and mandate binding arbitration through the Chamber of Commerce and courts, rendering the obligation practically enforceable .
Documentary Credits
The treatise also criticizes the fee structure of documentary credits (al-i'timadat al-mustanadiyyah). While taking a fixed fee for document handling and agency (wikalah) is permissible, charging escalating percentage fees based on repayment duration (such as 1.5% for three months, 3% for six months, and 6% for one year) constitutes illicit interest disguised within service contracts .
Reception
The treatise is cited in contemporary Islamic economic literature alongside writings by scholars such as Muhammad Sulayman al-Ashqar, Bakr Abu Zayd, and Rafiq Yunus al-Misri as one of the prominent early critiques arguing for the invalidity and prohibition of binding murabahah to the purchase orderer in Islamic banks .
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