Integrating Islamic Finance with Conventional Finance

Friends, every history has its time of reckoning. The movement of a boat is smooth if you sail with the current, however it is not necessary the best route to the light house.

Today, when we talk about Islamic Finance, we visualize a huge market developing literally with the speed of light. Now at this juncture let talk about something which normally comes into mind of a lot of us: Are we in the process of developing two sets of parallel financial systems on our planet? Whether Islamic Finance is a separate discipline of Finance? A lot of financial thinkers are putting their thoughts on the probability of integration and bridging the gap between two seemingly different streams of financial systems. Before we start looking at the avenues of integrations, let’s talk about a fundamental question, Are they really different? If we look from the micro level its seems to be different however if we look from the macro level the Shari Based Financing Principals are a foundation for a movement towards establishing the true role of money envisaged in the economics. All of us will agree to the fact that, in the true sense money in economies should be a tool to provide an “Innovative and Productive Capital”.

Hence this is the right time we should start thinking to bring about the desired corrections in the current financial market, and I strongly believe once it is done, we have to think about improvements and not integration.

All of us will agree that the foremost requirement of an Islamic economy is “Tawhid – a concept of over all vision, understanding and distinctiveness” through creation of a free market and widespread ownership of productive capital, bringing economic efficiency and establishing a direct connection between the money supply and real economics. This has been more or less the goal of any well balanced existing economy.

Majority of the schools of economics claim the persuance of a long term goal to establish a society, which will ensure the well balanced growth of all, and on broader terms, the inventions in financial markets have this basic aim.

Let’s talk about one of the most talked about concept of recent time “ Derivatives”. This technique was developed to limit the loss of capital by managing the uncertainty from the transactions, however under the existing financial market, it proliferated more as profit making instrument than a risk mitigation tool.

Sharia Based Financing, the Islamic finance in true sense advocate bringing in the discipline in the market by promoting the use of money as “Capital” and making it avaliable as a support to budding entrepreneurs to bring efficiency ant true returns to the providers of capitals.

We know that the “Wheel of Change” moves slow and the changes effected slowly are long lasting. The development of Islamic financing concept has taken more than 30 years to come into its present form. Presently we are standing on a cross road to change the concept of Islamic Finance from the “Sharia Complaint” to “Sharia Based”. I firmly believe that this is the right time we all should start thinking about directing the industry on the roads to “Sharia Based Funding” which will bring the revolutionary change in the world of financial market.

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