Islam is non merely a faith but besides a complete codification of life. It gives solution to all the jobs of humanity from personal, societal, political and economic life. Though Muslim economic experts had written about Islamic banking and finance from the beginning of 19th century, it got its model at the beginning of 1960 ‘s with little common economy undertaking in Egypt ( Schoon, 2009 ) . It started to take off from 1990 ‘s and it is a trillion dollar concern now turning at the rate of 15 % -20 % yearly. But in footings of merchandise development it is confronting important obstructions because of the deficiency of adept human resources with the combination of both banking and Sharia accomplishments. That is why, it is really of import to understand prohibition in Islamic banking like gharar and zero amount game, so that it can be avoided at the clip of future merchandise development in Islamic banking.
Muslim Banking:
“ Muslim banking is an alternate banking system based on rules of Sharia. It has been developed with the add-on of allowable economic techniques ( Halal-to do ) from Fiqh muwamalat ( Islamic concern Torahs ) like gross revenues, concern, net income and loss sharing and extinguishing prohibition of Sharia ( Haram-not to make ) like Riba ( involvement ) , gharar ( Ambiguity ) , zulm ( subjugation ) , mysir ( Gambling ) and investing in Haram merchandises like intoxicant, baccy and porc concern ” .
Yahia Abdul Rahman ( 2010 ) says ” Islamic banking is socially responsible and community based both in spirit and purpose ” . While conventional bank trades with lone money which leads to Riba, Islamic bank though a fiscal mediator like conventional bank trades with trade. As Islam prohibits Riba and allows trades. ( Al Quran, 2:275 )
Zero sum game
Decision theory, a instance in which one or more participants ( loss ) net income of other participants from injury ( benefit ) is equal to So a net income ( loss ) one or more others ( www.businessdictionary.com ) loss ( addition ) should take.
Zero amount – are playing a game where one wins and another loses, Zero amount job – merely when others insist that win may lose. Zero amount jobs – emotional entreaty that triumph for unconquered merriment can get the better of reflects. All games and chancing games are zero amounts. Robbery and plundering in the war nothing sums is hard. Overruling demand: zero amount relationship for granted is at the political degree “ that regulation or rule. ” I do non belong to the same. “ You have no others before them. ” Joke about a husbandman who wish endowment, but he called the following two zero sum outlook explains really good. “ A pigeon berry my eyes ”
Merchandise Development in Islamic Banking:
No industry can last for long term without continuously developing new merchandises. Change in engineering, demand of clients and forces of new rivals lead to new merchandise development ( Clark and Wheelwright, 1994 ) . While in secular industry fulfillment of client demand and victorious rivals in order to maximise gross of the company within the model of regulations and ordinance of the province is sufficient, but it needs to remain within the parametric quantity of Islamic law in footings of Islamic law compliant merchandise development. Development of merchandises for Muslim Bankss can be done by either wholly developing new merchandise based on Koran, Sunnah, ijma and qiyas or by sublimating bing conventional banking merchandises ( Ayub, 2009 ) .
Gharar:
“ The term Gharar does non hold a specific definition like Riba from Quran and Sunnah. It is because what is gharar today may non be gharar tomorrow. It keeps the flexibleness and options for statements among sharia bookmans at the clip of new merchandise development. Gharar by and large refers to uncertainness, ambiguity, high hazards, unknown and even ignorance. Because of the gharar prophesier ( PBUH ) forbade pebble sale, sale of things before geting ownership, two dependant contracts in one sale, sale of birds in the sky and fish in the sea etc ” ( Vogel & A ; Hayes, 1998 ) .
Zero Sum Game:
A game is a competition among two or more participants where everyone is viing for his ain involvement. But a zero amount game is a competition among two or more persons where what others lose ( nothing ) is a win ( amount ) for merely one individual ( Swailem,2000 ) . It means in order to win one must lose another. While competition among companies brings harmoniousness, zero amount game brings hatred and hostility in the market.
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Relationship between Maqsad Al Sharia, Gharar and Zero Sum Game:
Maqsad Al Sharia explains wisdom behind opinion. In wide sense it means to understand the grounds and aims of Torahs laid in Quran and Sunnah. Mujtahids use their single analogy in order to happen reply for modern-day jobs based on maqsad Al Islamic law ( Ibn Ashur,2006 ) . Hence it is really of import to understand it in order to develop merchandises for Islamic banking. Sharia intends to convey samaha ( easiness ) between parties in covering with one another. Samaha is the standing in the midway between stringency and indulgence ( Ibn Ashur.2000 ) . It is to make win-win state of affairs for counter parties in exchange so that they do non repent afterwards. Therefore gharar and zero sum game should be understood in visible radiation of maqasid Al Islamic law in order to avoid those in future merchandise development for Islamic banking.
Relationship between Maqsad Al Sharia and Gharar:
A intent ( Maqsad ) is non valid unless it leads to fulfillment of some goods ( maslahah ) or the turning away of some mischievousness ( mafsadah ) . Therefore the aim, purpose, principal, terminal or end of the Islamic jurisprudence is at that place for the ‘interest of the humanity ‘ ( Auda,2008 ) . So, sharia intends to avoid any struggle between counterparty, avoids uncertainness, stops harming oneself or others and repent after dealing. On the other manus, gharar leads to uncertainness, difference and struggle which may do injury to the society. So it can be concluded that Maqsad al Islamic laws and gharar are opposing to each other.
Relationship between Maqsad Al Sharia and Zero sum game:
While Maqsad Al Islamic law is to salvage society harming to one or to others, Zero amount game must vie to lose others for single addition. Therefore Islamic law does non let zero sum game.
Relationship between Gharar and Zero Sum Game:
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Imam Malik in Muwatta provinces “ Included in gharar and hazardous minutess is the instance in which a adult male whose camel is lost, or his slave has escaped, the monetary value of which is ( say ) fifty dinar, so he would be told by another adult male: I will purchase it for 20 dinars. Therefore if the purchaser finds it, the marketer loses 30 dinars ; if non, the purchaser loses 20 dinars ” ( Swailem,2000 ) . Here both purchaser and marketer ‘s involvement is wholly opposite, which one loses is the addition of others. Hence this is a nothing amount game every bit good. So, all sorts of Zero amount games lead to gharar. Because participants in zero sum game does non cognize ahead whether he is traveling to win or non ( uncertainness ) , if he loses so loses everything he puts in the game ( inordinate hazard ) .
Existing Islamic merchandises, Gharar and Zero sum Game:
To be able to develop new merchandises for Islamic banking in future it is indispensable to cognize bing allowable merchandises in footings of gharar and zero sum game.
Mudarabah ( Passive partnership ) :
“ Mudaraba is a partnership where one party supplies capital ( Rab ul Mal ) and another puts his expertness ( Mudarib ) . Exclusive direction remains with the mudarib without any intervention from Rab ul Mal. A net income rate ( % ) but non a fixed sum is assigned to each party before venture starts. So in instance of success, both of the party distribute the net income between them in agreed ratio and in instance of failure Rab ul Mal lose his capital and mudarib loses his clip and attempts ( Saeed,1999 ) . In this concern venture both rab ul mal and mudarib carbon monoxide operate with each other unlike zero sum game and they know beforehand the effects for net income and loss unlike gharar ” .
Musharaka ( Active Partnership ) :
“ Musharaka is partnership like mudaraba but lone difference is here both party invest capital and prosecute in direction every bit good. So overall success of concern brings net income to both and failure of concern brings loss to both at a clip. Hence musharaka is free from zero sum game and gharar ” .
Murabaha Bai Muajjal ( Cost plus deferred sale ) :
“ Most of the trade in Islamic banking are based on the mixture of murabaha and Bai muajjal. Murabaha is a contract where both purchaser and marketer agreed on goods, cost, and tag up and payment day of the month. Buyer pays higher monetary value than market rate but acquire the ownership of the good to be benefitted from it ( Thomas et al, 2005 ) . So in this sale contract, marketer benefit by higher monetary value and purchaser benefit from ownership of the goods, making a win-win state of affairs for both parties in the contract. Hence it is a none zero amount game and no range of gharar in the contract as everything about merchandise, monetary value and clip is written down in the contract. ”
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Ijara ( Lease ) :
Lexically ijara agencies to give something for rent. It is of two types. Renting usufructs of belongings or plus ( Lease ) or hiring/employing service of a individual or company for rewards, fees or committee ( Kettell, 2010 ) . Both the lease giver and leaseholder are being good for rental contract, one is basking service while other acquiring net income as a rent or fee. So, ijara contract develops win-win status for both parties. Hence ijara contract is free from zero sum game. There is no gharar in the contract every bit good because belongings, rent and clip of payment is specifically written before put to deathing contract.
Bai Salam ( Prepaid Purchase ) :
Bai salam is opposite of Bai Muajjal. It is a sale contract specifically for the agricultural merchandises. In this contract full monetary value of the goods ( Rice, wheat ) is paid in progress and bringing is taken in a pre agreed future day of the month. Though Islamic law does non let selling something which is wholly non ready to be sold but this exclusion has been made to ease hapless husbandman who needs money in progress to treat agricultural merchandise to do it useable for market ( Siddiqi, A & A ; Hrubi,2008 ) . In Bai salam contract determined monetary value is lower than topographic point monetary value. Buyer is benefited by paying less money and marketer is benefited by having money in progress. Though it is hazardous for purchaser in instance of any natural catastrophe, but it is sharia permitted hazard which is acceptable for any concern. At the clip of bringing if the monetary value of the goods goes up, marketer has the inducement to default or sell goods to person else. But he will non make that because sale contract has been already done. So, it will be capable to legal effects. Bai salam contract creates win win state of affairs for both purchaser and marketer. That is why it is non a zero amount game.
Istisna ( Commssion to industry ) :
Istisna is an exceeding sale contract like salam. At the clip of contract, good or point by and large non owned or ne’er existed earlier. Buyer gives order to seller to construct some point with specification. Unlike salam, bringing clip need non to be fixed and sale monetary value may non be paid full in progress ( Siddiqi, A.,2008 ) . In istisna contract both purchaser and marketer are in win-win place and there involvement are non conflicting to each other, therefore, it is a non zero sum game.
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Some Contradictory Islamic merchandises and Issues of Gharar and Zero Sum Game:
After analysing allowable merchandises of Islamic banking in footings of gharar and zero amount game, it is necessary to see some merchandises where fuqaha from different school of thought take different position for Islamic law opinions.
Bay ‘ Al Inah ( Same point sale redemption ) :
In Bay ‘ Al inah borrower ( client ) sells some belongings to the loaner ( bank ) for hard currency monetary value and so loaner turns back to sell same belongings to borrower with deferred but higher monetary value ( El-Gamal,2006 ) . In this contract, it is a status of 2nd sale for the executing of first sale. Since it brings two contract within one sale, it leads to gharar. Final consequence of two contracts is original belongings is transferred to borrower with a liability of debt. Extra sum for 2nd deferred sale that borrower loses is the addition of loaner, hence it leads to zero sum game. So, Bai’al inah is prohibited by major school of ideas.
Tawarruq:
To get the better of the unfavorable judgment of bay’al ina, a 3rd party agreement is introduced. In this contract client purchase a merchandise from Islamic bank on murabaha Bai muajjal footing and sell it back with lower monetary value to a 3rd party on spot footing. In pattern, bank form this 3rd party so that client can easy sell it back to the party whom bank has bought the merchandise from. So in world merchandise or plus does non travel from the original topographic point. Islamic fiqh academy and AAOFI has rejected this sort of organized tawarruq ( Swailem, 2006, pp. 103-104 ) . End consequence of tawarruq is like bay ‘ al ina. Excess sum paid by client is the addition of bank taking to zero sum game.
Marketing scheme, Gharar and Zero Sum Game:
From many component of selling, publicity to pull new client is really important for the being of any organisation. In conventional system, organisation can take many attack like sale, price reduction, and limited clip offer, purchase one get one free or even opportunity of acquiring really dearly-won points as a gift ( iphone, ipad ) etc. Another sort of selling attack is multilevel selling ( MLM ) , where people get reward for doing their relation, friends and household to be client of that organisation. Promotional activities in Islamic banking must follow Islamic law parametric quantity and it must avoid any kind of gharar, misrepresentation and zero sum game.
Attracting clients with offer of opportunity:
Most of the company pull new client with offer of opportunity of having dearly-won and beguiling points. For case, a web based telecom company may publicize client registering to their web site within a specific month, their name will be put into a pool of lottery. Lottery will be drawn after certain clip to pick up the name of victor who will have an iphone. At the clip of enrollment, if it is a status from the company that they must purchase a merchandise to be eligible for entry to pool of lottery, it will take to zero sum game. Because of client is really non merely paying for merchandise but besides purchasing the merchandise with the hope of winning lottery. After the draw of the lottery, merely some people win while other gets nil. Hence it is zero sum game. But if the client needs non to pay for any merchandise and acquire free entry to pool of lottery, it will non be zero sum game. Because of award of the lottery will be considered as a gift from company. Islamic bank can pattern 2nd attack to pull new depositors and purchasers of its merchandises.
