The Use of Interest Rate as A Benchmark for Islamic Banks
- Dallah al-Barakah
(22/1) Establishing Islamic benchmark as an alternative to interest-based benchmark for dealings involving deferred payment.
a. The reliance of Islamic financial institutions on the usage of conventional (interest rate) benchmarking – such as LIBOR and other similar benchmarking – in pricing their products that are based on deferred payment contracts such as Murabahah, Ijarahand Istisna’ as well as using the conventional benchmarking as a as measuring instrument to value the efficiency and productivity of the Islamic bank negates the principals and objectives of Islamic banking. The conventional benchmarking index is not supposed to be utilized as a tool to calculate the composition and the cost of the bank’s funds. Despite that, relying on the conventional benchmarking is a necessity in the absence of islamically accepted benchmarking indexes.
b. There is no prohibition in relying on the interest rate benchmarking in pricing the Islamic products of which such use of benchmark does not contradict the products’ nature of conforming to the Shariah upon its usage.
c. The conference recommends that the bodies which oversee and deliberate on Islamic banking issues – such as Islamic Fiqh Academy, Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) – to cooperate with institutions and centres which specialize in researches in the field of Islamic economics, in order to establish an Islamic benchmark which will serve as an alternative to the interest rate benchmark. The Islamic benchmark shall be based on principles and foundations that conform to the provisions and principles of Islamic law and the nature of operations of the Islamic banks. This can be achieved by establishing a special committee whereby it comprises of scholars and experts in the study of economics, accounting and Islamic banking to provide such benchmarking.
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Source:
Dallah al-Barakah Resolutions and Recommendations (p169)
- Mufti Taqi Usmani
It is thus clear that the use of the rate of interest merely as a benchmark does not render the contract invalid as an interest - based transaction. It is, however, advisable at all times to avoid using interest even as a benchmark, so that an Islamic transaction is totally distinguished from an un-Islamic one, having no resemblance of interest whatsoever.”
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No doubt, the use of the rate of interest for determining a halal profit cannot be considered desirable. It certainly makes the transaction resemble an interest-based financing, at least in appearance, and keeping in view the severity of prohibition of interest, even this apparent resemblance should be avoided as far as possible. But one should not ignore the fact that the most important requirement for validity of murabahah is that it is a genuine sale with all its ingredients and necessary consequences. If a murabahah transaction fulfils all the conditions enumerated in this chapter, merely using the interest rate as a benchmark for determining the profit of murabahah does not render the transaction as invalid, haram or prohibited, because the deal itself does not contain interest. The rate of interest has been used only as an indicator or as a benchmark.”
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Penggunaan Kadar Faedah (Interest Rate) Sebagai Penanda Aras Untuk Bank-Bank Islam
- Dallah al-Barakah
(6/14) Penyertaan bersama antara Institusi Kewangan Islam bersama Institusi Kewangan Konvensional).
Ahli- ahli persidangan telah membincangkan isu kerjasama institusi kewangan Islam dengan institusi kewangan konvensional dalam pembiayaan bersindiket. Majlis berpendapat sekiranya prosedur operasi pembiayaan bersindiket mematuhi kehendak Syariah, maka tiada halangan kepada institusi-institusi kewangan Islam untuk melibatkan diri dalam semua perkara dengan syarat langkah-langkah yang sewajarnya perlu diambil untuk memastikan bahawa setiap aspek mematuhi kehendak Syariah.
Bagi hukum berkaitan dengan penyertaan di antara institusi kewangan Islam dan institusi kewangan konvensional dalam menyediakan jaminan penuh atau jaminan separa penuh untuk aktiviti pembiayaan yang tidak patuh Syariah, maka hukum penyertaan tersebut adalah tidak harus kerana perbuatan menjamin aktiviti yang tidak patuh Syariah adalah dilarang.
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Sumber:Dallah al-Barakah Resolutions and Recommendations (p48)