The book under review is a revised edition of Muhammad AkramKhan's Islamic Banking in Pakistan. In this slender yet eloquent volumethe author, who has many other published works in the field of Islamiceconomics and finance to his credit, examines a cornerstone of governmentpolicy during the early 1980s: the Islamization of banking inPakistan. He gives a candid and coherent account of this major development and asserts that it failed because of the lukewarm attitudes of theadministration and political leadership as well as because of the pervertedoutlook of the bureaucrats, elites, and bankers. In the final analysis, hesuggests some concrete measures that are designed to help policy makersand strategists in reconstructing the financial institutions within the frameworkof Islamic laws. The subject matter of this book has been dividedinto six chapters, which are preceded by Muzaffar Hussain's preface andfollowed by concluding remarks, endnotes, an exhaustive bibliography,and an index.In chapter one, Akram provides an historical overview of the processof Islamization of banking, makes some important observations, anddraws logical conclusions. He points out that the Council of IslamicIdeology, a constitutional body consisting of scholars of all shades andschools of thought, categorically prohibited interest (riba) in all of itsvarious forms. However, no sincere effort was ever made by the governmentto eliminate interest and to build an interest-free economy. Theprocess of Islamization, which was initiated in the early 1980s andslowed down during the latter part of the decade, finally came to a completehalt in early 1992. The government, instead of invigorating theIslamization process, filed an appeal in the Supreme Court against theShari'ah Court's decision calling for the abolition of all interest-basedactivities by June 1992.In chapter two, the author goes to the roots of the problem andshows that a lack of political will was the single most important factorcausing the systematic failure of this experiment in Pakistan. He showsthe futility of inconsistent policies and inappropriate strategies pursuedby the State Bank of Pakistan, such as allowing banks to continueinterest-based operations side by side with interest-free activities.Given freedom of choice, banks and other financial institutions showeda much higher interest in such interest-based financing techniques asmark-up and buy-back agreements and little or no interest in suchmodes of finance as musharakah, mudarabah, and ijarah, all of whichare based on Islamic principles associated with profit-loss sharing. Heobserves that the situation was aggravated further when the governmentexcluded the management of public finance from the jurisdictionof the Shari‘ah court and continued its own interest-based activities asusual ...
AKAD MUDHARABAH SEBAGAI INSTRUMEN PENDANAAN DAN PEMBIAYAAN DI LEMBAGA KEUANGAN SYARIAH
