At a time when many critics are calling for tighter regulation of the worldwide financial industry, Muslim scholars are saying that Islamic finance cannot be more tightly controlled for theological reasons. The Islamic finance industry has long been marked by divergent interpretations of Sharia, or Islamic law. (Photo: Traders at Saudi Investment Bank in Riyadh, 8 Oct 2008)
Now, amid calls for standardisation, the scholars say the Islamic concept of ijtihad — reasoning to reassess sharia in light of modern developments– bars any tighter regulation or coordination of this $1 trillion industry.
It’s rare that religious scholars get to dictate terms to business, but this might be one because Islamic finance is expressly built upon the principle of sharia compliance.
Here’s a report from Frederik Richter, a correspondent in our Bahrain bureau:
Scholars reject strict Islamic finance standards
MANAMA, Nov 10 (Reuters) – Islamic scholars on Monday cautioned against enforcing legal standards in the Islamic finance industry, even though the lack of standardisation is widely seen as an impediment to growth.