It was a day where nerves were frayed and feathers ruffled.
A huge potential customer comes. The intention is that they wanted to move all their accounts to Sharia-compliant banking, as they intend to “Islamicize” their business. All the available structures were laid out to the customer, the processes and the documentary procedures were explained for their understanding.
But suddenly, comes the golden question… “Do you have any products that looks and behave like a conventional product that we are familiar with? We are not comfortable with all these Islamic terms and documentations, so can we have something that does not require us to sign all these documents?”.
I was left speechless.
Sharia-compliant banking is based on contractual relationships. There are many relationships; Musyaraka, Murabaha, Ijara, Mudharaba, Istis’na… Various and many depending on use, intention, and desired outcome. There must be an underlying transaction, governed by specific rules and tenets, and pays attention even to sequencing requirements, ownerships, rights and usufruct.
Fundamentally it is different from a conventional banking structure, which is loan based and interest charging. Thus documentation for a non-Sharia banking product is essentially one core document; Facility Agreement. But that may not necessarily be the case for Sharia banking, where documents are crucial evidence for the underlying transaction, ownership and obligations.
To make that conscious decision to shift to Sharia-banking is admirable. But to insist on a structure they are used to in conventional banks makes this effort superficial. It is frustrating to explain that each Sharia-compliant product behaves in a certain manner and must comply with the tenets captured in various documents; no matter how much a customer envision the product feature and documentation should be instead. A Sharia-compliant 1-month Term Deposit based on Qardh (ease of documentation) but with guarantee of returns? How would we pull that off? It is a contradiction in concepts.
Customers need to understand that to choose Sharia-banking is to accept the rules and trimmings that comes with this model. It is not the same as the conventional model, although at many times we try to replicate what’s available in the conventional space to avoid confusion. Replication is there for convenience but the DNA of Sharia-compliant banking is different. With replication then enhancement and eventual replacement, we hope awareness in Sharia-compliant products may come in gradual stages.
I think it all boils down to the lack of understanding what is required for us to offer Sharia-compliant banking. The layers we go through are numerous, stricter regulatory requirements and Sharia rules to follow. Turnaround times for Sharia-compliant product is understandably slower, where there is intense scrutiny on contractual relationships, legality and Sharia-sensibilities.
It is tough to be an Islamic banker. We manage perceptions, expectations and responsibility not only to the Bank’s customers, but also to general consumers. To choose this model, consumer must be open to the fact that Sharia-compliant banking is similar but definitely not the same as a conventional model. There is a lack of awareness of what is involved but we need to be open to an idea. Everyone knows the conventional model, therefore do take time to understand Sharia-compliant banking as a new learning instead on trying to hammer a conventional-familiarity into a model which works based on risk-sharing, relationships, and contractual certainties and tenets.
May I have a calm week ahead.