Islam isn't only a faith but also a complete code of life. It gives solution to all the issues of mankind from personal, public, political and financial life. Though Islamic economists wrote about Islamic banking and finance from the beginning of nineteenth century, it got its framework at the start of 1960's with small mutual saving project in Egypt (Schoon, 2009). It began to take off from 1990's and it is a trillion dollar business now growing at the rate of 15%-20% yearly. But in conditions of product development it is facing significant hurdles because of the insufficient expert recruiting with the blend of both banking and Sharia skills. That's the reason, it is very important to comprehend prohibition in Islamic bank like gharar and zero amount game, so that it can be averted at the time of future product development in Islamic banking.
Islamic Bank:
"Islamic banking is an alternative bank operating system based on key points of Sharia. It's been developed with the addition of permissible economic techniques (Halal-to do) from Fiqh muwamalat (Islamic business regulations) like sales, business, profit and loss posting and reducing prohibition of Sharia (Haram-not to do) like Riba (interest), gharar (Ambiguity), zulm (oppression), mysir (Gaming) and investment in Haram products like alcohol, cigarette and pork business".
Yahia Abdul Rahman (2010) says '' Islamic bank is socially dependable and community based both in spirit and intent''. While classic bank deals with only money which causes Riba, Islamic lender though a financial intermediary like normal bank handles trade. As Islam prohibits Riba and allows deals. (Al Quran, 2:275)
Zero amount game
Decision theory, an instance in which one or more participants (reduction) revenue of other participants from damage (profit) is equal to So a earnings (damage) a number of others (www. businessdictionary. com) reduction (gain) should lead.
Zero amount - are participating in a game where one wins and another manages to lose, Zero sum problem - only once others demand that earn may lose. Zero total problems - mental appeal that victory for unbeaten fun can beat reflects. All games and gambling game titles are zero amounts. Robbery and looting in the war zero volumes is difficult. Overriding need: zero total relationship for awarded is at the politics level "that guideline or basic principle. " I do not belong to the same. "You haven't any others before them. " Joke in regards to a farmer who wish talent, but he called the next two zero total mentality explains very well. "A poke my eyes"
Product Development in Islamic Banking:
No industry can survive for long term without continuously producing services. Change in technology, demand of customers and forces of new competition lead to new product development (Clark and Wheelwright, 1994). While in secular industry fulfilment of customer demand and winning competitors if you want to maximize earnings of the business within the platform of guidelines and regulation of the state is sufficient, but it needs to remain within the parameter of sharia in conditions of sharia compliant product development. Development of products for Islamic finance institutions can be done by either completely developing new product predicated on quran, sunnah, ijma and qiyas or by purifying existing conventional bank products (Ayub, 2009).
Gharar:
"The word Gharar does not have a specific definition like Riba from Quran and Sunnah. For the reason that what's gharar today may not be gharar tomorrow. It keeps the overall flexibility and options for arguments among sharia scholars at the time of new product development. Gharar generally identifies uncertainty, ambiguity, high risks, mysterious and even ignorance. Due to the gharar prophet (PBUH) forbade pebble deal, sales of things before acquiring ownership, two dependent agreements in one deal, sale of birds in the sky and seafood in the sea etc" (Vogel & Hayes, 1998).
Zero Sum Game:
A game is a competition among several players where many people are rivalling for his own interest. But a zero amount game is a competition among several individuals where what others lose (zero) is a get (amount) for only 1 person (Swailem, 2000). It means in order to earn one must lose another. While competition among companies brings harmony, zero total game brings hatred and enmity in the market.
Relationship between Maqsad al Sharia, Gharar and Zero Sum Game:
Maqsad al Sharia clarifies intelligence behind ruling. In wide-ranging sense it means to understand the reasons and goals of regulations laid in Quran and Sunnah. Mujtahids use their individual analogy and discover answer for modern problems predicated on maqsad al sharia (Ibn Ashur, 2006). Hence it is very important to comprehend it to be able to develop products for Islamic bank. Sharia intends to bring samaha (efficiency) between functions in dealing with each other. Samaha is the position in the midway between strictness and indulgence (Ibn Ashur. 2000). It really is to produce win-win situation for counter parties in exchange so that they do not regret later on. Therefore gharar and zero sum game should be known in light of maqasid al sharia to avoid those in future product development for Islamic bank.
Relationship between Maqsad al Sharia and Gharar:
A goal (Maqsad) is not valid unless it contributes to fulfilment of some goods (maslahah) or the avoidance of some mischief (mafsadah). Therefore the objective, intent, primary, end or goal of the Islamic law will there be for the 'interest of the humanity' (Auda, 2008). So, sharia intends to avoid any issue between counterparty, avoids uncertainty, stops harming oneself or others and regret after exchange. On the other hand, gharar contributes to uncertainty, dispute and conflict which may cause harm to the society. So it can be figured Maqsad al sharia and gharar are opposing to one another.
Relationship between Maqsad al Sharia and No sum game:
While Maqsad al sharia is to save society harming to one or to others, Zero amount game must be competitive to reduce others for individual gain. Therefore sharia will not allow zero sum game.
Relationship between Gharar and Zero Sum Game:
Imam Malik in Muwatta says "Included in gharar and dangerous transactions is the situation when a man whose camel is lost, or his slave has escaped, the price tag on which is (say) fifty dinar, so he would find out by another man: I'll buy it for twenty dinars. Thus if the buyer finds it, the seller manages to lose thirty dinars; if not, the buyer manages to lose twenty dinars" (Swailem, 2000). Here both buyer and seller's interest is completely opposite, which loses is the gain of others. Hence this is a zero amount game as well. So, a myriad of Zero sum game titles lead to gharar. Because players in zero amount game does not know beforehand whether he is going to gain or not (uncertainty), if he manages to lose then loses everything he puts in the game (extreme risk).
Existing Islamic products, Gharar and No sum Game:
To have the ability to develop new products for Islamic banking in future it is vital to know existing permissible products in terms of gharar and zero total game.
Mudarabah (Unaggressive partnership):
"Mudaraba is a partnership where one get together provides capital (Rab ul Mal) and another sets his knowledge (Mudarib). Single management remains with the mudarib with no disturbance from Rab ul Mal. A revenue rate (%) but not a set amount is designated to each get together before venture starts off. So in case of success, both of the get together distribute the profit between them in agreed percentage and in case there is failing Rab ul Mal lose his capital and mudarib manages to lose his time and attempts (Saeed, 1999). Within this business enterprise both rab ul mal and mudarib co operate with each other unlike zero sum game and they know beforehand the consequences for earnings and reduction unlike gharar".
Musharaka (Energetic Partnership):
"Musharaka is collaboration like mudaraba but only difference is here now both party invest capital and engage in management as well. So overall success of business brings earnings to both and failure of business brings loss to both at the same time. Hence musharaka is free from zero total game and gharar".
Murabaha Bai Muajjal (Cost plus deferred deal):
"Most of the trade in Islamic banking derive from the mixture of murabaha and bai muajjal. Murabaha is a agreement where both buyer and vendor decided on goods, cost, and mark up and payment date. Buyer will pay higher price than market rate but have the ownership of the nice to be benefitted from it (Thomas et al, 2005). So in this sales contract, seller gain by higher price and buyer reap the benefits of ownership of the products, creating a win-win situation for both celebrations in the agreement. Hence this can be a none zero amount game and no opportunity of gharar in the agreement as everything about product, price and time is on paper in the agreement. "
Ijara (Rent):
Lexically ijara methods to give something for rent. It is of two types. Renting usufructs of property or property (Lease) or selecting/employing service of your person or company for salary, fees or commission rate (Kettell, 2010). Both the lessor and lessee are being good for lease contract, an example may be enjoying service while other getting earnings as a lease or price. So, ijara agreement grows win-win condition for both people. Hence ijara contract is free from zero amount game. There is absolutely no gharar in the deal as well because property, lease and time of repayment is specifically written before performing contract.
Bai Salam (Prepaid Purchase):
Bai salam is opposing of Bai Muajjal. It is a sale deal specifically for the agricultural products. In such a contract full price of the products (Rice, wheat) is paid in advance and delivery is used a pre decided future day. Though sharia will not allow selling something is completely not prepared to be sold but this exemption has been made to aid poor farmer who needs money in advance to process agricultural product to make it useful for market (Siddiqi, A & Hrubi, 2008). In Bai salam contract determined price is leaner than place price. Buyer is benefited by paying less overall and retailer is benefited by getting money in progress. Though it is dangerous for buyer in case of any natural calamity, but it is sharia permitted risk which is satisfactory for just about any business. During delivery if the price tag on the goods rises, seller has the incentive to default or sell goods to another person. But he'll not do this because sale contract has recently been done. So, it'll be subject to legal outcomes. Bai salam agreement creates win earn situation for both buyer and owner. That's the reason it is not a zero amount game.
Istisna (Commssion to create):
Istisna can be an exceptional sale agreement like salam. During agreement, good or item generally not owned or operated or never been around before. Buyer offers order to seller to generate some item with standards. Unlike salam, delivery time need not to be fixed and sale price may well not be paid full in advance (Siddiqi, A. , 2008). In istisna contract both buyer and owner are in win-win position and there interest aren't conflicting to each other, hence, this is a non zero amount game.
Some Contradictory Islamic products and Issues of Gharar and Zero Sum Game:
After inspecting permissible products of Islamic banking in terms of gharar and zero amount game, it is necessary to see some products where fuqaha from different approach take different view for sharia rulings.
Bay' Al Inah (Same item sale repurchase):
In Bay' al inah debtor (customer) offers some property to the lender (bank or investment company) for cash price and then lender changes back again to sell same property to borrower with deferred but higher price (El-Gamal, 2006). In this contract, it is a condition of second deal for the execution of first sales. Because it brings two contract within one sales, it contributes to gharar. End result of two deals is original property is transferred to borrower with a liability of personal debt. Extra amount for second deferred deal that customer loses is the gain of lender, hence it causes zero amount game. So, Bai'al inah is prohibited by major school of thoughts.
Tawarruq:
To beat the criticism of bay'al ina, a third party arrangement is introduced. In this agreement customer buy a product from Islamic lender on murabaha bai muajjal basis and sell it again with cheap to a third party on location basis. Used, bank organize this third party so that customer can easily sell it back to the party whom lender has bought the merchandise from. So the truth is product or asset does not move from the original place. Islamic fiqh academy and AAOFI has declined this kind of arranged tawarruq (Swailem, 2006, pp. 103-104). Final result of tawarruq is similar to bay' al ina. Extra amount paid by customer is the gain of standard bank leading to zero sum game.
Marketing strategy, Gharar and No Sum Game:
From many aspect of marketing, advertising to get new customer is very vital for the existence of any corporation. In standard system, organization may take many procedure like sale, discount, and limited time offer, buy one get one free or even chance of getting very costly items as a gift idea (iphone, ipad) etc. A different type of marketing methodology is multi level marketing (MLM), where people get prize to make their relative, relatives and buddies to be customer of that business. Promotional activities in Islamic bank are required to follow sharia parameter and it must avoid any kind of gharar, deception and zero total game.
Attracting customers with offer of chance:
Most of the business get new customer with offer of chance of receiving costly and appealing items. For instance, a online telecom company may advertise customer registering with their website within a specific month, their name will be put into a pool of lottery. Lottery will be attracted after certain time to pick up the name of success who will get an iphone. During registration, if it is an ailment from the company that they must buy a product to qualify for entrance to pool of lottery, it'll lead to zero total game. Due to customer is in fact not only paying for product but also purchasing the product with the expectation of earning lottery. After the get of the lottery, only many people earn while other gets nothing. Hence it is zero sum game. But if the customer needs never to pay for any product and get free access to pool of lottery, you won't be zero sum game. Because of reward of the lottery will be considered as a surprise from company. Islamic loan provider can practice second approach to entice new depositors and customers of its products.
