The Art of RF (Riba-Free) Islamic Banking and Finance: Tools and Techniques for Community-Based Banking, 2nd Edition

CHAPTER 7 Civility and Social Responsibility of the RF Banking System

Some of the serious objections leveled against the current banking system are the gambling-like activities in banking that may compromise the safety of the banking system and the exaggerated bonuses system that grants participants huge bonuses that exceed their annual salaries and is based on their production of fees, commissions, and business to their banks without consideration to and paying attention to the risks involved, which may expose banks and financial institutions shareholders’ capital, investors, and depositors to significant losses. The objections emanate from the fact that the bankers, acting as sales professionals of investment products, services, and loans may be focused more on their perceived commissions and not the interest of the investors and the borrowers. This takes the bankers’ emphasis from primarily having the interests of their clients at heart by making full disclosure about the risks involved before transactions are conducted and the commissions and bonuses they collect based on the volume of business generated.

In the fall of 2013, we at LARIBA, interviewed a promising young graduate, who was 22 years old, from a recognized university for joining our staff. The candidate graduated from a prominent business school with a GPA of approximately 3.7 and has a proven two-year track record as a mortgage banker. We started discussing our business model, which focuses on the ethics of ...