Chapter 8: Major Features of the Islamic LARIBA Banking Policies
1. Focuses on the human contribution as a source of income (profits) and limits income from just capital.
The LARIBA Bank emphasizes that it is an institution entrusted with the management of capital for the purpose of economic growth through the creation of new job opportunities.
It derives its income for such a service as a Mudarib, (money manager for economic growth).
The LARIBA Bank stresses the definition of a "commission" or a "management credit" as a remuneration for the work it does.
The LARIBA Bank objective is to expand its profits through serving the economic growth targets of the community.
2. Tries to maintain, as much as possible, the role of the LARIBA Bank as an intermediary, i.e. an honest match maker (broker) between the owners of capital (depositors/investors) and the entrepreneur (business person).
The bank's legal status, from an Islamic point of view, is defined on that basis as a Mudarib.
3. Stands ready to be responsible for the outcome of this new approach to banking, i.e. The LARIBA Banking way.
This will present to the community at large a living aspect of the application of the Islamic LARIBA system.
For that cause the bank shareholders and its employees (workers and managing partners) should be willing to accept to forgo some of the short term higher profits and risk to ensure the success of this new pilot experiment.
The financiers in charge of the LARIBA Bank should approach their responsibility not only as business people but also as dedicated and believing leaders for the purpose of realizing a dream.
The dream is to apply and bring to life a working Islamic LARIBA financial system, at least on a community level, as one of the pillars of a new world order which operates according to the Islamic principles.
This task should be looked upon as a form of Jihad (striving)which requires sacrifices and continuous giving.
The real profits of the LARIBA Bank will not only be measured in dollars and cents.
But, in addition, the real profits will be the contributions of the bank to open job opportunities and new businesses.
The net result would be more economic activity, growth and affluence of the community.
4. Develops ways and means by which the LARIBA Bank can perform its unique activities without interest.
Here, the task requires the dedicated contributions of professionals who are well versed in Islamic knowledge and who are dedicated Islamically, and who are, at the same time, experts in banking operations and businesses.
These professional Muslims would act as the fulfillers of the missing link between Islamic Sharia (jurisprudence) and the banking business.
Creative financial products and services development along the lines and rules of LARIBA are going to be the key to the success of the LARIBA Banking system in a world governed by RIBA banking system.
Three issues emerge as we attempt to achieve the goal of developing and building a LARIBA bank.
1. How to structure the LARIBA bank in such a way that will allow it not to charge interest on money it pays out to those who need the money (called lending in RIBA banking and investing in LARIBA banks)? As it is well known, the interest on loans represents a major source of income for RIBA banks.
2. What should be the relationship between the LARIBA bank and its depositors and entrepreneurs who would be in charge of using the depositors' money to invest it on their behalf (called borrowers in RIBA banking)?
3. How will the LARIBA bank compete with the banking services offered by RIBA banks? and what are the alternative services which meet the demands of the community while at the same time comply with the laws of the Islamic LARIBA system?