• ARTICLE
ISLAMIC BANKING:
THE ORIGINAL IDEA
By Dr Abdul Ghafar Ismail, Recipient of the AmBank Group
Resident Fellowship at Perdana Leadership Foundation
T
he point that there is more to Islamic bank-
ing than the mere abolition of interest was
strongly driven home by M. Umer Chapra in
his book “Towards a Just Monetary System”.
He envisaged Islamic banks whose nature,
outlook, and operations could be distinctly
different from those of conventional banks.
Besides the outlawing of riba (interest), he considered it es-
sential that Islamic banks should, since they handle public
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PERDANA MAGAZINE 2017
funds, serve the public interest rather than individual or
group interests. In other words, they should play a social
welfare-oriented rather than a profit-maximising role.
He conceived Islamic banks as a crossbreed of commercial
and merchant banks, investment trusts, and investment-
management institutions that would offer a wide spectrum of
services to their customers. Unlike conventional banks which
depend heavily on the ‘crutches of collateral and of non-par-