A meeting under the banner Forum for Group Discussion on Economic Issues (FGDEI) commenced on 3rd November 2013 in Media Hall, Markaz JIH Campus, New Delhi. This forum has been formed by Sahulat Microfinance Society in association with Radiance Viewsweekly in order to deliberate upon issues relating to Islamic economics, finance and banking. Mr. Arshad Ajmal, Vice President, Sahulat Microfinance Society provided a brief introduction of the Speaker as well as FGDEI. Prof. Muhammad Nejatullah Siddiqi has graced the occasion with his presentation on "Interest Free Microfinance in India". Prof. M N Siddiqi is a well-known scholar of Islamic Finance. He is Prof. Emeritus in Aligarh Muslim University. He is also a member of Board of Advisory of Sahulat Microfinance Society and he has envisaged the idea of FGDEI.

While discussing the topic Prof. MN Siddiqi provided the simplest definition of financial system, he said that the society has two kinds of people i.e. ones are those who have surplus money after their expenses and others are those who are in need of finance to improve their financial condition. So taking fund from those who have surplus money and giving to those who are needy is financial system. This situation exists with the society since long ago. This was the system adopted in general. This practice was taking place between the people without any proper institution. People were doing it by themselves either due to social or in fulfillment of family responsibility.

By the time population and boundary increased at a very large scale this practice became difficult. The reason may be outreach. At this point of time middlemen came into existence. They started to take money from those who have surplus fund and provided those who are in need and took money in exchange of their service.

By the long history of humanity and its development it has changed many times. This became similar to interest. In simple words they tried to make 12 Rs. or 15 Rs. against a sum of Rs.10 for instance.
Islam focused over the fairness and justice in every sphere of life. As per the teachings of Islam interest is categorically restricted. It says money against money should be equal and not in excess. It also assures guaranteed repayment of debt. If the debtor is incapable to pay the debt at the decided time it says to provide some relaxation in time for repayment as it is fairness towards brotherhood.

By all means Riba, Gambling or Speculation in deals is invalid. Those uncertainties which are uncontrollable and can be the reason of loss for someone or reason of profit for someone are acceptable. But the artificial uncertainties going to be profitable for someone or loss for someone are strictly prohibited.
Finance has expanded in larger course. So did the society. In 1900 the world population was less than 1 billion. But today it has grown to 7.5 billion. The reason is the expanded financial system. No doubt other factors are also responsible for this but the financial system played a major role. Making money from money became easy.

At this point of time technique of leverage came in existence. In simple words, from the making100 from the 10 units is called leverage. The leverage based economics has given rise to the current crisis. The leverage for example for AIG it was reported during the current economic crisis was 1:30. Islam has provided the ethics of individual life and social life. So it has to be defined that which way is good and what is harmful. The current economy is in a state where 5% of population has 80% of the resources and the remaining 95% have only 20%. In the last 100 years generally and last 10-15 years specifically this inequality wealth has expanded. Poor become poorer and wealthy become wealthier.

Financial system today stands on interest based debt. Central banks, regional banks, businesses, public at large all are the part of this debt based system. To bring in use the existent currency it is dependent on interest based transaction. Interest based debt aims at making 12 from 10 but it cannot be always so. But the current system only looks at it in linear manner and only creates pressure to make 12 out of 10 and there is no exemption in case returns reduce to 8 after investment of 10. This pressure of making 12 out of 10explains why phenomena like global warming and ecological imbalance result. Exhaustion of resources beyond environmental capacity makes things worse. The nature of the world in which we live in does complement the existing financial system and hence crises here and there are common. While smaller crises are being handled bigger crisis are proving to shake the confidence in the existing financial system.

Nowadays Quantitative Easing Technique is being adopted by the financial systems across the globe. The essence of this technique is that without backing the print of currency notes with bullion injecting more money into the system. America has floated billions of dollars like this. The crisis therefore is inbuilt in the system and it affects all financial systems around the world. The common man bears the impact of such system. People are unable to comprehend.

An alternative Islamic model beyond socialism or other such philosophy has been advocated by Iqbal since 1920 in his poetry and many scholars like Maulana Maudodi, Sulaiman Nadvi etc. These people advocated that the system should be on fair dealings which are of utmost importance in Islam. Efforts in Islamic Banking were initiated in 1960s and afterwards Islamic Development Bank, Dubai Islamic Bank etc. came into existence. The issue can be traced back in the history. The period of 17th, 18th and 19thcentury was the periods of colonialism. The financial control was not with Muslims.

Although the basic values of Islam that have been advocated by Shah Waliullah, Mohammed Abudu etc. could not be reflected or inculcated in the financial system. Nonetheless efforts are being made in the direction to have an Islamic financial system. Countries like Pakistan, Iran, and Sudan in the 1980s tried to adopt Islamic principles in finance but for varied reasons like standing apart from the conventional financial world and lack of necessary homework much impact is not noticed of these efforts. But a major realization follows the development of finance system all over the world is that for smaller entrepreneurs and small income group not much has been done. Islamic microfinance was not known till 1980s. Now solutions are being sought for having a sustainable interest free system for the common masses. The stumbling blocks in these initiatives are on levels of meeting the cost incurred, mobilization of funds and handling of distress cases where the need is of purely that consumption nature. What Sahulat has conceived is Islamic microfinance through cooperatives but it has one limitation it has that this model cannot extend its services to non-members. As the community expects help for itself from such organizations irrespective of the fact that they hold membership or not and this approach cannot be changed in a day.

The challenges can only be faced through research and studies because most of the questions remain unanswered without scientific research and study. Islam is a framework of values and to derive what is fair and just from our existing practices is a task which demands a lot research and evaluation, providing justice has never been easy and it will require immense efforts and moreover we also need to live with dissent, plurality of opinion and diversity for a more harmonious society and the quest for fairness.