Zafar Sareshwala, former chancellor of Maulana Azad National Urdu University, who currently runs Parsoli Corp Ltd, is an expert on Islamic banking and finance. “The IMA scam was due to greed, which is un-Islamic,” he tells DH’s Mrityunjay Bose in Mumbai.
The IMA scam is turning out to be one of the biggest financial frauds, and its victims are mostly Muslims...
Let me be clear in the beginning itself: the entire case is due to nothing but greed. When there is greed, it becomes un-Islamic. In fact, from the word go, it was un-Islamic. Such companies set up, lure and trap people. They had persons to convince you to put in money.
I wonder how educated people in a city like Bengaluru fall into such traps.
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So, in such a situation, who is to be blamed?
Firstly, it is the investor who put in money into it out of greed. Secondly, the company owners who committed a fraud and swindled the money. Besides, the scholars and Imams who endorsed the schemes and, of course, the politicians who had knowledge of it.
There have been a series of such ‘Halal’ investment frauds. What can be done to stop them?
We need to follow the basics of Islamic finance and banking. It should not stem from greed. We need to have a regulator like RBI, RoC, SEBI etc (for such companies). All stakeholders must look into whether a project or investment is viable or not, who the fund manager is, who is the custodian of the money. You must ask for the balance sheet of the company. Only once you have done all these checks should you proceed to invest.
The ordinary Muslim may not be aware of all this. What is your advice to them?
If someone is offering something big and no one else is offering anything even close, alarm bells must ring. It is definitely not Islamic banking or finance. Financial literacy is needed. There are cheats around and people need to be careful. Simply put, a bank of the size of SBI with a massive network and large volumes find it difficult to give a 6% interest rate on deposits, how will a small company do that? This is a matter of common sense.
What are the possible avenues for Islamic banking and finance in India?
There are many things in the ambit of banking, stock markets and mutual funds. People need guidance and basic financial literacy. You need advice from a good fund manager and asset management firms and not from a clergy as far as financial issues are concerned.
What should Muslims keep in mind when investing?
High returns involve high risk. The principle of Islamic banking and finance is that it does not allow you to take undue risk because of greed. In that case, it becomes un-Islamic. Where there is greed, cheats thrive.