 We shall continue with our conversation on criticism on Islamic modes of finance. These criticisms are actually on Islamic banking and finance. And they come from people who somehow do not like one aspect or the other aspect of Islamic banking and finance. I am not referring to their intentions. It just happens to be the case that they are not comfortable with the Islamic banking and finance proposition. And hence they come up with a number of criticisms. Charging late payment penalty and offering rebate on early payments makes Islamic contracts just like interest based contracts. Interest based contracts. And they say that as there is no provision for charging late payment penalty in Islamic law, if Islamic banks do so, they are actually following the practice by conventional banks and hence both of them they are doing the same thing in different names. Conventional banks they do not refer to religion. Islamic banks they tend to camouflage their conventional products in the name of Islam by painting green. This is a criticism and again this criticism could be valid. This could be not valid. It is true that there is no provision for charging late payment on default on the payments. Someone was supposed to pay on the 5th of September this amount to the bank. The person has not been able to do so. As a result of that the Islamic bank may impose a penalty which is the practice in conventional banking and finance as well. Why this late payment penalty is not possible in an Islamic framework? Because late payment penalty is actually riba which is prohibited in Islam. And this is something I have explained in great detail in many modules during this course. Now the difference is actually that Islamic banks they impose a penalty. They charge the amount of penalty but they do not benefit from this one. The question arises if they do not benefit why do they charge this penalty? Because we are strong Muslims. Muslims like anyone else they happen to delay in their payments. And if we know that delaying this payment would not have any consequences then we would deliberately delay. This is human psyche. If I owe 100 pounds to a conventional bank and I owe another 100 pounds to an Islamic bank and I know that if I do not pay to conventional bank they would not only impose a penalty but they would charge more interest as well. However if I do not pay in time to an Islamic bank they wouldn't do anything. What would I do? I would default on Islamic bank payments because they are in the same market. Hence to curb that kind of behavior Islamic banks also impose a penalty. However they give away that money to a charity. It is only a deterrent. So this is I think very important and we have to look at this from a sympathetic viewpoint. If I want to criticize of course I can criticize you are charging and they are charging. It is exactly the same thing. Yes charging is exactly the same thing. And this practice of charging penalty to curb moral hazard problem, Sharia scholarship, the contemporary focaha they have not found any problems with it. Actually because it leads to good behavior this could be required as long as the Sharia rulings are observed strictly. And we have also seen in the context of Islamic risk management, risk management in Islamic modes of financing and risk management in general in Islamic banking and finance. We have found that the nature of credit risk faced by Islamic banks due to this charity kind of thing in the late payment penalty Islamic banks are already at a huge disadvantage as compared to the conventional banks. So just by way of observation that Islamic banks are charging late payment penalty as well and without giving any due consideration to what happens afterwards including that Islamic banking is the same as conventional banking this is not a valid argument and criticism.