 In this module and the next 4 or 5 modules, we shall be considering some of the major criticisms facing Islamic banking and finance. Islamic modes of finance are used everywhere in Islamic finance industry from retail banking to capital markets and other places where Islamic banking and finance is relevant. We find a number of criticisms being lodged against Islamic banking and finance in general and on certain Islamic modes of financing in particular. There are about 10 major criticisms. We shall be considering only 4 or 5 maximum 6 of them in these modules because the explanations or responses to these criticisms should highlight the problems with other criticisms as well. The criticism number one which we have chosen is that Islamic contracts are not used the same way as they were used classically. As the use of Islamic contracts in Islamic banking and finance is not the same as they were used in olden times, Islamic banking and finance is not sharia authentic. This is something we have heard in conferences, in seminars, on TV and in private conversations as well. And it seems as if this is a valid criticism. However, when we look at it in a scholarly way, we find that this is not entirely valid although the statement is true but the criticism or the conclusion from the statement, this is not correct. Of course, Islamic contracts in the context of Islamic banking and finance are not used as the same way as they were used previously. This can't be the case. 1400 years back, 1500 years back the circumstances were different and the use of these contracts was accordingly. Now the contracts remain the same. This is the beauty of preservation of Islam as a religion. Musharaka remains Musharaka but its applications could be different. They could differ in accordance with the circumstances, in accordance with the new challenges and opportunities and so on. And this is what Islamic banking and finance is doing. In this course, we also differentiated between an Islamic contract and an Islamic mode of finance. We said an Islamic contract is exactly the same thing as it was 1300 years ago, 1400 years ago or so on in the past. Islamic modes of finance on the other hand side may be composite arrangements involving a sale contract with a lease contract with a service level agreement and so on. So these arrangements as a whole may be deemed as Islamic modes of finance. It is definitely legitimate to innovatively use Islamic contracts to make business sense in the contemporary banking and finance. There is nothing that stops us doing so in Islam. For example, Musharaka is a partnership agreement and this is its classical use. In the olden times, Musharaka would be used as a business arrangement between two parties or more parties. So the context was business. Now in Islamic banking and finance, the context is finance. For example, in the form of diminishing Musharaka or Ejara wa Iqtina, as Islamic modes of finance, the use of Musharaka could be different. Musharaka as a contract remains unchanged. We cannot change the rules of Musharaka, Mudaraba, Ejara, etc. In case of Musharaka, classically, we say it is a partnership agreement between the two parties whereby they combine their money or resources to do business together in such a way that if there is any profit, they would distribute between them. If a loss occurs, that would be distributed or borne by the two parties in accordance with their respective shares. Musharaka remains this contract, this arrangement. Because that is the requirement of the structure, requirement of the product, requirement of the transacting parties and this is something which is very legitimate. Let us see. A few things people say that the intention is bad of the parties in Islamic banking and finance. Let me recognize the intentions of the people as well. So there is a party A, there is a party B and according to Musharaka, they pool their money to do some business. This is the classical Musharaka. If there is a profit that is distributed between them, if there is a loss that is distributed between them as well in accordance with their investment shares. There is nothing in Islam that prevents the one party or the other to take measures to minimize their risk emanating from the business. In fact, this is considered as a good practice to minimize risk. Modern use of Islamic contracts in the form of Islamic modes of finance does exactly the same thing. Let us see how. There is a customer and there is a bank. Let us see whether they have bad intentions or good intentions. Bank has intention to do business to earn profit, which is a legitimate objective. So the bank intends to earn some profit. What is the intention of the customer in case of to acquire an asset? This is the intention. So what they do? Customer doesn't have full amount of money to buy a house. He goes to a bank and they say, let's do a Musharaka and these are our intentions. Intentions They actually the customer who has got only 10% of the price of the house, he contributes 10% bank contributes 90% and they call this home purchase as a Musharaka arrangement. This is what we have studied. So I am not going into details. And pursuant to that agreement, the customer keeps paying the bank. Bank hasn't done anything wrong, the customer is happy as well. And I believe that this is a very good idea. Bank hasn't done anything wrong. The customer is happy as well and I believe that this is a very compassionate arrangement between the bank and the customer. And if you agree that this is a compassionate background, a compassionate arrangement between the two parties and all the contracts are executed in a Sharia compliant way, then there is no reason not to believe that this is a Sharia authentic product.