Shari'ah Legitimacy of the Existing Islamic Banks: As Artificial Person having Limited Liability

Abstract

This paper studies the legitimacy of existing Islamic banking as an artificial person with the element of limited liability. This paper aims to analyze those arguments which are presented in favor of Islamic banking in the aforesaid ground. It examines these arguments to see whether the role of Islamic banks as an artificial person with the element of limited liability is consistent with the laid down principles of Shariah or not. This paper denies those argument sand declares the present Islamic banking UN-Islamic. The prospectus of the bank was also found inconsistent with the basic rules of Mudarabah. The transactions of Islamic banks with their clients were also found contradictory with the basic conditions of a valid contract. The role of the director as a paid shareholder was also found contravening the injunctions of Islam. According to the author, the presence of an Islamic bank-as an artificial person with tag of limited liability on its brow has no evidence in the literature of Islamic Jurisprudence.