Are Islamic banks banks?

Query whether as Abdul Karim Aldohni argues (The Legal and Regulatory Aspects of Islamic banking — Routledge 2011) Islamic banks satisfy both common law and statutory definitions of banks. An exceptional work in that unlike the bulk of the literature it is a legal and scholarly analysis although some conclusions seemed pre-ordained or subtly partisan. A weakness perhaps ironically but the work answers that question only to leave the question ‘Are Islamic banks Islamic’ not only unanswered but unasked. Still a seminal work in suggesting what might be done beyond promotion and comparing English and Malaysian law and the interaction of UK based Islamic banks and the regulatory authorities, with a need to update to the current FCA and Bank of England rules and PERG. Also the number of banks and services provided by retail banks purporting compliance with Islamic law (the correct phrase rather than the customary descriptor shari’a compliance — therein lies another post) has increased since that treatment, and some products such as fixed deposits with a promised/expected return should be queried. This and questions about the nature of the property transfer in a sukuk (e.g. the use of a head lease as in the UK sovereign sakk) should also be queried not only in the interests of accuracy but also as a critical measure to hold the industry up to its own promise.

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