My journey in Islamic finance began in the late 1990’s when a client threw down the gauntlet.  “Why can’t anyone come up with a pristine Islamic finance structure?”  He was frustrated that after so many years, the Islamic finance landscape was still dominated by Bai’ Bithaman Ajil.  Being a non-Muslim, I had no religious inclination to advance Islamic finance but curiosity got the better of me.

 

I started by reading the book by Muhammad Taqi Usmani, AAOIFI standards, certain surahs and hadith.  What it was like during the Prophet’s time.  Why riba (interest) is so frowned upon in Islam.  And most importantly, what finance in Islam wants to achieve.  From there, I understood and appreciated that first and foremost, Islamic finance aims to be fair and not oppress any party.

 

My teammates in the Islamic banks, Chin Yoon Fatt and Chan Leng Kei all subscribed to the same ideal.  Substance must hold over form.  However, we were also not that naïve to assume that we could discard all commercial considerations.  Islamic finance is, in essence more equity than debt but traditional finance is the opposite.  Hence, practitioners are always trying to mimic and play catch-up with the conventional market.  

 

I retired from investment banking, started this book in 2010, stopped and restarted in 2019.  I was expecting IF to have made great strides during my absence but was dismayed to see instead that it had capitulated too much to commercial pressures.  Advanced in form but its soul lost in the process. Bankers falling back on the convenient Commodity Murabahah Tawarruq for challenging deals. Many are disillusioned, dismissing Islamic finance as conventional banking in disguise.     

 

That spurred me and the team to finish this book.  We hope that our book will advance the beautiful realm of Islamic finance just a little bit more. 

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Saw Ann Ping, CFA