TOWARDS A LEGITIMATE NEW WORLD
We need to reconsider and update the economic foundation on which we will build and grow participation banking
In a special interview for the Katılım Finans journal, TKBB Central Advisory Board Member Temel Hazıroğlu talked about the structure and activities of the association while examining the philosophy of participation banking and the principles of the participation finance ecosystem from an economical perspective.
AS A MEMBER OF THE CENTRAL ADVISORY BOARD, COULD YOU ELABORATE ON YOUR CURRENT ACTIVITIES?
The TKBB Advisory Board was established with the decision of the Banking Regulation and Supervision Board (BRSA) dated 22.02.2018 and numbered 7736 and started its operations with the decision of the TKBB Board of Directors dated 2.04.2018 and numbered 253. Our mission is to determine the principles and standards that participation banks must comply with, make general decisions to eliminate differences in practice, offer evaluations regarding compliance with all these, and express opinions to public institutions and organisations, professional organisations that have the qualification of public institutions, and other organisations within the scope of interest-free finance activities.
And many standards have been prepared, and general decisions have been taken in this regard. Thus, the first steps of practice unity were taken on issues that were discussed and raised com- pliance hesitations among participation banks.
WHAT ARE YOUR IMPRESSIONS OF THE CENTRAL ADVISORY BOARD'S CURRENT STATUS COMPARED TO ITS PREVIOUS PERIODS?
In the past, no one worked on the principles and standards of participation banking, instead, some general decisions were taken, and these decisions contributed to the establishment of a practice unity. With this new structure, however, further steps were taken both in preparing standards and ensuring practice unity with general decisions. In addition, we included many issues on our agenda and tried to form a serious compliance area with the decisions taken after the applications of many public organisations and institutions and professional organisations that have the qualification of public institutions.
WHAT ARE THE DIFFERENCES BETWEEN PARTICIPATION BANKING AND CONVENTIONAL BANKING?
As you know, conventional banks operate over three main servic- es for society. These are collecting savings in society, extending these funds to those who need them, and performing all kinds of banking services (EFT, transfer, check and bill collection, internet banking, forex transactions, export-import, etc.) What participa- tion banks do is that they perform these operations under the "interest-free principle", which constitutes their backbone and the golden rule.
The interest-free principle consists of three rules. Not mak- ing any yield commitment while collecting funds, sharing the emerging profit or loss at the agreed rate; Not giving cash loans when extending funds, buying a commodity or service in cash, and selling them on a deferred or partnership base; Abstaining from the interest in all banking services.
AND COULD YOU SHARE YOUR OPINIONS ON THE DEVELOPMENT OF THE PARTICIPATION FINANCE ECOSYSTEM IN TURKEY AND IN THE WORLD?
If we consider the participation finance eco- system as a whole, it can only make sense if banks, insurance, stock markets, all kinds of interest-free products and services achieve solidarity together with public regulation and supervision. There has been a lot of progress in this regard, but there is still a long way to go and many difficulties to overcome. First of all, our internal weaknesses and external obstacles make things difficult. We need to create a new mindset and make a "mental immigration" to the legitimate world to overcome all these obstacles.
We need to reconsider and update the economic foundation on which we will build and grow participation banking. Because par- ticipation banking can only form its own complete and integral area of legitimacy through an economy that exists only with its own values. To do that, first, we need to identify the differences between the "economy understanding" and "economy", which are quite profound in their differences.
"Economy understanding" refers to both the intellectual effort and theory, directed towards the goal of abstaining from excesses and being in moderation. "Economy", on the other hand, refers to the application of this intellectual theory.
The economy understanding in Islam is one, unique, and exclu- sive. We can call it the "Islamic economy understanding" for now. And it also has many practices, which we can call "economy". We are temporarily excusable to use the term "Islamic economy understanding". However, using the concept of "Islamic economy" is insufficient in terms of the new mindset and new economy un- derstanding, and it is extremely dangerous and disappointing for the future of Islam, Muslims, and humanity. And our roadmap is quite clear in this regard: Building a new "economy" concept and