Halal certification is a common phrase you will always find when you are researching on the broad topic of Islamic banking. The idea of halal certification started with foods. Halal foods are those that adhere to Islamic laws and they are monitored from their point of production up to the point of consumption.
The idea is now becoming widespread in the financial sector where people as well want to lead a halal lifestyle. The Islamic financial sector is growing pretty fast and it is even being adopted by non-Muslims. There are different definitions that try to define what a halal product is based on regional beliefs and upbringing. The following are some of the features that make halal banking products Sharia-compliant
They do not fund businesses that promote moral decay
There are some businesses like gambling and sale of alcohol that bring more harm than good in our society. Islamic financial institutions should not fund such businesses because they are not in line with the Islamic teachings. Conventional banks will fund such businesses because all they care about is the interest they get from the ventures. A financial institution should carry out research on the type of business that a borrower wishes to start before it releases the money.
Products that promote equity
The modern world is capitalistic in nature and the rich continue being richer while the poor are falling deeper into the poverty trap. Most of the products that conventional financial institutions provide will consider your asset base before they are advanced to you. This means that you could be having a million dollar idea but nobody will be willing to fund you just because you do not have assets to guarantee a loan. It thus means that only those with financial muscles will continue to enjoy high-value loans and funding. The Islamic financial sector is a very strong tool for promoting equity as it addresses the bottom of the pyramid. This is a sector that has been neglected for a long time simply because chances of loan defaults are very high.
Products that promote convenience
Even though most people are of the opinion that this industry is super strict, you should also note that it is responsive to change. Over the past few years, this industry has developed various fintech products that are taking Islamic finance to the next level. Our company, for instance, will be fully digital and people will be able to access our products at the convenience of their homes. Research shows that a good number of Muslims do not operate bank accounts simply because they are located far away from their homes. The idea of having financial products that are easily accessible and in line with the Islamic laws is thus an amazing idea that helps make the world a better place.
Halal is simply a way of life and it cuts across a person’s physical and spiritual well-being. It is the duty of financial institutions to educate people on what makes a product halal. There are many misconceptions on this topic and it will take time before people fully learn and appreciate the importance of leading a halal lifestyle.