Q1 A relative of yours had a frank discussion with you about the Idea of Islamic banking.
After a lengthy and heated debate, they openly share with you their strong views on the concept of Islamic banking and its practicality and tell you the following:
Honestly speaking, I don’t believe in the idea itself because of the following reasons:
1.it is just a copy-paste of conventional finance or in other words, it is conventional finance in Islamic costume.
2. Equity-based Islamic financial contracts such as Mudaraba and Musharaka are not practical and can’t be applied by Islamic banks which defeat the objective.
3. Islamic banks are purely profit-oriented and do not do well on the corporate social responsibility front.
How would you respond to them? Please tackle each point separately.
Q2. Explain how the Mudaraba application would enhance economic prosperity for everybody and why its application by Islamic banks is minimal?