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Home arrow Business & Finance arrow The art of RF (riba-free) Islamic banking and finance

Preface to the Second Edition

In 2009, John Wiley & Sons called me, stating that they were looking for an American to author a book on RF (riba-free) Islamic finance and banking because most books authored on the subject, until then, were in fact authored by authorities who live outside the United States. I welcomed the idea. The Art of Islamic Banking and Finance was published in 2010.1 am thankful to all those readers who chose to buy the book and who were kind enough to critique and rate the book on

We at the LARIBA RF Movement, are most indebted to God, the Lord of all people, for creating this opportunity to publish the book, to make it successful worldwide and to help popularize the RF Movement. This movement aims at inviting people of all religions, nations, and beliefs to live riba free. This RF lifestyle is a lifestyle that is free of debt, of overconsumption, of trying to use extravagance and “cool” looks to impress others, and of thinking that money can be rented at a price called interest by using credit cards, excessive borrowing, and the equity of one's home as a source of extra money to extinguish consumptive spasms created by slick advertising campaigns. The RF Movement is out to popularize a new RF lifestyle — a lifestyle that is free from the abuse of credit cards to consume more. It is a movement that promotes the goal of paying debt as soon as one possibly can. The movement also entices students, the leaders of the future, not to take the easy way out by borrowing their tuition using student loans. The RF Movement promotes that it is better for a student not to borrow money, find a part-time job, and graduate in six years debt free in contrast to graduating in four years with the heavy burden of debt.

The second edition includes:

■ Many of the recommendations and feedback that were received from many of the readers of the first edition. I thank all of those readers who invested their time to carefully read the book and to communicate their critiques, valuable feedback, and insightful advices to me.

■ Rearrangements of chapters to present the new ideas that cast a new light on the RF banking, finance, and monetary disciplines presented in the book for the first time in the history of RF Islamic banking. This, I hope, will make these RF disciplines and the real added value of applying the

RF banking, finance, and monetary disciplines crystal clear. For example, Chapter 5 in the first edition was divided into two chapters — Chapters 5 and 6. In addition, a new Chapter 12 was added to integrate and wrap up all the research findings, the RF disciplines, and the pioneered models presented in the book and how this integrated process is applied in practice.

■ New chapters added to cover:

■ RF capital markets to include a detailed study of financial products that were not fully covered in the first edition of 2010.

■ The financing products available in the riba-based conventional banking and their applicability in an RF domain.

■ How to handle nonperforming loans in an RF setting based on the 10-year RF operating experience at the LARIBA Bank of Whittier since 2003.

It is hoped that the reader of this second edition will find these additions enriching and most useful:

■ A set of review questions at the end of every chapter. These questions can be useful to students if the book is taught at a university campus. The review questions also will help give an intriguing quick insight about what to expect to learn by reading each of the chapters.

■ The use of a dedicated website for the book. See the page at the back of the book for details.

Now to a personal note and some words of advice:

In 2014 at the age of 70,1 want to leave a message to the new generation of RF bankers — Muslims and non-Muslims — before I return to God:

■ Try your hardest; never lose hope, which is a manifestation of believing in God; and try your best by starting from the idea that it is possible to achieve what others tell you is impossible.

■ Remember that we, the believers in the RF lifestyle, are not out to discredit nor do away with the riba-based banking and finance system. We are out to offer an alternative lifestyle and system that we hope will shine when contrasted with the riba-based system.

■ Never give up or feel defeated when you face a setback or if you could not achieve a dream. You will be criticized by Muslims and non-Muslims with good intentions and sometimes from people who lack experience and vision for the future. Never let these criticisms get you down. Listen carefully and fix the problems they bring to your attention as much as you can within the limitations at hand. Never discount the criticism of others to your work. Always pay respect and close attention to what others say about your work — good and bad.

■ Always associate with the optimists and the constructive well-meaning criticizers, but never hate those who criticize you or position them as your enemies. Remember never to burn your bridges with others. You will never know when you will need others in the future.

■ Communicate with people in the language they understand, including presenting RF banking disciplines, products, and contracts in a way that can be easily compared, evaluated, contrasted, and litigated with the riba-based conventional banking and finance disciplines.

■ Continue to build institutions and not a one-person organization. Institutions live for generations, but one-person shows expire when that man or woman disappears from the scene.

■ Hold to your RF beliefs and disciplines and always be frank, sincere, and straight in your communications with the public; what comes out of the heart reaches people's hearts.

■ Deal with all people with a humble attitude and respect. Never be boastful about what you, your staff, and/or your company have done by serving others in the community. Never complain because people do not appreciate your work. The ultimate goal you and we all should be working for is to please God.

■ Remember that when it seems that it is over, God will bring His rescue from the least expected source.

■ Make sure never to use ruses and circumventions of the RF disciplines and the law, including the laws of the land.

■ Always be clear in explaining the added value of the RF disciplines. Remember that the RF Movement is out to serve all people: Jews, Christians, Buddhists, Sikhs, Zoroastrians, and those who do not believe.

Remember that no one, regardless how pious that person is, holds the keys to paradise and to God's kingdom. We are all servants of God and His people, who were created by Him. We at the RF Movement are thankful because the first edition of this book made it to the top 10 bestsellers list in its category on the book list for a period of over six months. The book was bought by many customers around the world — in the United States and Canada, as well as in many countries around the world, mainly in Asia and Europe.

The success of the book prompted John Wiley & Sons to issue another printing in 2012, and with the success and the almost sellout of the second printing, it was decided to produce this expanded second edition.

Our hard work in publicizing and promoting the book worked. John Wiley & Sons, thankfully, did its share of marketing the book in the media by arranging radio and print media interviews and Internet publicity. To complement these efforts, we at the RF Movement decided to create a road show to present the book to universities, government regulatory authorities, and different communities around the world. The book was presented with signing events in many cities in the United States, Canada, Europe, Asia, the Middle East, and Africa.

In the United States, we arranged book-signing seminar events at the University of Wisconsin; California State University in San Bernardino; University of Southern California; Southwest Law School in Los Angeles; University of Texas at Dallas (UTD); Bradley University in Peoria, Illinois; Whittier College; George Washington University; and Columbia University, to mention a few. We visited most states'/provinces' major cities in the United States and Canada.

Internationally, book-signing events were conducted in many countries around the world.

In the United Kingdom, we presented at Oxford University, London School of Economics, and Durham University. In addition, we presented the book to the communities in Manchester and in East London at one of the larger Islamic Centers of London. These events were arranged by my dear friends, gifted RL monetary regime researcher Tarek El Diwany, and Afzal Chaudhary, who has moved to Manchester from southern California after retirement. We at the RL Movement thank them for their efforts and sincere help.

In the rest of the world, the book was presented at many universities and many government financial authorities in Malaysia, Singapore, Turkey, Saudi Arabia, Egypt, United Arab Emirates, Lebanon, Tunisia, Jordan, Switzerland, South Africa, Ethiopia, Argentina, and Trinidad. In addition, the book was promoted in Kazakhstan, where we had a successful full-service RF banking operation — LARIBA Bank of Kazakhstan — from 1993 to 2006. The bank was sold in 2006 due to the new excessive capital requirements of the government at that time because we simply did not have $100 million. LARIBA Bank of Kazakhstan was the first bank ever in the history of Kazakhstan and the former Soviet republics in Central Asia to introduce and publicize, using TV interviews and lecture series, mortgages in general and, for that matter, RF mortgages. The book was also introduced and promoted by the Egyptian Islamic Banking and Finance Association. It is important to note the successful introduction of LARIBA — LARIBA Misr A1 Arabiya — in Egypt between 2004 and 2010, when its services were temporarily frozen due to political turmoil that led to the events that took Egypt to the January 25, 2011, revolution. It is worth mentioning that half of its finance portfolio was given to members of the Egyptian Coptic and Christian community business entrepreneurs.

It is also useful to report that after the book was released, LARIBA Bank of Whittier opened up a full-service RF banking branch in the City of Richardson, Texas (about eight miles north of Dallas). The new branch, under the able leadership of Mohsin Mandavia, has contributed greatly to our cause and our RF Movement. We all want to thank the Texas community for their wonderful and enthusiastic support of the RF Movement.

To conclude, please remember that “the best of all people are those who benefit people through serving their needs with love and good intentions” as taught by Prophet Muhammad (pp[1]).

  • [1] Throughout the book I shall use the abbreviation (pp) to stand for the prayer every Muslim is taught to utter every time he/she hears the name of a prophet mentioned: “May God's peace and prayers be showered onto him.”
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