Monzer Kahfand shareholders. It is true that mudarabah is based on contractual freedom,
but freedom alone does not tell the whole story about distribution when it is
not supported by a bargaining power. When the two parties have different
powers, contracts are bound to be influenced by the monopolistic power
exercised by the Islamic bank vis-à-vis its depositors. The effect of
unbalanced contract is apparent in the huge differences between the
shareholders’ profit and the depositors’ share as noticed from Figure 3. Such
a huge disparity cannot be justified by the little differences between these two
groups in terms of commitments, as it turned out in the cases of
bankruptcy/failure of some Islamic banks.
Fourth, some Shari[ah boards rush to defend the bank management even
in technical matters that should have been referred to neutral experts.
Fifth, little attention is paid by the Shari[ah boards to the human and
labour relations in the Islamic banks including boycotting the companies that
use child labour or practice gender or racial discrimination, number of hours
imposed on workers in certain Islamic banks and un-equitable pay the
workers receive.
Sixth, there is a lack of interest of Islamic banks to create and inculcate a
culture of real development and investment among their clientele and public
at large. This is manifested in their lack of emphasis on efficiency, hard work,
wealth preservation, production growth, etc., instead they are satisfied with
financial increases alone.
All these factors accumulate and re-enforce each other towards undesired
outcomes. Therefore, there is a dire need for Islamic banks and their Shari[ah
boards to consciously reconsider their present approaches and behaviours if
they want to provide outstanding services to their customers and
consequently gain their confidence and the continued growth of the bank.