fees should be paid out to a charity, and should not be added to the
bank’s profit. This was an easy requirement to implement.
4.Any income realized by the bank due to an unavoidable interest
source must be paid to charity and not added to bank profit. This
condition is also achievable.
5.In a lease-to-purchase model, insurance premiums must be shared by
the two participants in the transaction in proportion to their owner-
ship. Most scholars suggested that the monthly payment of the buyer
be increased to reflect that cost, and add the portion of the insurance
premium to the monthly payment. Per U.S. bank regulations and
for the sake of transparency and straightforwardness, the bank must
disclose in full the payments made and what they were used for.
In response, it was decided that if an RF bank uses the LARIBA Shar-
i’aa-based RF model, the bank must tell the customer openly that he or
she is responsible for the insurance; because he/she own the shares
from the beginning and that he/she is the one benefiting from the use
of the facility in an operating lease.
6.Maintenance must be shared. Again, because the buyer uses the fa-
cility, regular maintenance is not only required, but must be paid by
the user to keep the property in the best of all shapes.
7.Customers’ deposits must be exposed to bank profit and loss. Invest-
ment products cannot guarantee a certain interest rate or return. It is
believed that it is unfair, in a banking scheme that offers Federal De-
posit (FDIC) insurance on funds, that peoples’ hard-earned savings
and deposits are exposed to the risk of loss. We are aware of the
scheme used in the United Kingdom, in which the customer must be
offered the guaranteeandoffered the option of refusing it in order
for that condition to be applicable.
8.The bank should have a supervisory board that specializes in Shar-
i’aa to ensure that the bank’s products, services, and operations
are compliant with Shari’aa. The Shari’aa Board is given the power
to render bank operations not compliant. That condition can be
implemented as a part of, and a complement to, the annual onsite
regulatory examination conducted by the concerned regulatory au-
thorities. As discussed earlier in the book, many of the aspects of the
regulatory onsite examination ensure compliance to regulations. It
must be frankly admitted that the bulk of the regulations, which are
in fact Judeo-Christian-Islamic in nature, are not even considered by
the Shari’aa Boards of the Islamic banks in many of the Muslim
countries. As an example, the fairness of treating expatriate workers
needs to be closely examined and evaluated by the Shari’aa Board of
the bank or finance company. Another example is applying the basic250 THE ART OF ISLAMIC BANKING AND FINANCE