Muhith criticises Islamic banking

Finance Minister AMA Muhith yesterday criticised Islamic banking, saying the system has been built on "misconception".

"The system seems to me absolutely fraudulent," he told parliament, replying to a question of a lawmaker.

Muhith said the banking model has become popular around the world. "It is unfortunate that many organisations like IMF [International Monetary Fund] talk about it."

The minister said "riba" and interest rates are not the same.

Riba is a concept in Islamic banking that refers to charged interest. It is forbidden under sharia because it is thought to be exploitive, according to Investopedia. "Riba is forbidden in Islam. It is a compound interest. But the interest rate in the conventional banking system is fixed taking into account the cost of fund,” Muhith said.

He also said he has nothing to do in this regard. "The Muslims and those who think about Islam can do something."

Replying to another query, Muhith said no specific allegation has been received so far against any bank capitalising on religion.