The Birth of Shari’a Technician
In IBF, Shari’a and technology must go along each other, as failing this will give rise to lack of innovation in structures and resultant stifling growth in the industry. The industry needs people with in-depth knowledge of Shari’a and equally good understanding of trends in conventional banking and finance.
There is an excellent term that describes such people – Shari’a technicians. The difference between a Shari’a scholar and a Shari’a technician is that the former is an expert in Islamic jurisprudence while the latter is an innovator who specialises in financial innovation that fulfils all the Shari’a requirements while developing cutting-edge Islamic financial products. Shari’a scholars are reactive, i.e., they issue fatwas on the products and structures presented to them for Shari’a approvals.
A Shari’a technician, on the other hand, initiates product development by applying juristic rules pertaining to financial transactions, i.e., fiqh al-mua’malat al-maliya, to develop innovative Islamic financial products, and in the process procures Shari’a approval from the Shari’a fraternity. A Shari’a technician may himself in certain cases be part of the Shari’a approval process.
As a Shari’a technician, I have been involved in some of the most pathbreaking product development endeavours in IBF. Short-selling techniques, Shari’a plugs-&- play structures, Islamic financial derivatives (better known as Islamic hedging instruments) and Shari’a feeders into conventional products are some of the examples of the innovations in which I have been involved in the past. Because such structures tend to push Shari’a boundaries, a Shari’a technician always faces criticism from some segments of the industry..
In the aftermath of the great financial crisis (2007-2011), innovation in IBF has slowed down, although there has been a lot of focus on FinTech in the recent past. Many IBF experts are found to be enthusiastic about FinTech in the recent past and at present. However, it must be emphasised that experts in Islamic FinTech should not be confused with Shari’a technicians, as the latter have in-depth knowledge and understanding of Shari’a matters while the former have distinction of being technology experts.
Shari’a technicians should be employed by Islamic financial institutions for the following reasons:
- For spearheading Shari’a-compliant financial innovation;
- For undertaking internal Shari’a audit; and
- For liaising with members of Shari’a Advisory Board.
Employing Shari’a technicians as Advisory Board. part of product development & structuring teams and also using their expertise and skills for internal audit (which must include Shari’a audit as well) is expected to internalise costs associated with Shari’a advisory services.
This model is being practiced in Pakistan where leading Islamic banks have developed their product development & structuring departments under supervision of a resident Shari’a scholar. Meezan Bank, for example, employs a large team of product developers who are also involved in training and advisory. It’s resident Shari’a advisor, Dr Imran Usmani, closely works with Ahmad Ali Siddiqui who heads a vibrant team of product developers, structures and trainers. Bank Islami Pakistan is also emulating the model under the leadership of Mufti Aijaz Ahmad Irshad, its resident Shari’a advisor.
Although Dr. Imran Usmani and Mufti Aijaz Ahmad Irshad are scholars of international and national repute, their teams comprising young Shari’a scholars are members of the emerging breed of Shari’a technicians. These Shari’a technicians are not just fatwa issuers but are actually central to a regime providing turnkey Islamic financial solutions.
The likes of Darul Uloom Karachi, with which most of the young Shari’a technicians are associated (either as alumni or teaching staff) has modernised the practice of traditional seminaries (called madrasas) to make them relevant to the contemporary financial markets. Consequently, graduates of madrasas have started enjoying diversity of career options, which previously was limited to teaching and/or administration of mosques and similar establishments.
The future holds good for Shari’a technicians rather than traditional Shari’a scholars, or ulama, who still have a narrow choice of career in academia or some research organisations. Shari’a technicians, on the other hand, have a blue ocean horizon full of opportunities in banking, insurance and capital markets.
