Islamic Banking vs Netflix

Islamic Banking vs Netflix

Banking as a service has always been controversial when it comes to keeping it compatible with Islamic provisions. Reasons for this incompatibility are more than one, however, we would be sticking to one of them in this piece, which is the heavy dependency on interest in dealings you make through banks.

Whether you mortgage your property, buy something in installments or acquire a loan from the bank, each transaction requires you to pay an additional sum of money that you could have avoided had the transaction been made without the involvement of the bank. The additional charge is interest, which is simply the consideration that is paid by you to the bank as part of the contract that has been constituted between you and the bank when you go to them for a specific service.

We will not be discussing how religiously moral such functioning of a contract is, but the discussion will attempt to enlighten you on how the system of Islamic and Sharia banking absolutely does nothing to make things religiously moral. Recently, Meezan Bank, while acting on its Sharia complaint banking policies, prohibited payments to Netflix and other entertainment sites through its bank accounts, which in other words meant that if you were an account holder at Meezan Bank, you could not use services like Netflix.

Meezan Bank has stated that they are making decisions based on the values they uphold as an “Islamic bank”. To analyse this justification, we would have to discuss how the Islamic banking system works and how it “avoids” inculcating interest in transactions. Since interest is one of the major sources of revenue for banks, it would be naïve of us to assume that banks with an Islamic label on them would operate without it – they simply cannot function without interest. The only difference is that it is called “profit” which is allowed. The State Bank issued circulars in 1984 which allowed Sharia complaint Islamic banks to be set up and for their transactions to be regulated by “Islamic” guidelines. A grand advisor, called the Sharia Advisor, who is someone who knows Islamic finance in and out, now has the power to decide if a certain banking transaction would be acceptable in the eyes of God. This Islamic scholar approves or disapproves all policies of Islamic banking.

Keeping the competency and appointment of this very noble person aside, let’s discuss how most Islamic banking transactions work. When it comes to lending money, regular banks give you loans for different purposes, such as home loans. If you go to a regular bank and ask for a loan, they will simply give you the amount you want after applying terms of the installments and the rate and amount of interest you have to pay to the bank. Such a transaction may appear to send you to hell if disapproved by the Sharia Advisor, but what does get approved is that the bank purchases the property you want a loan for, instead of you, and then sells it to you, asking you to make payments in installments with extra money that would be the “profit” because calling it interest would be haraam (forbidden). This process of lending is called murabaha.

What’s funny is that consumers actually fall into this fraudulent pit dug by marketing techniques in order to gain more business. One believes that people who use other people’s beliefs for their own interests and exploit them to make a business for themselves are no doubt worse than those who simply charge interest instead of keeping it disguised. It’s a shame that such banking facilities are prevalent in the market and a group of corporate elites are benefiting from them by fooling the masses. The news about banning payments to Netflix and other entertainment websites is nothing but a stunt by these elites to portray themselves as saints and religious nobles while in reality all religion means to them is a great opportunity to get business.


The views expressed in this article are those of the author and do not necessarily represent the views of or any other organization with which he might be associated.

Hubaish Farooqui

Author: Hubaish Farooqui

The writer is the Executive Editor of SZABIST Law Journal 1.0 and a final year law student at SZABIST Karachi. He has served as an intern at Courting The Law.