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Posts Tagged ‘lessons’

External article: What RBS and the banks can learn from early Islam

April 15, 2013 1 comment

I recently came across a short article about the economic benefits of an Islamic economic system. This was in Money Week and authored by Dr. Peter Frankopan titled “What RBS and the banks can learn from early Islam“.

It unfortunately takes a non-muslim Historian to point out the benefits of Islamic economics void of overburdening income taxes and interest/debt overhang that drag economies into the abyss.

The disastrous results released by RBS earlier this year were bad from a financial perspective – a loss of £5.2bn in 12 months. But they were even worse morally.

Contained in the 318-page report, and listed in the unfortunately named section “Highlights”, are a catalogue of sins, including fines for fixing Libor, for mis-selling “structured collar products by the cartload and the systemised scandal of PPI [payment protection insurance]”.

If the sentence that follows is not meant as a joke, it is certainly a brave one: “RBS is committed to serving its customers well and helping them realise their ambitions.” Who knew that those ambitions included being ripped off?

Nevertheless, the report does try to seek penance for past deeds. This been a chastening year, it says. A time “to put right past mistakes.” RBS is lucky it was not in the banking business around the time of the birth of Islam – or it would have found things much more uncomfortable than a light grilling by the Financial Services Authority and the series of humiliating fines and provisions. The bankers would not have been losing their bonuses; they’d have been losing their hands.

One of the great secrets of early Islam was the store that was set by justice and on fairness in commerce. It was significant that the spiritual revelations delivered to Muhammad promised a new way of doing things, a way that protected private individuals as well as businesses from being exploited by those with access to credit. Of particular concern was the issue of the principles of lending money – a topic that appears repeatedly in the Koran.

The customers of RBS and the other banks implicated in the current scandals would recognise the sins that Islam’s holy book warns about. Those who set out to exploit their customers by excessive borrowing charges are no different to “those controlled by the devil”, records the Koran.

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The last sermon of Prophet Muhammad (PBUH)

November 27, 2011 3 comments

This is the English translation of the last sermon of Prophet Muhammad (May Peace Be Upon Him)… taken from Huda website.

This sermon was delivered on the Ninth day of Dhul-Hijjah, 10 A.H. (623AD) in the Uranah valley of Mount Arafat in Mecca. It was the occasion of annual rites of Hajj. It is also known as the Farewell Pilgrimage. After praising and thanking Allah the Prophet Muhammad (May the Peace be upon him) began with the words:

O People! Lend me an attentive ear, for I know not whether after this year I shall ever be amongst you again. Therefore, listen carefully to what I am saying and take these words to those who could not be present here today.

O People! Just as you regard this month, this day, this city as sacred, so regard the life and property of every Muslim a sacred trust. Return the goods entrusted to you to their rightful owners. Hurt no one so that no one may hurt you. Remember that you will indeed meet your Lord, and that he will indeed reckon your deeds.

Allah has forbidden you to take usury; therefore all interest obligations shall henceforth be waived. Your capital is yours to keep .You will neither inflict nor suffer any inequality. Allah has judged that there shall be no interest and that all interest due to Abbas Ibn ‘Aal-Muttalib be waived.

Every right arising out of homicide in pre-Islamic days is henceforth waived and the first such right that I waive is that arising from the murder of Rabiah ibn al-Harithiah.

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Preparing for the next crisis

December 30, 2009 1 comment

You might ward it off as “premature talk” but I think, the biggest lesson learnt from this financial debacle is to correct our mistakes (which we never did before) and prepare for the next big hit. While a lot has been said on the mistakes done… and obviously the corrective measures, little has been said on the latter lesson.

Fundamental to our preparedness is the need for a change in basic human tendencies… the greed to mistake imagination for reality. This imagination has manifested itself in different ways at every economic turning point. Being from India, I have seen three major economic shifts all through my life… (1) the economic reforms in emerging markets leading to liberalization; (2) the millennium stock market bubble; and (3) the debt markets’ collapse. If you take each of these events and go beyond the facade, the common thread is “financial sector” and “we, the people”.

Bloating small opportunities beyond their realistic scope and capability, following herd mentality to take it to disproportionately unmanageable levels… and ending up with a reality check – thy has been the game!!! At the end of each phase, the whole world (including those who haven’t ever seen a financial statement in their life) went all out to admit that lessons have been learnt. While immediate steps were taken (not to take away that credit) to stem the current crisis, no one spared even a tiny bit of that effort in finding the underlying systemic problem – the distorted compensation structures and useless organizational governance models.

And what have “we, the people” done? Every time finance folks took imaginations to their extremes, our inherent human greed has made us rally in favor of these financial institutions thereby expediting the onset of the crisis. What we fail to realize is that, the intensity of the crisis is only going up with every event. What we termed as the ‘biggest’ crisis of our lifetime will be easily overshadowed by the immediate next crisis… we’ll soon run out of superlatives. And the nightmare will not be a lack of will to react to the crisis but the means to deal with it. This crisis has showed us our limits in terms of resources and capabilities… countries have gone bust; companies are closing down by the 100s every month; people are losing their jobs… even more than a year after the crisis started its volcanic eruptions.

For me, the worst thing to see is that… everyone reads this everyday and yet conveniently forgets to factor this in their work life as they take important decisions for their organizations. In the name of cost cutting, it is often the lower ranked employees who had no say in business decisions who face the flak… when simple number crunching tells me that you get 10 low-level employees for 1 leadership executive. The top people still continue to warm their seats… without acknowledging the mistakes they’ve committed and lo’ what they do is… get in another army of consultants to tell them what went wrong with their business practices.

Concepts of management accountability and corporate governance which had all along kept conflicts of interest, cartelization and goliath power-structures at bay in successful organizations have been thrown out of the window… and they have now come to haunt them albeit their ignorance. Some ghosts are yet to cross-over… BEWARE!!!

US Elections: Lessons for India

November 10, 2008 1 comment

The world’s celebration on the US presidential elections finale is over… but one question that lingers on my mind is, “Can we Indians learn something from this and transform India?” Of and on, I and so many other expressionists have cribbed about the mediocre polity plauging India that it is high time we draw a few lessons from such experiences.

Some of the striking outcomes of the US presidential elections have been:
1. Race, creed, religion, ethnicity are no longer the factors amongst voters
2. Character, education, persuasiveness and far-sightedness of the candidates seems to rule over the voters’ minds
3. Age is another important decisive factor with voters going for the youth instead of the grey-haired
4. Voters seem to have more faith in people who have come up in life through struggles but have still shown their grit to fulfil their dreams

The lessons for India are equally simple…. we need to weed away the religion-caste divisions and rise above that. Unlike the order of the day where the average age of a politician is in the mid-40s, it is high time we start encouraging and supporting the young political entrants. More importantly, it is not just the age which should decide their candidature but the assets they bring to the table in terms of their character, education, communication skills and more importantly their independent thoughts to work for a common good.

Hope we Indians get to see a major political revolution back home… with the rise of some dynamic, intellectual and young politicians rising to the helm to get back India on the track of growth and prosperity. Amen!