With more than ten years of experience in the field of Islamic Finance, Mr. Yousuf Sultan aspires to make Bangladesh a global hub of Islamic Finance. He has been involved in various projects from home and abroad and worked with regulatory bodies in setting Islamic financial standards.
Let’s dive deeper into his story as he shares his vision with IFA Consultancy and pioneering examples for future generations to follow.
Q. WE’D LIKE TO START THE INTERVIEW WITH A BRIEF INTRODUCTION OF YOURS. WHERE WERE YOU BORN AND BROUGHT UP, YOUR CHILDHOOD, AND YOUR ACADEMIC BACKGROUND?
Although my birthplace is Dhaka, I shifted to Abu Dhabi with my family right after my birth. I started my schooling over there and studied till 4th grade. My childhood memories are scattered all over Abu Dhabi, a land with modern developments back then. I returned to Bangladesh after the 4th grade and continued my studies here. Since my parents aspired to make me an Islamic Scholar, I shifted to traditional madrasah after passing grade six. During the Madrasah studies, we had to attend multiple board exams, including the final board exam of Takmeel in 2008, I stood first all over Bangladesh, Alhamdulillah. After completing my 10 years’ studies from Madrasah education, I attended another 1-year specialized course on Fiqh and Fatwa.
I always had an interest in being involved in the field of modern Islamic economics and finance. Then luckily Alhamdulillah, a prominent foreign scholar referred me to the Ethica Institute of Islamic Finance in Dubai. I took the CIFE (Certified Islamic Finance Executive) course which was completely online and took a few months to complete. I was the first Bangladeshi to enroll in this course. After completing the course, a door to new opportunities and horizons opened in front of me. I came to know about the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), a Bahrain based international standard setting body for Islamic financial institutions. I used to attend a number of Islamic Banking seminars held in the country. The more I interacted, the more I understood that I need to take a systematic approach to learn modern Islamic finance practices. Gradually, I learnt about other Islamic financial institutions which were INCEIF and ISRA in Malaysia. When Mr. Daud Vicary, the then CEO & President of INCEIF visited Bangladesh in around 2012, I had the opportunity to discuss with him about
Islamic finance which really inspired me. As a result, in 2013, I went to Malaysia to visit INCEIF, ISRA and the Central Bank of Malaysia. In September 2014, I got myself admitted to the MSc in Islamic Finance course at INCEIF with a scholarship. That was a huge leap towards my journey in the field of Islamic finance.
Q. SHARE THE STORY OF YOUR TRANSITION FROM STARTING EDUCATION IN THE WORLD OF ISLAMIC FINANCE TO TAKING IT UP AS A PROFESSION.
This journey was very enlightening and full of experiences. When I was in Malaysia, one of my students from Bangladesh suggested that we spread awareness among the public regarding Islamic finance.
The General Perception Was That, Islamic Finance Only Deals With Banking, Whereas, The Jurisdiction Of Halal & Islamic Finance Covers Everyday Jobs, Businesses And Daily Life.
It was during that time when we created a Facebook group called Islamic Economic forum to raise awareness.
Within a few months, the group took off among like minded individuals and we frequently got queries regarding shariah rules in business and jobs. After returning from Malaysia, we decided to arrange a meetup for the group. This meetup acted like a primary foundation for starting IFA Consultancy (IFAC). They suggested that we should prepare a training program and we continued this on a regular basis. My colleague and Founder of IFAC, Mufti Abdullah Masum, was working tirelessly on the field to promote our cause during that time. We formed IFA Consultancy after the first meetup.
It was in 2016, when I took Islamic Finance as a profession first. I joined an Islamic fintech group named Ethis in Malaysia. It was a privilege to gain exposure to Malaysian financial regulators like Securities Commission of Malaysia and Bank Negara Malaysia, Indonesia’s monetary authority OJK, Qatar Financial Center and some other regulatory bodies. I joined as a consultant first, then started full-time, and wore multiple hats during my 5 years journey. I left Ethis as the head of Shariah & Governance in September 2021. Next, I started a shariah advisory company named Adl Advisory, based in Malaysia. That was on top of my capacity as a Co-founder of IFAC in Bangladesh.
At the same time, I started my PhD at INCEIF in 2016. I would like to mention two particular projects of INCEIF, one of which was taken by the Central Bank of Malaysia. It addressed environmental, social and governance concerns for Islamic financial institutions which is a comprehensive version of the UN’s SDG goals. INCEIF was the first to draw a policy paper for this project titled “Value Based Intermediation” and I led the Shariah research over there in this project.
The other project was led by the then Chancellor, Tan Sri Dr Zeti, who served as Governor of the Central Bank of Malaysia for 16 years. She worked on a report on the convergence between Ethical Finance or Impact Investment and Islamic Finance. The report titled “Responsible Finance – Ethical and Islamic Finance: Meeting the Global Agenda” was published by Responsible Finance Institution (RFI), a UK based firm, at a summit of Islamic Financial Services Board (IFSB) in Indonesia. It was a big exposure for me. My name is still in the author profile of the RFI website.
Q. WHAT IS THE PRESENT SITUATION OF ISLAMIC FINANCE IN THE GLOBAL MARKET?
When Muslims were under various colonialism, they influenced financial instruments and institutions. Concurrently, we saw the establishment of banks during that time. Conventional finance was solely controlling the world’s economy at that time and the Muslim community had very less influence on the financial system.
But around the 1970s, things began to change. A lot of initiatives were taken to build a Islamic financial system that was different from conventional finance. Seminars, symposiums, were arranged and many books were written conveying the message of Islamic Shariah in the economics and financial system.
As many Muslim countries achieved independence in the middle of the last century, they started to put an impact on the global economy. Those countries were disinterested in the conventional interest-bearing system. To meet the demand of a rising economy, Islamic Development Bank was founded in 1975. Following the IsDB, several countries began to introduce their own Islamic banks. In Bangladesh, we had our first Islamic bank in 1983 which is IBBL. In Malaysia it was Bank Islam Malaysia Berhad in the same year, followed by other Islamic banks around the globe.
The new emergence of Islamic finance in the modern world is only about 50 years old. But in this short period of time, this sector showed immense potential, incredible growth, and exceptional resilience. It has already become a market with an asset size ofUSD 3 trillion. This actively potential market has absorbed the economic crisis in 2007 so well that it rang a bell for many non-Muslim countries.
Captivated by its potential, the global financial community is vigorously exploring opportunities in the Islamic Finance sector. In fact, European countries like UK, Luxembourg, etc. are very much interested in becoming a hub of Islamic Finance alongside other Muslim countries.
Q. WHAT IS YOUR PERSPECTIVE ON THE CURRENT PRACTICE OF ISLAMIC FINANCE SYSTEM AND WHAT IS THE OPERATIONAL OUTPUT OF THIS PRACTICE FROM YOUR VIEWPOINT?
This 50 years of Islamic finance in the modern world is not sufficient to change or update the existing legal and regulatory system. If you talk about our region, majority laws over here have been formulated by the British. There might have been some minor amendments but things mostly run based on those. It’s a mammoth challenge to start from scratch and create the rules and regulations.
Very few countries took this challenge. In Malaysia, after starting Islamic Banking in 1983, they developed a different ecosystem for Islamic finance systematically, phase by phase with proper planning and blueprint. They established sufficient academic institutions, research centers, publications, financial institutions as well as regulatory act, legal framework and effective human resources solely for Islamic financial system. Furthermore, they have their own Islamic Financial Services Act. All these initiatives took the Malaysian market in a very mature state. Compared to that, we are still lagging behind. Although we started around the same time, we still don’t have any dedicated Islamic Banking Act or Islamic Financial Services Act. With a few amendments in the existing Bank Company Act and a guideline by the Central Bank, it is still being used as a backbone of this system in the country.
Q. MANY INDIVIDUALS ARE STILL UNAWARE OF ISLAMIC FINANCE PRACTICES. WHAT ARE YOUR THOUGHTS ON PEOPLE’S MISCONCEPTIONS BETWEEN CONVENTIONAL AND ISLAMIC FINANCIAL SYSTEMS?
The biggest misconception is that, Islamic financing should be completely different from conventional financing, explicitly and implicitly. In reality, for worldly matters like business and finance, Islam provides some specific guidelines, which act as a filtering system. Using this, you can filter out
the prohibited elements from the existing conventional system, without the need to start from scratch. During the time of the Messenger of Allah (Sallallahu Alaihi Wasallam), there was Mudaraba business, which he himself practiced. There were also different types of sales and other agreements, like the “Salam Agreement” which basically is to purchase a described commodity for deferred delivery in exchange for immediate payment. From those practices, the ones that clearly had no scope of substitution and caused disputes, Rasulullah (Sallallahu Alaihi Wasallam) forbade them. Some examples are, sales through Mualamasah, Munabazah, Najash etc. The other agreements were tweaked through the shariah filters, so there is no room for exploitation. For example, in the “Salam Agreement”, the delivery of commodities would have been in the future. But a lot of people didn’t specify the commodity, which may lead to dispute between the parties. That’s why Rasulullah (Sallallahu Alaihi Wasallam) said that if someone does a “Salam Agreement” he should clearly specify the weight, quality, and quantity of the commodity. He didn’t outrightly declare Salam as impermissible. Similarly, in the case of modern Islamic finance, it doesn’t necessarily mean we’re trying to reinvent the wheel. And hence often the final outcome may seem quite similar, even though the underlying contractual roles, obligations and liabilities are different. In contrast to financial transactions, the Ibadat or pure rituals of worship like prayer, hajj, fasting etc have very specific shariah regulations and there is no room for invention. But when it comes to worldly issues, the world should go forward with the guidelines and keep the shariah filters and values into consideration.
One of the basic guidelines of Sharia is it prohibits us from making money out of money. Instead, we have to take risks of loss while doing business with an asset or a capital. To take risks with assets we need to have the proper ownership of the asset as well. If we create money out of money, it adds no additional value to the economy. It’ll only create more room for exploitation.
When modern Islamic banking started and they had the challenge to replace pure loan based banking transactions, they took few shariah based contracts to work, like Mudaraba and Murabaha contracts. Mudaraba denotes that the bank or institution and the client will be sharing the profit and loss, where uncertainties exist for both parties to make a profit due to economic fluctuations. The contract is mostly used on the deposit side in our country. On the other hand, on the finance side, Murabaha is widely used. Murabaha is a sale agreement, whereby the Bank or institution will buy an asset from a vendor, take possession, and sell it to the customer for a specific profit margin. Murabaha is used for various different types of financing, where the financing is required for an asset. There are some other products as well like Hire Purchase under Shirkatul Milk (HPSM), which is a hybrid of co-ownership, lease and transfer of ownership at the end. The product is used more for property financing. Financial lease and other contracts are also used.
To wrap up, this misconception is not valid. However, it is true that there are some other challenges on the ground, which includes legal challenges, lack of capable human resources etc.
Q. TAKING THE CURRENT SCENARIO INTO CONSIDERATION, AND THE WAY BUSINESSES ARE OPERATING, HOW DO YOU THINK ISLAMIC FINANCE CAN IMPACT THE ECONOMY OF BANGLADESH?
First of all, I’d like to mention that we don’t have enough concrete factual data or external shariah audit reports that would help us understand the current shariah position of Islamic finance in Bangladesh. But I’m certain that there’s huge potential for growth in this sector. The shariah-compliant banks are getting bigger and their assets are also increasing. The government has also approved the launch of new Islamic banks and BSEC has published the rules on Sukuk back in 2019. As a result, we have seen the introduction of sovereign sukuk and corporate sukuk in the market in 2020 and 2021 respectively. There’s a positive vibe in the market around Islamic finance and stakeholders are quite adaptive to it.
If we observe the scenario from a business point of view, we note that there’s a lot of deficits in our annual budget. So, how do we cover this deficit? We’d have to source the fund through foreign investments, domestic and international borrowings, or grants. The borrowings are usually based on shariah non-compliant loans. But
In Order To Attract Investments From Muslim Countries, We Can Adopt Islamic Finance Which Would Expand The Horizon Of Our Economic Position.
You’d be surprised to know that many of the top halal meat exporters reside in Brazil, India, and other non-muslim countries. Malaysia has a small population but in terms of Islamic finance, they can be considered one of the largest promoters and adopters. Bangladesh has the potential to reach the pinnacle of success if it can utilize its manpower properly. We can be a center of Islamic finance and attract many foreign investments from other Muslim countries.
In a country like the United Kingdom, where the majority of the people are non-muslims, its former President David Cameron has stated that they want to be the hub of Islamic Finance. Even Luxembourg has declared that it wants to be a leader in Islamic Finance. We’re not so loud regarding it at the national level, so, there aren’t enough discussions on us at the international level. We’re already doing much better than several other countries but if more opportunities are created for Halal & Islamic Finance, then I believe the country will have more room to grow.
Q. IN THE NEW AGE OF DIGITIZATION, E-COMMERCE, AND SINCE THE FINTECH INDUSTRY IS BOOMING, WHAT ROLE CAN ISLAMIC FINANCE PLAY IN THIS REGARD?
The fast pace of technology has definitely impacted every aspect of our life to an enormous extent. The median age of Muslims around the world is 27 years whereas the median age of the global population is 32 years. As we can see that a huge portion of Muslims are millennials, who are very much adaptive to technology and digitization. So, if we want to present any product in the market, we need to take a digital-first approach in an innovative way.
Despite the blessings of technology, it has its negative side as well. We have seen recently how the e-commerce market has operated and how their fraud has caused so many people to lose huge amounts of money.
It was narrated in Surah An-Nisa that, “Believers! Do not devour one another’s possessions wrongfully; rather than that, let there be trading by mutual consent”. This verse specifies the importance of mutual consent so that no dispute arises from transactions. We proposed to E-cab regarding product transparency and refund policy before the formulation of e-commerce guidelines. Anyone selling goods or services online should provide clear pictures, videos and descriptions of the product and mention the refund policy, this is the bare minimum requirement for them from shariah’s perspective.
THE GUIDANCE OF SHARIAH IN ISLAMIC FINANCE IS ESTABLISHED IN SUCH A WAY THAT THERE’S NO SCOPE FOR MISUNDERSTANDINGS OR FRAUDULENT ACTIVITIES. THERE CAN BE GAINS IN THE SHORT RUN IF ONE FOLLOWS THE PATH OF DISHONESTY BUT THERE WILL BE NO BARAKAH OR BLESSING IN THE LONG RUN.
Q. KINDLY SHARE WITH US THE STORY OF HOW IFAC WAS FORMED AND WHAT SERVICES DOES IFAC PROVIDE?
As I’ve mentioned before, it was around 2014 when we had a meetup for our Facebook group. From that meetup, we had the initial idea of launching IFA Consultancy. Later, my colleague and Founder of IFAC, Mufti Abdullah Masum prepared a course outline and contents regarding Islamic finance. Back then, there were hardly any comprehensive resource books on Islamic finance in Bangla. He has authored thousands of pages in Bangla to conduct the course. His contribution to the establishment of IFA Consultancy is enormous. At the same time, I’m eternally grateful to all the team members who have worked with utmost dedication and passion to bring IFAC forward. We have the capacity now to serve large corporations to make them shariah-compliant and take on big assignments.
Our first training was the ‘Certified Islamic Economics & Finance’ course and over the years we have completed 24 batches. We ran a few other courses on Riba, Islamic Banking, Takaful, Sukuk, Ecommerce, Islamic Fintech, Halal audit as well. We have several especialised courses for shariah graduates so that they are equipped with the modern Islamic finance knowledge and are ready to serve the industry. Till the end of 2019, we were just a training center, and later we formally structured as a private limited company. So far, we have collaborated and partnered with various regional and international institutions, among which the most popular is the AAOIFI, the Bahrain-based global Islamic finance standard-setting body. We are their training partner as well as the exam and registration center. We have around ten AAOIFI certified Shariah Advisers in our team who are also Muftis. I can proudly say that I haven’t seen another consultancy company with so many certified members in the whole world.
From 2020, we have formally started shariah consultancy services for different institutions. We provided end-to-end Shariah screening services for all the business processes of an organization. Already we are acting as Shariah consultants for numerous national and international organizations and in talks with several banks. We are also invited by the regulators like Bangladesh Bank, Bangladesh Securities & Exchange Commission. We are providing support to a prominent Non Bank Financial Institution, where they have completed a specialized course and another batch is now running. We have prepared the draft for the takaful guideline for the Insurance Development and Regulatory Authority of Bangladesh. We are also the Shariah advisor for two fintech companies in Bangladesh. Additionally, we are providing valuation services for startups from an Islamic perspective.
Alhamdulillah, we are gaining traction and have qualified Muftis and certified shariah advisors. We have the resources and a global network of scholars and experts to provide shariah advisory services in different dynamics. In the past 5 years, at least 1,500 students have completed different courses from IFAC, at least from 10 countries around the globe. They include doctors, lawyers, engineers, bankers, finance graduates, etc.
Q. WHAT OPPORTUNITIES DO THE YOUNG STUDENTS HAVE WHO ARE INTERESTED IN BUILDING A CAREER IN ISLAMIC FINANCE? WHAT IS YOUR ADVICE FOR THEM?
It is essential for every Muslim to have proper knowledge of Islamic guidance, no matter in what field he’s involved in. Since there are a lot of shariah-compliant banks and the number of Islamic fintech companies is growing, students having knowledge of Islamic finance would surely give them an edge over others. Even the westerners also acknowledge the fact that Islamic finance is a very good alternative to conventional economics.
Q. WHAT ARE YOUR PLANS IN THE COMING DAYS WITH YOUR PERSONAL LIFE AND WITH IFAC?
Personally, my ambition is to be a leading Shariah & Islamic finance personality globally. I want to contribute and share my opinions that make an impact, especially at the policy-making level. Concurrently, I want to prepare exemplary leaders in the field of Islamic finance who will carry forward the legacy.
As for IFAC, my vision is to make it the leading Shariah advisory company in our region and place it in the top five shariah consultancy companies globally. I’m optimistic that we’d be able to achieve our goals and promote the adoption of Islamic finance both locally and globally, In Sha Allah.
