Interest Free Banking

It was in early 1950's when I was a young lecturer in the Department of Economics, University of Dacca, that the issue of the application of Islamic ideology used to agitate the minds of thinking citizens in general and the academicians in particular. Some senior colleagues including Dr. M. N. Huda (who later became Minister of Finance and then Governor, East Pakistan, and is presently Member of the Advisory Council of the President of Bangladesh) encouraged me to do some research on Islamic framework of banking. Similarly, late Mr. Zahid Hussain, the first Governor of the State Bank of Pakistan who used to visit Dacca (being the President of Pakistan Economic Association) encouraged and gave his blessings for carrying out research on 'Interest-free Banking'. It was with this background that I started thinking and doing some research work on the subject of 'Interest-free Banking’.

It took me quite some time to study the relevant literature of Islam. Fortunately I knew Arabic and thus had no difficulty in going to the original source material on Islamics. However, there was no guidance or help in this research pursuit. I am indebted to Mufti Saiyid Ameen-ul-Ihsan, of Madrassa-e-Aaliya, Dacca, for providing some guidance in the study of relevant and pertinent literature. After a while I felt my feet on firmer grounds and was able to develop in my mind a picture of the framework of banking without interest in keeping with the injunctions of Islam. In 1954 I started writing on the subject; and by 1955 I had prepared a manuscript under the title of A Groundwork for Interest-free Banking. However, it was not published in the form of a book, partly because no publisher was interested in publishing the book of a new author written on a new subject which would not attract a wide market. By that time the interest of publishers in Islamic ideology was dwindling, and the emphasis had shifted to politics and 'balanced' economic development in the country. Two things happened towards the end of 1955: I was able to get a summary of the manuscript published in the form of a booklet entitled An Outline of Interestless Banking, which is included in this book as an Appendix.