Further to my previous note, there are two additional posts which are worthwhile reading.
1. A comment on the original article. I quote: I share Hamoudi’s criticism of the gimmickry that the modern-day practice of Islamic finance seems to relish.......I am not impressed by the gimmickry, and I join Mahmud al-Gamal and Haider Ala Hamoudi in their skepticism towards what Hamoudi rightly calls ‘hypocrisy.’ From a system which is informed by the moral unease in Islamic law toward speculative investment which is not underscored by labour, the current Islamic banks have engaged into a spate of dubious transactions with Arabic names that all but dupe the customer. Commercial contracts between investor and worker under the classic mudaraba, which had been already thoroughly examined by Abraham Udovitch (Partnership and Profit in Medieval Islam, Princeton 1970) are replaced with murabaha and tawarruq schemes that mean little other than contorted, allegedly Islamised schemes, which are in fact poor replicas of Western banking. This is unfortunate, and has been rightly exposed in the better literature which Hamoudi, Gamal and Ibrahim Warde represent.
2. A followup comment. I further quote:
Professor Mallat and I agree entirely on the substance of Islamic finance, and he is certainly right that Sadr’s approach is quite interesting and indicative of his functional style. If, Sadr wonders, the bank is using the capital of one group of people to fund another, why not simply consider transactions across the financial intermediary to be one collective whole, disregarding as a result the formal existence of the intermediary? While that particular idea may not be attractive, the approach, of seeking to attach an Islamic substance to a shar’ia form, is more satisfying than the deceptive nonsense that dominates the practice of Islamic finance, as Professor Mallat properly points out.
I am afraid the general consensus is not looking good at all. But this universal bank proposal by Sadr is definitely worth considering.