One of the principle criticisms of Islamic financial institutions is that they have not agreed on a common set of rules to govern their activities. Some of the central banks in the west advance this as a reason for denying banking licences to Islamic banks.

It is now urgent that the Islamic financial institutions formulate a charter to which they all adhere. It may appear strange to the onlooker that Islamic organisations basing their activities on the principles of the Shariah differ as widely as they do. But a closer look may explain the basis of the problem.

It is usually assumed that there is a common theory of Muslim Law. This is not so. It is true that the basic sources of Muslim Law are the Holy Quran and the Sunna of the Prophet. But, the approaches to these sources vary between those who restrict themselves to the literal meaning of the texts, and those who usie their own judgement, or ijtlhad, in interpreting the texts taking circumstances into account.

Students of Muslim Law are aware of the differences between Ahl-Hadith (The Literatetists) and Ahl-Ra'i (The Rationalists). The first school is generally stricter in its application of the law and less responsive to changing circumstances. The second is generally more flexible and more accommodating. Naturally the absence of a common theory results in differences in the fatwas, or legal rulings, regarding financial management.

From the start each Islamic bank established a Shariah board to advise and supervise its activities. The membership of these boards consisted of distinguished scholars of different backgrounds and allegiances to different Schools of Law. It was natural, therefore, that these boards came to different judgements, and that each bank fixed its operations within its own particular set of rules.

The membership of the boards drew very heavily on people with traditional training. The literature used by our universities in the field of Islamic Law goes goes back to the days of the Abbasid and Ottoman empires. IN these distant times business and financial management was at slower and smaller levels. The rules contained in these books reflect the simplicity and face-to-face nature of the transactions of these time. It may be regarded as inappropriate to transpose these old rules onto a modern society with its vastly greater size and complexity, and greater diversity in the nature the players, including multinational conglomerates.

Occasionally some scholars resorted to simplifying the complex sitiations of present day business by breaking a transaction into small discrete steps corrspending to the practices of the past. This allowed them to bring such modern transactions under the regulation enshrined in the old literature. The basic assumption here is that there is nothing new in modern business procedure that modern business practice is only a cotinuation of the practices with which forefathers were familiar.

Such an approach denies that modern business and banking practice present new phenomenon requiring new judgements. In opposition to this there are those who feel that the innovations in business are barely dealt with in the and that, fundamentally new solutions called for. I was told by one Islamic banker that his Shariah board was good that, it legitimised all his practices. This prompted mo to say that, he should therefore, dispense with it. Another Islamic banker confided  in me that Shariah board was so strict, that has little room to manoeuvre. To which I replied that he should dispense with is bank.

One could ask 'Why are there Shariah boards at all?' Would it not have been preferable to train the bankers in Islamic Law and then let them put it into practice? This idea was not followed for two reasons. First, it was not feasible for practising bankers to start learning a new discipline of great complexity and depth. Second, the Shariah boards were designed to reassure the doubting Muslim investors of the purity of the practices of the new institutions. Indeed membership of a Shariah board depended more on the public relations value of an individual, rather than upon his scholarship. Sometimes differences of opinion occur between Shariah boards, which leads to serious arguments each side claiming that their view is more authentic than the other. This is yet another reason for the lack of a common set of rules.

This state of affairs cannot continue. We must take into consideration that the world has become too small for communities to conduct their business within the narrow circle of their own Mahdab (School of Law). We cannot ignore the innovations brought about by the development of business, and the diversity of the contemporary economic environment.

We must arrive at a common norm for Mall the Islamic banks throughout the world. If the Islamic banks are to become serious world-wide players, they must ktudy the issues thoroughly. All the Islamic scholars who are members of the various Shariah boards, and also qualified Islamic scholars at universities and institutions in the field of the Shariah must convene. They should study proposals put forward by Islamic bankers as to what the Islamic banks require to function effectively.

The Muslim scholars should debate the issues and contribute their ideas. They may agree among themselves, if they take into account the need for a consistent set of rules. Or they may come up with strongly differing views. The arguments of the scholars should then be analysed by an expert in Islamic Law to determine whether the scholars recognised the changing circumstances, and whether they respected the sources. These diverse opinions should then be presented to the Islamic Banker to sift through and settle upon an agreed set of regulations gorverning their actions. The individualShariah boards, if they still required, could act as public relations bodies reassuring investors that all is well.

As a long-term plan I support the initiative that the Sudanese have embarked upon. We were told by the Governor of the Central Bank of Sudan, Abdullah Hasan Ahmed, that the government had recruited Muslim scholars to work within the banking system so that they could be part of the decision making process. This seems to be the ideal solution.

Our scholars in the past were aware of the business practices of their day. But many of them were very suspicious indeed of financial practices. It was not uncommon for them to despise moneychangers, Saraaf. One even went so far as to say that in the midday heat he would not take refuge in the shade of a Saraaf's shop. This attitude towards financial activities must be abolished if the enterprise of Islamic banking is to succeed in the world-wide financial environment.

Finally, I should object most strongly to the creation of a Supreme Shariah Board to be an appeal forum. This could become a Vatican excommunicating those who disagree with it and would lead to an even greater state of paralysis.