One missing scamster, Rs 2,000 crore at stake, and over 30,000 complaints filed within a week – the scam surrounding I Monetary Advisory (IMA) is one of the biggest financial frauds Bengaluru has witnessed in the recent past.
Using the loopholes in the law, the company’s chairman Mohammed Mansoor Khan had managed to evade scrutiny, including two RBI notices, for several years. But, eventually, Khan’s malpractices resulted in him absconding with the investments raised.
Even though the IMA scam is one of around 20 ponzi scams out of Bengaluru, at the heart of a scam is a clever manipulation of religious feelings and greed, using a banking system based on Islamic beliefs called ‘halal investment’ or ‘Islamic banking.’
What exactly is this religion-accepted banking system? And how does it work?
Halal banking is a model of banking practised in Muslim-dominated countries. The principles of Islamic law Sharia prohibits Riba, which is receiving or paying any interest or usury. In fact, it is considered haraam (sinful and prohibited). Because of this, Islamic banking does not have any interest component.
For example, the equivalent of a savings account in Islamic banking is Wadiah, which means safekeeping. Under this system, the customer gives his or her money to the bank for safekeeping. Unlike the traditional banking, where the customer is paid interest on the deposit, under Islamic banking, the customer has to pay a fee to the bank for keeping the money safe.
Similarly, another form of banking is Mudharabah, which is a profit-sharing model, where the investor funds a bank for business ventures, instead of making deposit, and the investor would get the returns based on the profits made by the venture.
Apart from these, there are several other models of banking within Islamic banking such as Qard (interest-free loan), Ijara (leasing), Salam (cash advance for the purchase of agricultural produce) and Istisna (cash advances for the manufacture of assets) etc.