The objective of [having] Islamic banks is that they take the place of commercial banks considering that they operate on interest, and it is here that some Islamic jurists are of the opinion that the mudaraba (silent partnership) contract1 in Islam is considered a legal basis for some contemporary credit processes, accordingly, it modifies the banking regime until it is consistent with the laws of the Islamic silent partnership contract and until the profits from silent partnership take the place of prohibited interest. On the other hand, there are those who think that the bank is not a silent partnership investment agent and that the depositors are not financiers but rather they are all merely partners. Hence, it is the principles of partnership that must gain currency and not the principles of silent partnership. In any case, the value of Islamic bank operations will become clear to us whenever we recognise that the relation between transactions that involve the cost of interest and transactions conducted upon the principle of equity partnership in profit (through the silent partnership contracts or partnership contracts) the relation will, to a large extent, resemble the relation between fantasy and fact or imagination and reality.
1. NOTE: “Mudaraba is a partnership where capital is provided, in cash or assets (no debt is accepted) by one party – the fund provider – and labour is provided by the other party – mudarib.” http://lexicon.ft.com/Term?term=mudaraba [Translator]↩