Muhammad Nejatullah Siddiqi: The founder of Modern Islamic Banking is gone


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Mohammad Nejatullah Siddiqi, PhD, is an Indian economist and is the winner of the King Faisal International Prize for Islamic Studies. At the age of 91, Siddiqi passed away in San Jose, USA on November 12th, 2022.

The great scholar, Dr. Mohammad Nejatullah Siddiqi is one of the pioneer Islamic economists in modern times. He occupies a position of esteem amongst the founders of the nascent discipline of Islamic economics. He has sought to respond to the many challenges that the modern economic system poses for Muslims. Dr. Siddiqi is also amongst the few economists who initiated research and dialogue on the interest-free economy before the issue came to the fore in the context of reconstruction of Islamic economy. He is one amongst such Islamic economists who have shown genuine flexibility and creativity necessary for the evolution of a new discipline along with a strong sense of history, moral integrity and intellectual commitment to Islam.

Born in India in 1931, he was educated at Aligarh Muslim University as well as Rampur and Azamgarh. Dr. Siddiqi served as associate professor of economics and professor of Islamic studies at the Aligarh Muslim University and as professor of economics at the King Abdul Aziz University, Jeddah, Saudi Arabia, in its Center for Research in Islamic Economics. He later became a Fellow at the Center for Near Eastern Studies at the University of California, Los Angeles, and after that a visiting scholar at the Islamic Research & Training Institute, Islamic Development Bank, Jeddah.

As an Islamic Economic Thinker, Dr.  Siddiqi noted that, a modern economy is built around debts that bear interest. Monetary management as well as financial intermediation is effected through interest bearing debts. This makes the system crisis prone. It also makes the system unfair and inequitable.

“Debt has penetrated all corners of financial relations and monetary management, and almost all debts carry interest. Islam’s prohibition of interest mandates the designing of financial and monetary arrangements that eschew interest. It is possible. Digging into our Islamic heritage Islamic economists have come up with a number of devices that can be integrated together to forge a viable alternative to conventional arrangements that is fairer, poor-friendly and efficient. The core idea is participation and risk sharing. This is hedged by Qard-Hasan with third party guarantee, service charges, and some kind of trade-based financing like Murabaha and Sukuk- Ijarah. The package is capable of handling all kinds of demands for finances, leaving a modest trail of debts that can be contained. With a ban on sale of debt instruments, Islamic sharing-centered arrangements will avoid the fate of conventional finance as exposed in the recent crisis (2007 – ?).”

“The distinctive nature of Islamic economics is emphasized, based as it is on sharing and cooperation while recognizing the role of self-interest and competition. Compassion, moderation and balance are projected as chief behavioral and social characteristics of an Islamic economy. In the light of current information and experiences we add sustainability as a desired feature. We need fresh intellectual, behavioral and regulatory initiatives to bring ground reality closer to Islamic economic aspirations.”

Academic Honors

  • Awarded King Faisal International Prize for Islamic Studies, 1982.
  • American Finance House Award, 1993
  • Ph.D in Economics from Aligarh Muslim University, India, 1966.
  • Arabic and Islamic learning from Rampur, India, 1954.

Related: 

The History of Modern Islamic Banks

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