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In a murabaha, the bank buys an asset and resells it to the client at a disclosed markup payable in installments, so the profit is framed as trading margin rather than interest on a loan. Because the bank must briefly own the asset and bear its risk, the transaction is Shariah-permissible in form. In practice the markup is typically benchmarked to LIBOR-style interest rates, so the economics mirror a conventional loan.
Sukuk give investors fractional ownership of an underlying asset or venture and pay returns from that asset's income, such as lease rentals, instead of paying interest on debt. The distinction is meant to tie investor returns to real economic activity and shared risk. Many sukuk are asset-based rather than asset-backed, however: purchase undertakings guarantee repayment of principal, so holders carry issuer credit risk exactly as bondholders do.
The book argues that much of Islamic finance reverse-engineers conventional products, keeping the same cash flows and risk profile while inserting contractual steps that satisfy the legal letter of Shariah. The result obeys the formal prohibitions on interest while defeating their purpose, which was to promote risk-sharing, equity, and a link to real assets. Products that are replications rather than innovations lose the ethical distinctiveness that justifies the industry's existence.
Seeing the scholar's certification as one more input a bank buys, alongside legal and structuring fees, changes what the approval appears to mean. Banks want conventional products with a fatwa attached. Scholars are paid by the institutions whose products they review, which creates pressure toward approval and makes the fatwa function more as a marketing credential than as independent moral scrutiny.
Few scholars combine classical Islamic jurisprudence with fluency in modern finance, so a small group sits on dozens of Shariah boards at once. This concentration makes their personal views market-moving and creates a supply bottleneck. It also weakens independence, because the same individuals approve competing products across the industry.
To create cash financing, banks run tawarruq (commodity murabaha): the client buys metals on the London Metal Exchange from the bank on deferred terms and immediately sells them for spot cash. The same warehoused metal can cycle through many such deals in a day, and no one intends to take delivery. The structure illustrates how a chain of individually permissible sales can reproduce an interest-bearing cash loan, and several scholars condemned it for exactly that reason.