Benchmarking in Islamic FinanceBashir Uj Jaman Mihe, University of Gloucestershire 2Benchmarking interest rate in Islamic banking has become subject of debate andcontroversy from the inception of Islamic finance. In order to find out answers to thedoubt and bring solution on the issue
, one need to understand the term „‟ benchmarking‟‟and „‟Islamic finance‟‟ clearly.
Robert Demilio (1995)
enchmarking as an improvement process used todiscover and incorporate best practice into business operation. Benchmarking is the preferred process used to identify and understand the elements (causes) of a superior or
world class performance in a particular work process‟‟.
Xerox corporation, which is the pioneer of the technique‟s application in manage
mentpractice, defines it as
The search for industry best practices which lead to superior
From above two definitions key points identified are best practice and superiorperformance. For instance Allah says in the Quran,
“Indeed in the Messenger of Allah
you have an excellent example (
) to follow for whoever hopes in Allah and the last Day and remembers Allah much (
So any Muslim that wants to worship Allah in the best possible manner should follow thesunnah of the prophet (Pbuh). For instance, if one wants to be a best husband, he needs tolook and follow the way prophet (pbuh) has behaved with his wife. So a Muslim isexpected to benchmark the sunnah of prophet (pbuh) in each and every sphere of life toget the best performance in both worlds; here and hereafter whether it is personal, family,social, business or any finance related work.