11-14-2005, 03:07 AM
On Islamic websites, I often come across Muslims who complain about the high cost of "Islamic banking". For example, here is a question I came across on the IslamOnline website two days ago:
Quote:QUESTION: I live in Canada, and support my entire family (parents and siblings). I rent a place and we all live together. I am getting married soon ... but can't afford two places. Buying house seems to be the most affordable option that can accommodate everybody as I can not afford two places. I have looked into all Islamic financing but find it unaffordable. Is taking from the bank permissible and if not, than what are my options?
In this particular case, the scholar gave his approval of getting a mortgage (i.e., paying interest):
Quote:ANSWER: Dear brother, yes, it is permissible in your case as you described it, according to the Fatwa of the second International Fiqh Conference that was held in Detroit in the fall of 1999.
but in the majority of cases the Islamic scholar says that paying interest is not allowed under any circumstances.
The common complaint by Muslims is that an "Islamic loan" costs way more than a regular bank mortgage. The common reply by scholars is that Islamic loans cost more than mortgages when interest rates are low (like now), but are a better deal when interest rates are high.
Right now, I can borrow all the money I want at a yearly interest rate of 4.5%. Very reasonable, in my opinion. I believe that an Islamic bank would charge way more than that. I think the fact that a regular bank charges "interest" and an Islamic bank charges "loan fees" (or something similar) is irrelevant. All that matters is the final cost to the borrower.
I think we can all agree that usury is immoral and, in most western countries, illegal. But I see nothing wrong with banks which charge a reasonable rate of interest.
In my opinion, I think that Islamic banks are taking advantage of Muslims. Since many Muslims won't take out a bank loan under any circumstances, Islamic banks can charge whatever fees they want, and their Muslim customers have no choice but to pay.