What is Ribaa?

[mohsie]

Bismillahi Rahmaani Raheem


Assalaamualaikum Warahmatullahi Wabarakaatuhu


I read this article on Ribaa posted on another forum, and I am confused now. Here is the link that was posted with the article.


........


Please tell me what you think.


JazaakAllah Khair

[reepicheep]

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:

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):

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.

[reepicheep]

Looking at this issue from the other side of the fence:


A common complaint by Islamic lenders, when making business loans, is that the lender is not allowed to charge a predetermined amount for a loan. Instead, the lender becomes a partner in the business, and is paid a portion of the company's profits.


The problem with this is that it's in the borrowers best interests to run a company that loses money. if there are no profits, the lender does not get paid. So, what often happens is that the borrower engages in unethical activities such as:


- hiring his wife and kids, and paying them a salary two or three times greater than what is fair


- if the business owner needs to buy any sort of supplies, then he will buy them from (for example) his brother, and pay him three times what the supplies are worth


Generally speaking, the western system of banking doesn't have these sorts of problems. If a customer thinks his bank is treating him unfairly, then he can go find another bank. And if a bank doesn't trust a customer, they can stop doing business with him.


In other words, the laws of "supply and demand" keep everyone on their toes, and makes it more difficult for a bank to cheat customers, and for a customer to cheat banks.

[radiyah]

Bismillah


First, brother Mohsie, I deleted the link, Why, because that site is against islam, the founder of that site claims to be a prophet, he is a cult, he does not approve of ahadeeth and consider all muslim scholars to be liars and so on and so forth, he created the 19th calculation theory to prove that he is a prophet. Dealing with riba in banks is haram, riba is riba usury is usury, and when Allah(SWT) prevent us, He is The Knower of all, it is for our own good, and He did not leave us like that he put us all the laws that we can live with in this life, and islamic scholars put the laws accordingly from Quran and Sunnah. I will bring u the answer that is final on this issue from our fiqh scholar, it will be tommorrow by will of Allah(SWT).


Salam


Second, Reepi, when u put a fatwa, do put the link to that fatwa so we will know from where u bring it, second it is up to muslim scholars to say if something is permissaable or not, and not u, and all that explaining u put we do not accept as muslims if not from the mouth of a trusted scholar, unless u r claiming to be one [img]style_emoticons/default/sleep.gif[/img] , so if u wish to help just put the link to that fatwa to make sure it is a trusted one, thanku .


Peace

[Dan]

Bismillah


As Salam alaikum


Here is the link which I think Reepi got his fatwa. Am I correct, R?


http://www.islamonline.net/livefatwa/engli...hGuestID=9O79FZ

[radiyah]

Bismillah


Jazak Allah khayr brother Dan for the link, but i cant find the one reepi mentioned [img]style_emoticons/default/mellow.gif[/img] . Would u care to provide it Reepi to fortify what u wrote in your post.


In our Sharia'a a fatwa may differ from one place to another even though it is the same question, but it will depend on the situation of the person and the country, so yes there is leniancy in some cases according to countries people are living in, but then it is still up to scholars to decide that .


Anyways our fiqh lesson is today evening and i will ask about this issue insha'Allah, may Allah assist us to what he loves and pleases insha'Allah.


Salam

[reepicheep]

The fatwa I quote came from here:


Financial fatwas by Dr. Monzer Kahf


but the fatwas linked to by Dan are essentially the same (the same scholar made them).


Here is another fatwa which can be found in the above fatwa session:

QUESTION: Is purchasing a house with a conventional Mortgage haram? Or is it consider basic necessities? 
ANSWER: The permissibility Fatwa is conditional on: 1) there are no alternatives that are acceptable to Shari`ah; 2) there is a need for house purchase on the basis of family size, schooling, public services, security, tax deduction, etc.

Here in Canada, there are 600,000 muslims and only one Islamic bank. Since the bank can't possibly supply mortgages to all Canadian muslims, muslims have no choice but to go to a regular bank if they need a loan. Besides, the cost of borrowing money from a regular bank is less than the cost of borrowing money from an Islamic bank. Why should Muslims be forced to pay more than non-Muslims for loans???


Here's an interesting statistic about Islamic banking. World wide, Islamic banking has assets under management of approximately 200 billion dollars. Canada alone has 5 banks which each exceed this amount. And Canada's banks are tiny compared to the banks in other countries of the world.

[radiyah]

Bismillah


yes Reepi thanku, I hope every time u would put the link for any fatwa u find if we find it unsuitable then we will remove it.


Now according to my fiqh scholar, I asked her today and her answer was the following:


1- first he has to go and ask relatives of his to lend him money if refused then,


2- he asks for a loan from a non usury banks, such as islamic instituetes, if it is not possible for him to do so then,


3- he goes to the bank, and he must take the amount according to his needs, which means that he must take that loan for saving his life like he needs it for operation, to buy a car if he does not have one and he has to travel far places and not just for luxourious purposes, or to build a house if he does not have one, so it is okay, even if in muslim countries not only non muslim if he cannot find suitable muslim banks, then it is okay.


So it is permissable to take a loan for necessities, clothing if he does not have, medical treatment, also if he want to take for learning fees for schooling and so on.


Now about islamic ratings of loans reepi, it depends upon the institute on the percentage they put, islam law did not put a percentage considering it as trade, and each mearchant will put the percentage he wants.


Here in Kuwait, we have Kuwait Finance House, they take the lowest rates from any other banking or usury institutes.


The islamic way that it puts a stable percentage that will not change no matter how long the time is, now if it is an ordinary bank if a 4 year passed which is the period agreed upon, then they will take a higher percentage and ask for more money, that is Usury. Now KFH and its likes do not do that according to islamic law, if the period agreed upon is 5 years and the merchandise is for lets say 5,000 KWD, if the 5 years passed and the full amount is not paid, it will not add to the 5,000, 5,000 is what they paid for the merchandise and 5,000 they will take not more not less. And even the percentage they put for the loan is much lower than any other company. So it depends on those islamic instituets in canada, they should not take high percentage, but maybe they do that for another reason that is permissable which i dont know.


I hope it is clear now, and where is Mohsie, are u satesfied or u need more explanation brother [img]style_emoticons/default/smile.gif[/img]


Salam all

[mohsie]

JazaakAllah Khair Sister Radiyah for this information. May Allah reward you much for it.


This was not really a question asked by me... just something posted on another forum, and I just wanted to get an opinion from a different source. Below are a few more questions asked by a brother on the same topic:

I understand that every interest is haram. I don't see any difference in interest, usury, riba etc. Calling haram by another name does not remove its haram-ness.
However, how can we take account of


1. economic growth (up or down) as in value of money borrowed or to be more specific inflation rate;


2. Administrative cost etc;


in the money exchanging hand between the lender and the borrower?

Below is the answer I gave to the first question:

I have been thinking about the same questions recently, and to answer your first question about economic growth, I think that the value of money should be measured in terms of value of gold or silver (to be decided and agreed upon by both parties at the time of making the contract). This is the same thing that's used when calculating the Zakat. The nisab for Zakat has just been given as approx. 75 grams of gold, and the monetary value is calculated based on the rate of gold at the time you have to pay the Zakat.
This is just my understanding, and it would be best to refer to a reliable scholar for a more correct opinion... and ALLAH KNOWS BEST.

Please let me know what you think inshaAllah. JazaakAllah Khair for your time and efforts [img]style_emoticons/default/smile.gif[/img]

[radiyah]

Bismillah


Jazak mithluh brother, Alhamdulilah that Allah(SWT) guided us to the right path, and if it was not for Him we would not be guided.


As for zakat, well, I am at work right now, but I looked it for u at


"Kingdom of Saudi Arabia



Ministry of Islamic Affairs, Endowments, Da‘wah and Guidance


Found this for u [img]style_emoticons/default/smile.gif[/img]


http://hadith.al-islam.com/bayan/display...eng&ID=524


below calculator of Zakkah:


http://zakat.al-islam.com/eng/


So I guess that will answer your question, and i will also check in my notebooks when i go home, but insha'Allah it is the same on that site. You can find all aspects of sharia' in that site, insha'Allah. May Allah(SWT) accept from us, if we are right from Him if wrong from shaytan and ourselves.


Wasalam