Islamic banking

[Veiled Princess 1]

Ok so I'm trying again so I can add that option to the poll... Let's see if I can get it right this time.

I decided after writing this, to make a poll... the last choice is just to keep things on a lite note... no fighting please but at the same time please do explain your answer!

OK where is Rahma with the links or Bosco with the break down???

What kind of banking is considered Islamic?

I have been trying to find information about this but I'm very cornfused!

I looked at LaRiba but they seem to charge just as much as the bank would so is it just interest under a different name? What's the difference?

I've been having this conversation with my brother too and he makes the point that it's not bad for a person who loans money to expect some kind of return on it.

I have found the following in the Quran

[002.275] Those who eat Ribâ will not stand except like the standing of a person beaten by Shaitân (Satan) leading him to insanity. That is because they say: "Trading is only like Ribâ," whereas Allâh has permitted trading and forbidden Ribâ. So, whosoever receives an admonition from his Lord and stops eating Ribâ, shall not be punished for the past; his case is for Allâh; but whoever returns, such are the dwellers of the Fire – they will abide therein forever.

[002.276] Allâh will destroy Ribâ and will give increase for Sadaqât (deeds of charity, alms). And Allâh likes not the disbelievers, sinners

[002.277] Truly, those who believe, and do deeds of righteousness, and perform As-Salât (the prayers), and give Zakât (obligatory charity), they will have their reward with their Lord. On them shall be no fear, nor shall they grieve.

[002.278] O you who believe! Be afraid of Allâh and give up what remains from Ribâ, if you are believers.

[002.279] And if you do not do it, then take a notice of war from Allâh and His Messenger [sal-Allâhu 'alayhi wa sallam] but if you repent, you shall have your capital sums. Deal not unjustly, and you shall not be dealt with unjustly.

[002.280] And if the debtor is in a hard time, then grant him time till it is easy for him to repay; but if you remit it by way of charity, that is better for you if you did but know.

[002.281] And be afraid of the Day when you shall be brought back to Allâh. Then every person shall be paid what he earned, and they shall not be dealt with unjustly.

And this explaination

"Ribâ: Usury is of two major kinds:

a) Riba An-Nasî'ah, i.e., interest on lent money;

b ) Riba Al-Fadl, i.e., taking a superior thing of the same kind of goods by giving more of the same kind of goods of inferior quality, e.g., dates of superior quality for dates of inferior quality in great amounts."

And the following ahadith

Narrated 'Aun bin Abu Juhaifah [radhi-yAllâhu 'anhu]: My father bought a slave who practised the profession of cupping. (My father broke the slave's instruments of cupping.) I asked my father why he had done so. He replied, "The Prophet [sal-Allâhu 'alayhi wa sallam] forbade the acceptance of the price of a dog or blood, and also forbade the profession of tattooing, or getting tattooed and receiving or giving Ribâ, and cursed the picture-makers." [sahih Al-Bukhâri, 3/2086 (O.P.299)]

Narrated Abu Juhaifah that he had bought a slave whose profession was cupping and then said: The Prophet [sal-Allâhu 'alayhi wa sallam] forbade taking the price of blood and the price of a dog and the earnings of a prostitute, and cursed the one who took or gave Ribâ, and the lady who tattooed others or got herself tattooed, and the picture-maker. [sahih Al-Bukhâri, 7/5962 (O.P.845)]

Narrated Sumurah bin Jundub [radhi-yAllâhu 'anhu]: Allâh's Messenger [sal-Allâhu 'alayhi wa sallam] very often used to ask his Companions, "Did anyone of you see a dream?" So, dreams would be narrated to him by those whom Allâh willed to relate. One morning the Prophet [sal-Allâhu 'alayhi wa sallam] said, "Last night two persons (angels) came to me (in a dream) and woke me up and said to me, 'Proceed! Proceed!'.....

They said to me, 'Proceed! Proceed!' And so we proceeded and came across a river." I think he said, "-- red like blood." The Prophet [sal-Allâhu 'alayhi wa sallam] added, "And behold, in the river there was a man swimming, and on the bank there was a man who had collected many stones. Behold, while the other man was swimming, he went near him. The former opened his mouth and the latter (on the bank) threw a stone into his mouth whereupon he went swimming again. Then again he (the former) returned to him (the latter), and every time the former returned, he opened his mouth, and the latter threw a stone into his mouth, (and so on) the performance was repeated. I asked my two companions, 'Who are these two persons?' They replied, 'Proceed! Proceed!'...

and the man whom you saw swimming in the river, and was given a stone to swallow, is the eater of Ribâ;...." [sahih Al-Bukhâri, 9/7047 (O.P.171)]

but I don't really think riba is defined

I have read the opinions that any money charged at all on money loaned is considered riba and forbidden and so that would mean, from the ahadith above, that anyone who takes a loan to buy anything and agrees to pay interest back on it (even at a low rate) would be one of the cursed mentioned therein and it would mean that banks like LaRiba is just eating riba but calling it something else.

I have also heard the opinion that charging a fee is not forbidden and that what is being referred to is the type of interest that is designed to keep a person indebted for a long time (which I guess could still be a lot of loans in the US).

Which opinion do you follow and why?

Please don't feel you have to be muslim to participate in this too... I know there are jews and christians who also believe interest/usury is not allowed as well.

[Veiled Princess 1]

How come no one's voting or posting?

ETA: Ok two people have voted but no one has responed and it says over 30 people have veiwed so why not 30+ votes?

Edited October 29, 2006 by Veiled Princess

[sarah and hicham 3]

I voted!

[Joel Halfwassen 0]

How come no one's voting or posting?

ETA: Ok two people have voted but no one has responed and it says over 30 people have veiwed so why not 30+ votes?

I'm guessing that it is because this is a tough topic...and there is a lot of football on today. ;-)

Before I comment I want to provide a disclaimer...I am a BIG fan of interest and approve of it fully.

Based on your passage I'm wondering if 'interest' is okay as long as it maintains the value of the original loan amount (i.e. is equal to inflation). I don't think that the Quran would intend for the original lender to LOSE money. "Deal not unjustly, and you shall not be dealt with unjustly."

Now...I think a related question would be how does a person who does not believe in/does not like/does not want to pay interest function in the US. My wife is from Ukraine where it is almost impossible to get a loan and when you do the interest is a CRAZY amount for a very short period of time. Needless to say...she HATES loans AND interest. In order to make her comfortable I am trying to figure out how to live without borrowing money. I am finding it VERY difficult to do in the US.

Joel

[Veiled Princess 1]

Now...I think a related question would be how does a person who does not believe in/does not like/does not want to pay interest function in the US. My wife is from Ukraine where it is almost impossible to get a loan and when you do the interest is a CRAZY amount for a very short period of time. Needless to say...she HATES loans AND interest. In order to make her comfortable I am trying to figure out how to live without borrowing money. I am finding it VERY difficult to do in the US.

That's a very good question and one I've discussed at legnth with my brother. In his business he has to borrower money frequently in order to get his job done and make money in the long run... (he builds houses)

He's talked to me about getting to a point where I'd be able to buy forclosed properties and sell them for profit but we can't wrap our minds around how I'd go about doing that without borrowing the money initially to buy the house and then paying off the loan after I sell the property... Granted, one could pay off the loan before the first payment comes due and avoid interest altogether but in the back of my mind I'd still be wondering if "agreeing" to it in the first place would also be wrong.

I should mention I've worked in the banking/lending/real estate industry most of my adult life so this is something pretty important to me... it's my livelyhood after all... my dad, brother and SIL are all in this same line of work as well so none of us can really imagine life without some kind of interest.

I don't have any loans that I pay interest on anymore and I won't take them because I'm not clear on this matter but if it's not as simple as all that then I'd like to know what my limits truly are.

I totally get your point about inflation as well... my brother says pretty much the same thing. Of course they don't consider "usury" in the bible the same as the interest we know today.

Who voted "yes but it's much more complicated than you think"??? Can you explain your answer please??

[Joel Halfwassen 0]

Now...I think a related question would be how does a person who does not believe in/does not like/does not want to pay interest function in the US. My wife is from Ukraine where it is almost impossible to get a loan and when you do the interest is a CRAZY amount for a very short period of time. Needless to say...she HATES loans AND interest. In order to make her comfortable I am trying to figure out how to live without borrowing money. I am finding it VERY difficult to do in the US.

That's a very good question and one I've discussed at legnth with my brother. In his business he has to borrower money frequently in order to get his job done and make money in the long run... (he builds houses)

He's talked to me about getting to a point where I'd be able to buy forclosed properties and sell them for profit but we can't wrap our minds around how I'd go about doing that without borrowing the money initially to buy the house and then paying off the loan after I sell the property... Granted, one could pay off the loan before the first payment comes due and avoid interest altogether but in the back of my mind I'd still be wondering if "agreeing" to it in the first place would also be wrong.

I should mention I've worked in the banking/lending/real estate industry most of my adult life so this is something pretty important to me... it's my livelyhood after all... my dad, brother and SIL are all in this same line of work as well so none of us can really imagine life without some kind of interest.

I don't have any loans that I pay interest on anymore and I won't take them because I'm not clear on this matter but if it's not as simple as all that then I'd like to know what my limits truly are.

I totally get your point about inflation as well... my brother says pretty much the same thing. Of course they don't consider "usury" in the bible the same as the interest we know today.

Who voted "yes but it's much more complicated than you think"??? Can you explain your answer please??

Here is something to think about too...you would be making a profit off of people who WOULD get a loan WITH interest to purchase your property. As a matter of fact you would probably PLAN on people getting an interest loan to buy the home. Where is THAT line? Is it okay to profit when other people do use interest, but just not okay to use interest yourself?

Not a judgement...just a thought that crossed my mind.

Joel

[chris4336 3]

VP - I voted not sure because I really don't know enough about this topic. But my fiancee and I did look into this, because he doesn't like to take interest from the bank, and I will soon be up to my eyeballs in interest on my student loans. I believe we found a ruling online that if the interest was necessary it was allowed (I can't find it now). There is no way I can pay for school on my own, but it is important for our future, so we figured it would be okay. However, we do intend to pay it back as quickly as possible.

I am still just studying Islam, but it seems me that your intention is the most important. I want to continue school so I can provide for my family and help others. I'm sure you want to continue your work for those same reasons. It is not our fault that the American (world) economy is so dependent on interest, and that a lot of times things like providing a home for your family and getting an education are impossible without interest.

I guess I didn't really answer your question, but that is all I really know about the topic. If I find out any more I'll be sure to share it

[~Jess~ 0]

i have noooooo clue lol........... errrrr

[Veiled Princess 1]

I think it's funny that we can fill the pages with nonsense and fighting but when an important question is posted and someone is asking for various opinions it gets pushed to the next page because there isn't enough room for it to compete with the junk

[Ban Hammer 13,334]

I think it's funny that we can fill the pages with nonsense and fighting but when an important question is posted and someone is asking for various opinions it gets pushed to the next page because there isn't enough room for it to compete with the junk

i'm offended about that implication

[Bosco 1]

Ok, is that your way to make people answer,

I think sometimes we have to look beyond words and look to why. It seems to me that the point was to protect people, especially from unsavory money lenders which are like modern day loan sharks.

Credit card debt can be extremely hard to get out of. The payment terms are not fixed, the rate can vary, etc.

Interest that is received on a bank account is basically "payment" for the use of their money. It is not harming the bank nor it is harming you.

Similarly, mortgage terms can be very clear, with a fixed rate, fixed term. This is clearly less harmful than a credit card or borrowing money from a loan shark (although I am not saying it cannot have end up hurting a person).

So going back to my first point. I think the whole reason riba was prohibited was for our good. Hence, with a so-called Shariah-compliant loan where you are actually paying MORE than you would with a simple interest bank loan, it may be meet the letter of the law within the Qur'an but it certainly doesn't meet the spirit of the God's intention. I cannot reason that changing up the terms and paying more is somehow what God intended.

So, I guess it comes down to a person's approach to Islam as a whole. Do you follow the words or do you look to examine the purpose behind those words? For those who are more focused on the letter of the Qur'an, Shariah-compliant laws will make them feel they are doing as God wished. For me, they miss the intention completely.

[Veiled Princess 1]

Ok, is that your way to make people answer,

Yes and it worked

I think sometimes we have to look beyond words and look to why. It seems to me that the point was to protect people, especially from unsavory money lenders which are like modern day loan sharks.

Credit card debt can be extremely hard to get out of. The payment terms are not fixed, the rate can vary, etc.

Interest that is received on a bank account is basically "payment" for the use of their money. It is not harming the bank nor it is harming you.

Similarly, mortgage terms can be very clear, with a fixed rate, fixed term. This is clearly less harmful than a credit card or borrowing money from a loan shark (although I am not saying it cannot have end up hurting a person).

So going back to my first point. I think the whole reason riba was prohibited was for our good. Hence, with a so-called Shariah-compliant loan where you are actually paying MORE than you would with a simple interest bank loan, it may be meet the letter of the law within the Qur'an but it certainly doesn't meet the spirit of the God's intention. I cannot reason that changing up the terms and paying more is somehow what God intended.

So, I guess it comes down to a person's approach to Islam as a whole. Do you follow the words or do you look to examine the purpose behind those words? For those who are more focused on the letter of the Qur'an, Shariah-compliant laws will make them feel they are doing as God wished. For me, they miss the intention completely.

I'm not even so sure they follow the letter of the law but what is riba exactly??? The thing that bothers me is I don't see where it's really ever defined in the Quran or the ahadith. Is it any money charged on a loan or is it a specific type of interest intended to keep a person indebted for a long period of time (like variable rates (ie credit cards) or are fixed rates included too?

Linguistically speaking, what is riba? Any interest on money loaned?

I think I need to know this before I can decide on the details you know?

[Bosco 1]

Ok, is that your way to make people answer,

Yes and it worked

I think sometimes we have to look beyond words and look to why. It seems to me that the point was to protect people, especially from unsavory money lenders which are like modern day loan sharks.

Credit card debt can be extremely hard to get out of. The payment terms are not fixed, the rate can vary, etc.

Interest that is received on a bank account is basically "payment" for the use of their money. It is not harming the bank nor it is harming you.

Similarly, mortgage terms can be very clear, with a fixed rate, fixed term. This is clearly less harmful than a credit card or borrowing money from a loan shark (although I am not saying it cannot have end up hurting a person).

So going back to my first point. I think the whole reason riba was prohibited was for our good. Hence, with a so-called Shariah-compliant loan where you are actually paying MORE than you would with a simple interest bank loan, it may be meet the letter of the law within the Qur'an but it certainly doesn't meet the spirit of the God's intention. I cannot reason that changing up the terms and paying more is somehow what God intended.

So, I guess it comes down to a person's approach to Islam as a whole. Do you follow the words or do you look to examine the purpose behind those words? For those who are more focused on the letter of the Qur'an, Shariah-compliant laws will make them feel they are doing as God wished. For me, they miss the intention completely.

I'm not even so sure they follow the letter of the law but what is riba exactly??? The thing that bothers me is I don't see where it's really ever defined in the Quran or the ahadith. Is it any money charged on a loan or is it a specific type of interest intended to keep a person indebted for a long period of time (like variable rates (ie credit cards) or are fixed rates included too?

Linguistically speaking, what is riba? Any interest on money loaned?

I think I need to know this before I can decide on the details you know?

I think the best translation is usury which is specifically interest paid for borrowed money. So borrowing money just to borrow money and having to pay interest is clearly riba to me. However, I don't think this necessarily applies to accepting a higher price on a purchase with the ability to defer payment or make installment payments. A mortgage is the latter, with the higher price determined by you and the length of time it takes you to pay it back, with the longest time frame and highest price clearly established by the duration of the mortgage. Credit cards are essentially borrowing money since there is no agreed upon higher price determined for defering payment at that time. You may be using that money for a purchase, but this is obviously quite different than a mortgage or car loan.

Edited November 2, 2006 by Bosco

[UmmSqueakster 54]

Islamic banking and economics aren't my forte, sorry. I should get husband on here, as I believe he's studied it to some degree.

[Veiled Princess 1]

Islamic banking and economics aren't my forte, sorry. I should get husband on here, as I believe he's studied it to some degree.

Ok we'll be awaiting his explaination