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Law - Economy

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Lesson 74

Finance (1)

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Main Points
 

·   Allah prohibited usury. It is the increase of wealth by two means. The first is excessive usury, selling an item for its equivalent with difference in value. The second is delayed usury which is of two types, one well-known which is increasing the value of debt through the debtor's payment to compensate for his delay in payment, the second is selling an item for another different item on credit.

·   The wisdom behind prohibition is to encourage investments, realize profits in return for actual activities, ward off injustice, and preclude abhorrence.

·   Bank interest and saving channels which define the interest in advance without sharing in the profits and losses are a kind of usury.

·   Insurance is possible on condition that its money will not be used in usurious dealings.

·   Currency exchange is possible as a kind of sale on condition that exchange is hand to hand without any stated term.

·   It is allowable to transfer the debt from one creditor to another to whom he also owes a similar debt, and merited to the latter - if he is capable of accepting it.[2]

·   Good loans are recommended for the mature person who is capable of lending, on condition that description and value must be determined, and no benefit in any way will be attained, or considered a kind of charity. Agreeing on a date for payment is possible but it is preferable not to do this.

·   Allah, the Almighty, made it obligatory to write down the debt, or to have it documented by two witnesses. The same applies to all contracts and transactions that can be documented.

·   Deposits for safekeeping are lawful between two mature parties with the consent of the depositary party. Its acceptance is obligatory if the depositor is in constraint, while it is recommended in any other case, unless the depositary is unable to preserve the deposit. In that case, it would be offensive.

·   The depositary has no right to benefit from the deposit. He is under no obligation if the deposit was damaged without his intention or negligence. Each party has the right to return the deposit whenever he wants to.


 

Evidence of Qur'an and Sunnah

 

Usury prohibition:

Allah says:

]ذَلِكَ بِأَنَّهُمْ قَالُواْ إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا وَأَحَلَّ اللّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا[
(البقرة: 275)

This means: “That is because they say: "Trading is only like Riba (usury)," whereas Allah has permitted trading and forbidden Riba (usury).”
(2, Al-Baqarah: 275)

Allah says:

] يَا أَيُّهَا الَّذِينَ آمَنُواْ اتَّقُواْ اللّهَ وَذَرُواْ مَا بَقِيَ مِنَ الرِّبَا إِن كُنتُم مُّؤْمِنِين[ (البقرة: 278)

This means: “You who believe! Be afraid of Allah and give up what remains (due to you) from Riba (usury) (from now onward), if you are (really) believers.” (2, Al-Baqarah: 278)

 Allah says:

]يَا أَيُّهَا الَّذِينَ آمَنُواْ لاَ تَأْكُلُواْ الرِّبَا أَضْعَافًا مُّضَاعَفَةً[
(آل عمران: 130)

 This means: “O you who believe! Eat not Riba (usury) doubled and multiplied.” (3, Al-`Imran: 130)

`Abdullah Ibn Mas`ud (may Allah be pleased with him) narrated:

“Allah’s Messenger (peace be upon him) cursed that who accepts usurious interests and the one who pays it, those who record it, and stand witness to it (are also like those who take and give interest).” (Reported by At-Tirmidhi)

The Prophet (SAWS) said, “A dirham which a man knowingly receives in usury is more serious than thirty-six acts of fornication. [Ahmad]

The Prophet (SAWS) said, "Usury is (equivalent to)  seventy types of sins, the simplest being that a man should marry his mother. " [Ibn-Majah]

Abu Hurayrah (may Allah be pleased with him) narrated that the Messenger of Allah (peace be upon him) said:

“Avoid the seven deadly things. It was said: What are they, Messenger of Allah? He replied: Associating anything with Allah, practicing sorcery, killing one whom Allah has declared inviolable without a just cause, devouring the property of an orphan, devouring usury, fleeing from the battlefield, and accusing the pious women with adultery.”
(Reported by Al-Bukhari and Muslim)

The Messenger of Allah (peace be upon him) said:

“Gold is to be paid for with gold, raw and coined, silver with silver, raw and coined (in equal weight), wheat with wheat in equal measure, barley with barley in equal measure, dates with dates in equal measure, salt with salt with equal measure; if anyone gives more or asks more, he has dealt in usury. But, there is no harm in selling gold for silver and silver for gold (in unequal weight), payment being made on the spot. Do not sell them if they are to be paid for later. There is no harm in selling wheat for barley and barley (for wheat) (in unequal measure), payment being made on the spot. If the payment is to be made later, then do not sell them.”
(Reported by An-Nasa’i and Abu Dawud)

Sa`d Ibn Abi Waqqas (may Allah be pleased with him) narrated:

“The Messenger of Allah (peace be upon him) forbade to sell fresh dates for dry dates when payment is made at a later date.”
(Reported by Abu Dawud)

The Prophet (peace be upon him) said:

“The selling of wheat for wheat is Riba (usury) except if it is handed from hand to hand and equal in amount. Similarly, the selling of barley for barley is Riba except if it is from hand to hand, and dates for dates is usury except if it is from hand to hand.” (Reported by Al-Bukhari)

He (peace be upon him) also said:

“Do not sell gold for gold unless equivalent in weight, and do not sell less amount for greater amount or vice versa; and do not sell silver for silver unless equivalent in weight, and do not sell less amount for greater amount or vice versa and do not sell gold or silver that is not present at the moment of exchange for gold or silver that is present.”
(Reported by Al-Bukhari and Muslim)

Transferring the debt:

The Messenger of Allah (peace be upon him) said:

“A rich person’s procrastination in paying back his due debts without a legal reason is an act of oppression. And if any of you is referred to a rich person (for settling a debt), he should agree to such substitution.” (Reported by Muslim)

Good loans:

Allah says:

]مَن ذَا الَّذِي يُقْرِضُ اللَّهَ قَرْضًا حَسَنًا فَيُضَاعِفَهُ لَهُ وَلَهُ أَجْرٌ كَرِيمٌ[
(الحديد: 11)

This means: “Who is he that will lend to Allah a goodly loan, then (Allah) will increase it manifold to his credit (in repaying), and he will have (besides) a good reward (i.e. Paradise).” (57, Al-Hadid: 11)

The Prophet (peace be upon him) said:

“That who brings his brother out of a discomfort, Allah will bring him out of the discomforts on the Day of Resurrection.”
(Reported by Al-Bukhari and Muslim)

Debt documentation:

Allah says:

]يَا أَيُّهَا الَّذِينَ آمَنُواْ إِذَا تَدَايَنتُم بِدَيْنٍ إِلَى أَجَلٍ مُّسَمًّى فَاكْتُبُوهُ وَلْيَكْتُب بَّيْنَكُمْ كَاتِبٌ بِالْعَدْلِ وَلاَ يَأْبَ كَاتِبٌ أَنْ يَكْتُبَ كَمَا عَلَّمَهُ اللّهُ فَلْيَكْتُبْ وَلْيُمْلِلِ الَّذِي عَلَيْهِ الْحَقُّ وَلْيَتَّقِ اللّهَ رَبَّهُ وَلاَ يَبْخَسْ مِنْهُ شَيْئًا فَإن كَانَ الَّذِي عَلَيْهِ الْحَقُّ سَفِيهًا أَوْ ضَعِيفًا أَوْ لاَ يَسْتَطِيعُ أَن يُمِلَّ هُوَ فَلْيُمْلِلْ وَلِيُّهُ بِالْعَدْلِ وَاسْتَشْهِدُواْ شَهِيدَيْنِ من رِّجَالِكُمْ فَإِن لَّمْ يَكُونَا رَجُلَيْنِ فَرَجُلٌ وَامْرَأَتَانِ مِمَّن تَرْضَوْنَ مِنَ الشُّهَدَاء أَن تَضِلَّ إْحْدَاهُمَا فَتُذَكِّرَ إِحْدَاهُمَا الأُخْرَى وَلاَ يَأْبَ الشُّهَدَاء إِذَا مَا دُعُواْ وَلاَ تَسْأَمُوْاْ أَن تَكْتُبُوْهُ صَغِيرًا أَو كَبِيرًا إِلَى أَجَلِهِ ذَلِكُمْ أَقْسَطُ عِندَ اللّهِ وَأَقْومُ لِلشَّهَادَةِ وَأَدْنَى أَلاَّ تَرْتَابُواْ إِلاَّ أَن تَكُونَ تِجَارَةً حَاضِرَةً تُدِيرُونَهَا بَيْنَكُمْ فَلَيْسَ عَلَيْكُمْ جُنَاحٌ أَلاَّ تَكْتُبُوهَا وَأَشْهِدُوْاْ إِذَا تَبَايَعْتُمْ وَلاَ يُضَآرَّ كَاتِبٌ وَلاَ شَهِيدٌ وَإِن تَفْعَلُواْ فَإِنَّهُ فُسُوقٌ بِكُمْ وَاتَّقُواْ اللّهَ وَيُعَلِّمُكُمُ اللّهُ وَاللّهُ بِكُلِّ شَيْءٍ عَلِيمٌ[
(البقرة: 282)

This means: “You who believe! When you contract a debt for a fixed period, write it down. Let a scribe write it down in justice between you. Let not the scribe refuse to write as Allah has taught him, so let him write. Let him (the debtor) who incurs the liability dictate, and he must fear Allah, his Lord, and diminish not anything of what he owes. But if the debtor is of poor understanding, or weak, or is unable to dictate for himself, then let his guardian dictate in justice. And get two witnesses out of your own men. And if there are not two men (available), then a man and two women, such as you agree for witnesses, so that if one of them (two women) errs, the other can remind her. And the witnesses should not refuse when they are called (for evidence). you should not become weary to write it (your contract), whether it be small or big, for its fixed term, that is more just with Allah; more solid as evidence, and more convenient to prevent doubts among yourselves, save when it is a present trade which you carry out in the spot among yourselves, then there is no sin on you if you do not write it down. But take witnesses whenever you make a commercial contract. Let neither scribe nor witness suffer any harm, but if you do (such harm), it would be wickedness in you. So be afraid of Allah; and Allah teaches you. And Allah is the All-Knower of each and everything.” (2, Al-Baqarah: 282)

Allah says:

]إِنَّ اللّهَ يَأْمُرُكُمْ أَن تُؤدُّواْ الأَمَانَاتِ إِلَى أَهْلِهَا[
(النساء: 58)

This means: “Verily! Allah commands that you should render back the trusts to those, to whom they are due.” (4, An-Nisa’: 58)

Allah says:

]فَلْيُؤَدِّ الَّذِي اؤْتُمِنَ أَمَانَتَهُ[
(البقرة: 283)

This means: “Let the one who is entrusted discharge his trust (faithfully).” (2, Al-Baqarah: 283)

The Messenger of Allah (peace be upon him) said:

“Pay the deposit to him who deposited it with you, and do not betray him who betrays you.” (Reported by At-Tirmidhi)

Deposits for safekeeping:

The Messenger of Allah (peace be upon him) said:

“Verily the best of you is the best in giving back the loans.”
(Reported by Al-Bukhari and Muslim)