The Economic Law of Islam

The Economic Law of Islam

 

Editorial

The Economic Directives of Islam                         Shehzad Saleem

Economic Issues

The Economic Law of Islam

Javed Ahmad Ghamidi (Tr. by: Shehzad Saleem)

 

Queries

Is only Usury forbidden?                             Asif Iftikhar

Difference between Interest and Rent

Taking Interest from Non-Muslims                         Shehzad Saleem

Stability of Interest Based Economies

Using Interest received to pay Interest

A Justification for Interest

Benefiting from Interest Money

Taking Interest for a Noble Cause

Earning Money through Lending

Inflationary Adjustments

Zakāh on Stocks

Zakāh on Loans

Can Zakāh be given to Non-Muslims?

Taxes Other than Zakāh

Calculation of Zakāh

Inheritance and Gifts

The Daughter’s Share in Inheritance

Raffle-Tickets                                     Asif Iftikhar Status of the Stock Exchange

Why is Gambling Prohibited?                         Shehzad Saleem

GP Fund

Insurance

Prize Bonds    

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Renaissance

A MONTHLY ISLAMIC JOURNAL                                    PAKISTAN

The Economic Directives of Islam

Economic Issues
Shehzad Saleem

Ever since the industrial revolution stunned the world more than two centuries ago, the discipline of economics has grown in import. It has become a specialized field attracting the attention of several minds. Alive to the situation, Muslim scholarship set about to frame and formulate the economic teachings of Islam in a more lucid and concrete manner. In particular, the last half-century has witnessed a phenomenal amount of work being done in this regard. Without taking anything away from this endeavor, it can be said that this effort could have been more fruitful and productive had it not been marred by a grave flaw: the belief that  Islam provides a complete economic system and the only thing needed is its implementation in favorable circumstances.

In spite of a tremendous amount of work and dedication, unfortunately, Muslim scholarship today appears in shambles because of this flaw. It has been unable to come to grips with this challenge, which still spitefully stares at them. This grave flaw, it seems, can only be overcome if the approach to the whole issue is completely reviewed in the light of the Qur’ān and Sunnah.

It needs to be appreciated that man has been blessed with the faculty of intellect and reason and has also been blessed with innate guidance regarding good and evil. In the affairs of life, his intellect and the innate guidance are generally enough to guide him and show him the way. It is only at certain crossroads that he needs divine guidance to select the right way. Consequently, in all such affairs a detailed system of directives has not been divinely revealed to guide mankind: only a broad outline has been given in the form of a set of rules and regulations which must be adhered to. Bearing this in mind, intellect and reason must evolve a system suited to the requirements and needs of a society. Since these requirements vary with time and place, the resulting systems will also vary accordingly. However, these systems shall be based on the same set of rules and regulations. In other words, the law, which is a set of rules and regulations is divine and, therefore, eternal, but the system evolved upon this law is a human inference and, therefore, flexible. This flexibility, obviously, has been left to accommodate changing circumstances and evolutionary developments of human societies.

Therefore, instead of extracting an economic system from the Qur’ān and Sunnah which, of course, does not exist, all out efforts should be made by Muslim scholars to derive the economic law of Islam. The task of formulating a system on its basis should be left to the economists and to those who understand the intricacies of this field.

Working on the pattern outlined above, Javed Ahmad Ghamidi has attempted to derive the economic law of Islam from the Qur’ān and Sunnah. He has shown that this law consists of seven basic principles and each of these principles is based on specific verses of the Qur’ān. During the course of his research, he has revived the true concept of Zakāh and shown that the issue of ‘ِرَبوا اْلفَضْلِ’ (ribā al-fadl: interest in transactions concluded on the spot) is a case of misinterpretation and has arisen in our Fiqh because the narrators have mixed up the words of certain Āhadīth. He has also derived that the establishment of a public sector in a country is an essential ingredient of this economic law. His research on the law of inheritance merits separate mention keeping in view its profound nature. Approaching the whole issue through the universal principles of language and working abinitio on their basis, he has come up with what can be termed as a prodigious piece of research. He has demonstrated that if a person has a flair for relishing the finer aspects of a language, the verses of the Qur’ān unfold their meaning to him. There is absolutely no need to employ the ‘Doctrine of Increase’ (‘awl) to proportionately decrease the shares if the law of inheritance is understood on this basis. All the shares can be perfectly distributed. Similarly, the correct meaning of ‘َكلالة’ (kalālah) can be ascertained very easily if this approach is adopted.

This effort is by no means the final one. However, being an original piece of research, both in approach and content, it deserves a serious reading from all those who want to understand the economic message of Islam. It needs to be weighed in the scales of reason and revelation and not in those of conventionality.

For the benefit of the English reader, in the following pages, I have attempted to translate Ghamidi’s research article from Urdu1.

1. The article appears in Ghamidi’s Mīzān, 1st ed., Dāru’l-Ishrāq, Lahore, 2001


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Top of Form


The Economic Law of Islam

Economic Issues
Javed Ahmad Ghamidi
(Tr. by:Shehzad Saleem)

The economic law of Islam has been revealed by the Almighty through His last Prophet (sws) for the purification of the economy. It is based on the Qur’ānic philosophy of creation. According to this philosophy, the Almighty has created this world as a trial and test for man; every person has therefore been made to depend on others for his living. No one in this world can live independently as regards his needs and requirements. A person of the highest rank must turn to the most ordinary to fulfill them. In other words, every single person has an important role to play, without which this world cannot continue. This role depends upon his abilities, intelligence and inclinations as well as upon his means and resources, which vary from person to person. In fact, it is because of this variation that a society comes into being. Consequently, laborers and workers, artisans and craftsmen, tillers and peasants are as indispensable as scholars and thinkers, savants and sages, leaders and rulers. Every individual is an integral component of society and contributes to its formation according to his abilities. The Qur’ān says:

نَحْنُ قَسَمْنَا بَيْنَهُمْ مَعِيشَتَهُمْ فِي الْحَيَاةِ الدُّنْيَا وَرَفَعْنَا بَعْضَهُمْ فَوْقَ بَعْضٍ دَرَجَاتٍ لِيَتَّخِذَ بَعْضُهُمْ بَعْضًا سُخْرِيًّا وَرَحْمَةُ رَبِّكَ خَيْرٌ مِمَّا يَجْمَعُونَ (٣٢:٤٣)

We have apportioned among them their livelihood in this world [in such a manner that] We have exalted some in status above others so that they can mutually serve each other. And better is your Lord’s mercy than what they are amassing. (43:32)

 By creating various classes of people, the Almighty is testing whether the big and the small, the high and the low create a society based on co-operation and respect or create disorder in the world by disregarding the role each person has been ordained to play. The latter attitude would, of course, lead them to humiliation in this world and to a grievous doom in the Hereafter. The Qur’ān says:

وَنَبْلُوكُمْ بِالشَّرِّ وَالْخَيْرِ فِتْنَةً وَإِلَيْنَا تُرْجَعُونَ (٣٥:٢١)

We are trying you by giving you happiness and sorrow to test you, and to Us you will be returned. (21:35)

It is to salvage man in this trial that the Almighty has guided him through His Prophets and revealed this economic law to cleanse and purify him.

Following is a summary of this law:

1. The Obligation of Zakāh: It is obligatory upon a Muslim to pay Zakāh according to the way prescribed by the Sharī’ah from his wealth, produce and livestock if he is liable to it.

2. Sanctity of Ownership: If a Muslim has paid his Zakāh dues, then his rightfully owned wealth cannot be usurped or tampered with in any way, except if on account of some violation by him. So much so that an Islamic State has no authority to impose any tax other than Zakāh on its Muslim citizens.

3. Formation of a Public Sector: For the just distribution of wealth, the establishment of a public sector is essential. Consequently, everything which is not, or cannot be owned by an individual should in all cases remain in the ownership of the state.

4. Incompetence: Since a person’s way of using his wealth and property also influences the development and welfare of a society, the state, while acknowledging him to be the owner, has the right to deprive him from using them if he is proved to be incompetent.

5. Usurpation of Wealth: It is prohibited to devour other people’s wealth and property by unjust means. Gambling and interest are some horrendous forms of usurpation. Other economic activities should also stand permissible or prohibited in the light of this principle.

6. Documentation and Evidence: In affairs such as various financial transactions, making a will and acquiring a loan, the parties involved should write down a document and call in witnesses to safeguard against any moral misconduct by either of the parties.

7. Distribution of Inheritance: The wealth of every Muslim must necessarily be distributed after his death among his heirs in the following manner:

If the deceased has outstanding debts to his name, then first of all they should be paid off. After this, any legacies he may have bequeathed should be paid. The distribution of his inheritance should then follow.

No will can be made in favour of the heirs ordained by the Almighty. Similarly, no one can be an heir to a deceased who has severed his kinship with him because of some inappropriate deed or conduct.

After giving the parents and the spouses their shares, the children are the heirs of the remaining inheritance. If the deceased does not have any male offspring and there are only two or more girls among the children, then they shall receive two-thirds of the inheritance left over, and if there is only one girl, then her share is one-half. If the deceased has only male children, then all his wealth shall be distributed among them. If he leaves behind both boys and girls, then the share of each boy shall be equal to the share of two girls and, in this case also, all his wealth shall be distributed among them.

In the absence of children, the deceased’s brothers and sisters shall take their place. After giving the parents and spouses their shares, the brothers and sisters shall be his heirs. The proportion of their shares and the mode of distribution shall be the same as that of the children stated above.

If the deceased has children or if he does not have children and has brothers and sisters, then the parents shall receive a sixth each. If he does not even have brothers and sisters, then after giving the husband or wife his (or her) share, one-third of what remains shall be given to the mother and two-thirds to the father. If there is no one among the spouses, then all of the inheritance shall be distributed among the parents in this same proportion.

If the deceased is a man and he has children, then his wife shall receive one-eighth of what he leaves, and if he does not have any children, then his wife’s share shall be one-fourth. If the deceased is a woman and does not have any children, then her husband shall receive one-half of what she leaves and if she has children, then the husband’s share is one-fourth.

Together with these rightful heirs or in their absence or, as in some cases, from the left over inheritance, the deceased can make a near or a distant relative, aside from his parents and children, an heir. If the relative who is made an heir has one brother or one sister, then they shall be given a sixth of his share and he himself shall receive the remaining five-sixth. However, if he has more than one brother or sister, then they shall be given a third of his share and he himself shall receive the remaining two-thirds.

If a person dies without making anyone his heir, then his remaining legacy shall be distributed among his male relatives according to the principle ‘اَلْاَقْرَبْ فَالْاَقْرَبْ’ (nearest to the next nearest).

This is the law the Almighty has revealed to us to purify our economic dealings. While following this law in letter and spirit, a person may encounter financial difficulties and he may have to sacrifice his interests. The real reward for this is the Kingdom of Heaven which the Almighty will grant him on the Day of Judgment. However, He has promised that if the Muslims in their collective capacity adhere to faith and adopt a God-fearing attitude, the Almighty shall provide them abundantly in this world as well:

وَلَوْ أَنَّ أَهْلَ الْقُرَى آمَنُوا وَاتَّقَوْا لَفَتَحْنَا عَلَيْهِمْ بَرَكَاتٍ مِنْ السَّمَاءِ وَالْأَرْضِ (7: 96)

Had the people of these cities accepted faith and kept from evil, We would have showered the blessings of the heavens and the earth upon them. (7:96)

 According to the Qur’ān, the Prophet Noah (sws) recounted before his nation this established practice of the Almighty in the following words:

فَقُلْتُ اسْتَغْفِرُوا رَبَّكُمْ إِنَّهُ كَانَ غَفَّارًا  يُرْسِلْ السَّمَاءَ عَلَيْكُمْ مِدْرَارًا وَيُمْدِدْكُمْ بِأَمْوَالٍ وَبَنِينَ وَيَجْعَلْ لَكُمْ جَنَّاتٍ وَيَجْعَلْ لَكُمْ أَنْهَارًا (٧١ :١٠١٢)

I said to them: ‘Ask forgiveness from your Lord. He is Oft-Forgiving. [As a result], He shall send rain upon you in abundance and give you increase in wealth and children and bestow on you gardens and shall bring forth for you springs of water’. (71:10-12)

The Old Testament says in this regard:

If you fully obey the Lord your God and carefully follow all his commands I give you today, the Lord your God will set you high above all the nations on earth. All these blessings will come upon you and accompany you if you obey the Lord your God: You will be blessed in the city and blessed in the country. The fruit of your womb will be blessed, and the crops of your land and the young of your livestock – the calves of your herds and the lambs of your flocks. Your basket and your kneading trough will be blessed. You will be blessed when you come in and blessed when you go out. (Deuteronomy, 28:1-7)

After this preliminary discussion, I will now attempt to explain this law in detail. (The verses of the Qur’ān on which this law is primarily based are stated in bold.)

1. The Obligation of Zakāh

 وَأَقِيمُوا الصَّلَاةَ وَآتُوا الزَّكَاةَ وَأَقْرِضُوا اللَّهَ قَرْضًا حَسَنًا وَمَا تُقَدِّمُوا لِأَنْفُسِكُمْ مِنْ خَيْرٍ تَجِدُوهُ عِنْدَ اللَّهِ هُوَ خَيْرًا وَأَعْظَمَ أَجْرًا (٢٠:٧٣)

And [in the daytime and at night] establish the prayer and pay Zakāh and [for the cause of your religion and state] lend to Allah a befitting loan, and remember whatever good you send forth for yourselves you shall find it with Allah better than before and greater in reward. (73:20)

 In the verse quoted above, and at numerous other places in the Qur’ān, Muslims are directed to pay Zakāh from their wealth. In religious parlance, Zakāh means the wealth given in the way of Allah to obtain purity of heart and to obtain the blessings of Allah. The root of the word Zakāh in Arabic has two meanings: ‘purity’ and ‘growth’. The words ‘purify them’ in the first and ‘people who will increase their wealth’ in the second verse quoted below allude to these two meanings of the word:

خُذْ مِنْ أَمْوَالِهِمْ صَدَقَةً تُطَهِّرُهُمْ وَتُزَكِّيهِمْ بِهَا (١٠٣:٩)

Take alms from their wealth [O Prophet!] in order to purify them with it. (9:103)

وَمَا آتَيْتُمْ مِنْ  رِبًا لِيَرْبُوَا فِي أَمْوَالِ النَّاسِ  فَلَا يَرْبُوا عِنْدَ اللَّهِ وَمَا آتَيْتُمْ مِنْ زَكَاةٍ تُرِيدُونَ وَجْهَ اللَّهِ فَأُوْلَئِكَ هُمْ الْمُضْعِفُونَ (٣٩:٣٠)

That which you give as loan on interest that it may increase on [other] people’s wealth, it has no increase with Allah; but that which you give as Zakāh, seeking Allah’s countenance, it is these people who will increase their wealth [in the Hereafter]. (30:39)

 Subsequently, this word was specifically used for the wealth a Muslim gives to those in authority to meet the collective requirements of a state. It is evident from the Qur’ān that like Salāh (prayer), Zakāh has always remained an essential ingredient of the Sharī’ah given to the Prophets of Allah. When the Almighty directed the Muslims to pay Zakāh, it was not an unknown thing to them. All the followers of the religion of Abraham (sws) were well aware of its philosophy as well as its rates and statutory exemptions. Consequently, there was no need to state the details of Zakāh in the Qur’ān. It was a pre-existing Sunnah which the Qur’ān only revived and which the Prophet (sws), on the Almighty’s bidding, established as a directive of the Sharī’ah among the Muslims. If, irrespective of the differences of the jurists in understanding the concept of Zakāh, the details of this directive which have reached us through the consensus of the Companions of the Prophet (sws) and their practical perpetuation, and which now stand validated through the consensus of the Ummah are studied as regards their bases in the Sharī’ah, then they can be stated as:

1. Items

Nothing except the tools of production, personal items of daily use and a fixed quantity called nisāb are exempt from Zakāh. It shall be levied annually on wealth of all sorts, livestock of all types and produce of all forms of every Muslim citizen who is liable to it. However, if some need arises, an Islamic State can give relaxation on any item.

2. Exemption (Nisāb)

The statutory exemptions (nisāb) in wealth, livestock and agricultural production are fixed as:

(a) Wealth: 5 ounces / 612 grams of silver or its equivalent

(b) Produce: 5 Wasaqs / 1119 kilograms of dates or their equivalent

(c) Livestock: 5 camels, 30 cows, 40 goats

3. Rates

(a) Wealth: 2 ½% annually

(b) Produce: (i) 5 %: on all items which are produced  by the interaction of both labor and capital, (ii) 10 % on items which are produced such that the basic factor in producing them is either labor or capital and (iii) 20% on items which are produced neither as a result of capital nor labor but actually are a gift of God.

(c) Livestock

(i) CAMELS

– From 5 to 24 (camels): one she-goat on every five camels

– From 25 to 35: one one-year old she-camel or in its absence, one two-year old camel

– From 36 to 45: one two-year old she-camel

– From 46 to 60: one three-year old she-camel

– From 61 to 75: one four-year old she-camel

– From 76 to 90: two two-year old she-camels

– From 91 to 120: two three-year old she-camels

– Over 120: one two-year old she-camel on every forty camels and one three-year old on every fifty camels

(ii) COWS

– one one-year old calf on every thirty cows and one two-year old calf on every forty cows

(iii) GOATS

– From 40 to 120: one she-goat

– From 121 to 200: two she-goats

– From 201 to 300: three she-goats

– Over 300: one she-goat on every hundred goats

4. Heads

The heads for which Zakāh is to be spent were never unclear. It was always expended on the poor and needy and on the collective requirements of the Muslims. However, when the hypocrites in the time of the Prophet (sws) raised certain doubts about these heads, the Qur’ān unequivocally stated them:

إِنَّمَا الصَّدَقَاتُ لِلْفُقَرَاءِ وَالْمَسَاكِينِ وَالْعَامِلِينَ عَلَيْهَا وَالْمُؤَلَّفَةِ قُلُوبُهُمْ وَفِي الرِّقَابِ وَالْغَارِمِينَ وَفِي سَبِيلِ اللَّهِ وَاِبْنِ السَّبِيلِ فَرِيضَةً مِنْ اللَّهِ وَاللَّهُ عَلِيمٌ حَكِيمٌ (٦٠:٩)

Zakāh is only for the poor and the needy, and for those who are ‘āmils over it, and for those whose hearts are to be reconciled [to the truth], and for the emancipation of the slaves and for those who have been inflicted with losses and for the way of Allah and for the welfare of the wayfarers. This is an obligation decreed by the Almighty, the All-Knowing and the Wise. (9:60)

Here are some details of the heads of Zakāh mentioned in this verse:

(a) ‘الْفُقَرَاءِ وَالْمَسَاكِينِ’ (al-fuqarā wa’l-masākīn): The poor and the needy.

(b) ‘الْعَامِلِينَ عَلَيْهَا’ (al-‘āmilīna ‘alayhā):1 the salaries of all employees of the state.

(c) ‘الْمُؤَلَّفَةِ قُلُوبُهُمْ’ (al-mu’allafat-i-qulūbuhum): all political expenditures in the interest of Islam and the Muslims.

(d) ‘فِي الرِّقَابِ’ (fi’l-riqāb): for liberation from slavery of all kinds.

(e) ‘َالْغَارِمِينَ’ (al-ghārimīn): for helping people who are suffering economic losses, or are burdened with a fine or a loan.

(f) ‘ِفِي سَبِيلِ اللَّهِ’ (fī sabīlillāh): for serving Islam and for the welfare of the citizens.

(g) ‘اِبْنِ السَّبِيلِِِ’ (ibnu’l-sabīl): for helping travelers and for the construction of roads, bridges and rest houses for these travelers.

This is all as far as the Sharī’ah regarding Zakāh is concerned. However, since there exist some general misconceptions about it, the following points must remain in consideration:

Firstly, there is no basis in the Qur’ān and Sunnah for the condition of ‘تمليك ذاتى’ (personal-possession) imposed by our jurists. Therefore, just as Zakāh can be given in the personal possession of an individual, it can also be spent on projects of his welfare2.

Secondly, if the basis of the directive is taken in consideration, industrial produce of all forms, production of all forms based on various skills, rent of various items or buildings of all forms, salaries (reward for labor) and fees of all forms obtained in various ventures must be classified as produce and not as wealth; therefore, the Zakāh imposed on them should be based on the rates specified by the Prophet (sws) for land produce.

Thirdly, according to the above mentioned principle, Zakāh on leased-out houses, properties and other rented items should be that which is levied on produce, and if they are not rented out, its rate should be that which is levied on wealth.

Fourthly, the Nisāb of all items which are analogously linked such as those above can be fixed by the state, if need be, by analogy with the ones specified.

2. Sanctity of Ownership

 فَإِنْ تَابُوا وَأَقَامُوا الصَّلَاةَ وَآتَوْا الزَّكَاةَ فَخَلُّوا سَبِيلَهُمْ (٥:٩)

If they repent, establish the prayer and pay Zakāh, leave them to themselves. (9:5)

This verse explains to the Idolaters of Makkah the conditions which they had to fulfill to become Muslim citizens of the Islamic state of Madīnah. If this context of the verse is kept in consideration, it follows from the words ‘فَخَلُّوا سَبِيلَهُمْ’ (fa khallū sabīlahum: leave them to themselves) that just as an Islamic State cannot tamper with the life, honor and freedom of expression of people who have acquired its citizenship after fulfilling the conditions stated in the verse, it also has no right to commit any excesses against their assets, wealth and property. If they accept Islam as their religion, establish the prayer and are willing to pay Zakāh, the Almighty bids the state to leave them to themselves and not forcibly demand a single penny from them once they have paid Zakāh. The Prophet (sws), while explaining this directive, is reported to have said:

أُمِرْتُ  أَنْ أُقَاتِلَ النَّاسَ  حَتَّى يَشْهَدُوا أَنْ لَا إِلَهَ إِلَّا اللَّهُ وَأَنَّ مُحَمَّدًا رَسُولُ اللَّهِ وَيُقِيمُوا الصَّلَاةَ وَيُؤْتُوا الزَّكَاةَ فَإِذَا فَعَلُوا عَصَمُوا مِنِّي دِمَاءَهُمْ وَأَمْوَالَهُمْ إِلَّا بِحَقِّهَا وَحِسَابُهُمْ عَلَى اللَّهِ (مسلم: رقم ٢٢)

I have been directed to fight3 with these people until they testify to the oneness of Allah and the prophethood of Muhammad, establish the prayer and pay Zakāh. If they accept these conditions, their lives shall be given protection except if they are deprived of this protection on the grounds of some offence they commit4. As far as their account is concerned, it rests with Allah. (Muslim: No. 22)

In the sermon of the Last Hajj, the Prophet (sws) asserted that the wealth of a Muslim has eternal sanctity. Without the permission of the Almighty no one – not even the ruler of the Muslims – has the authority to violate this sanctity. The following subtle words allude to this:

إِنَّ دِمَاءَكُمْ وَأَمْوَالَكُمْ حَرَامٌ عَلَيْكُمْ كَحُرْمَةِ يَوْمِكُمْ هَذَا فِي شَهْرِكُمْ هَذَا فِي بَلَدِكُمْ هَذَا (مسلم: رقم ١٢١٨)

Indeed, your blood and your wealth are as sacred and inviolable as this day5 of yours, this month6 of yours in this city7 of yours. (Muslim: No. 1218)

It is evident from this discussion that an Islamic state has no right to impose any sort of tax on its Muslim citizens except Zakāh, the rates of which have been fixed in their wealth by the Almighty through His Prophets.

This is an unimpeachable directive of Islam. It is this very directive through which Islam not only ends once and for all a great tussle between a state and its citizens in financial matters, but also eliminates the possibility of a state creating imbalance in the national economy by exceeding the resources available to them.

3. Formation of a Public Sector

 مَا أَفَاءَ اللَّهُ عَلَى رَسُولِهِ مِنْ أَهْلِ الْقُرَى فَلِلَّهِ وَلِلرَّسُولِ وَلِذِي الْقُرْبَى وَالْيَتَامَى وَالْمَسَاكِينِ وَابْنِ السَّبِيلِ كَيْ لَا يَكُونَ دُولَةً بَيْنَ الْأَغْنِيَاءِ مِنْكُمْ (٧:٥٩)

And whatever the Almighty has bestowed on His Prophet from the people of the cities, it is reserved for Allah and His Prophet and the relatives of the Prophet8 and the orphans and the needy and the wayfarers so that it may not circulate in only the rich among you. (59:7)

 The context of this verse is that in the Prophet’s times when people demanded that the wealth, land and assets obtained from the enemy against whom no war had been waged be distributed among them, the Qur’ān refused this demand; it asserted that they belonged to Allah and the Prophet (sws) and were reserved for the collective requirements of the state and religion, and for the poor and needy. This, according to the Qur’ān, was necessary so that wealth should not get concentrated among the rich and that it be directed to those sectors of the society who, because of their natural disabilities and lack of resources, are unable to struggle for their livelihood or for some reason are left far behind others in earning for themselves.

Since the wealth and assets referred to in the above mentioned verse were obtained without any real assistance from the believers merely through the Almighty’s help in accordance with His law regarding His Messengers, all of these were reserved for collective purposes. The spoils of war obtained in the times of the Prophet (sws) in various battles fought in Arabia were also owned by Allah and the Prophet (sws)9 because of the peculiar nature of these armed offensives. However, since the believers had also assisted in acquiring them by using their personal weapons, camels and horses as well as food, camps and various other items needed during these wars, it was necessary to give them their due from these spoils. Nevertheless, even in these spoils the Qur’ān reserved 1/5th of the share for these collective purposes:

وَاعْلَمُوا أَنَّمَا غَنِمْتُمْ مِنْ شَيْءٍ فَأَنَّ لِلَّهِ خُمُسَهُ وَلِلرَّسُولِ وَلِذِي الْقُرْبَى وَالْيَتَامَى وَالْمَسَاكِينِ وَابْنِ السَّبِيلِ (٤١:٨)

You should know that a fifth of the spoils you get hold of are for Allah and the Prophet and his near relatives and the orphans and the needy and the wayfarer. (8:41)

If the terminology of modern times is used, we can say that it is the purport of the Qur’ān that in the economy of a country a public sector should come into being parallel to the private sector. The reason is that at the state level this is the only way through which a balance can be achieved in the circulation of wealth, and the problem of concentration of wealth in certain sections of the society as a result of the development of private sector can be resolved in an organized and planned manner. 

As far as the way in which this public wealth and property are to be organized is concerned, the Sharī’ah has left the matter to the circumstances which prevail in a society and upon the general well-being of the Muslims. Therefore, the ruler of an Islamic state in consultation with the elected representatives can adopt whatever measures he deems appropriate in this regard. Consequently, it is known that the Prophet (sws) in his time gave the lands of Khaybar for crop sharing10, left certain lands under the permanent control of certain people for whom these lands had been reserved11, regarded certain lands as Himā12, left certain things to be shared equally by every one13 , fixed the principle of   ‘اَلْاَقْرَبْ فَالْاَقْرَبْ’ (nearest to the next nearest) for using the water of certain springs and canals14 or the way the Caliph ‘Umar (rta) imposed a fixed amount of tribute (Khirāj) on the state owned lands of Syria and Iraq conquered in his times, according to the extent of their produce while leaving them in the hands of their owners15

 4. Incompetence

وَلَا تُؤْتُوا السُّفَهَاءَ أَمْوَالَكُمْ الَّتِي جَعَلَ اللَّهُ لَكُمْ قِيَامًا وَارْزُقُوهُمْ فِيهَا وَاكْسُوهُمْ وَقُولُوا لَهُمْ قَوْلًا مَعْرُوفًا (٥:٤)

Do not give to the feeble-minded the wealth and property which the Almighty has made a means for your support and development. But feed and clothe them with magnanimity, and speak to them with kindness. (4:5)

It is clear from the context of this verse that it pertains to orphans and their guardians. The Almighty has directed us that since wealth has been made a means of subsistence and survival for man, therefore if an orphan is imprudent and naïve, then his guardians while acknowledging his personal right must also take into consideration the welfare of the family and that of the collectivity, and during the time he is unable to properly discharge his responsibilities, they must not return his wealth to him and should themselves take care of this wealth.

This is the context of the verse. However, a further reflection on this verse shows that the basis of the directive is their incompetence and not their status as orphans. Therefore, it can be concluded that if the basis of the directive exists, the above right granted to the guardians with regard to the orphans, by analogy, should also be granted to a state with regard to its citizens. This measure takes care of the welfare and well-being of the society, which must always be kept in consideration. So, if a person because of his foolishness and carelessness squanders away or ruins his wealth and resources, then it is the duty of the state to strip him from their control and management and take charge of them. However, in this case, it has been directed that the state must generously cater for his requirements from his wealth and whole-heartedly adjust all matters. The Arabic words used are ‘وَارْزُقُوهُمْ فِيهَا’ (feed them in it) and not ‘وَارْزُقُوهُمْ منها’ (feed them from it), and these words, according to Arabic usage, clearly point to the generosity with which he must be looked after.


5. Usurpation of Wealth

يَاأَيُّهَا الَّذِينَ آمَنُوا لَا تَأْكُلُوا أَمْوَالَكُمْ بَيْنَكُمْ بِالْبَاطِلِ إِلَّا أَنْ تَكُونَ تِجَارَةً عَنْ تَرَاضٍ مِنْكُمْ (٢٩:٤)

O believers! Do not devour one another’s wealth by evil means except through trading by mutual consent. (4:29)

This verse prohibits a person from devouring other people’s wealth through means which are against justice, honesty, fairness and against the good conventions of a society. It is this directive of the Qur’ān which forms the basis of all prohibitions in Islam that pertain to economic matters. Obtaining money through illegal gratification, theft, extortion, lying, co-operation with evil, embezzlement, misappropriation, consuming unclaimed items without publicizing them, all come under it. These evils require no further discussion since they are universally acknowledged sins in every society and in every religion. Transactions and activities which become a source of deceit or damage for the parties involved are also corollaries of this directive. Their various forms which the Prophet forbade (sws) in his own times are:

Selling something before its possession is taken.16

Selling grain bought in mounds before bringing it to the place where it is sold.17

Selling and purchasing done by a city dweller for a villager.18

Increasing one’s bid in an auction just for deception.19

Bargaining when someone else is bargaining.20

‘محاقله’ (Muhāqalah): Selling crop when it is still in the spikes.21

‘مزابنه’ (Muzābanah): Selling the dates which are on a date-tree in exchange for plucked dates.22

‘معاومه’ (Mu’āwamah): Selling the fruits of trees for many years.23

‘ثنيا’ (Thaniyā): Leaving an unspecified exception in a bargain. One of its forms, for example was that the seller would say: ‘I sell my grain to you, but I will take something out of it’.24

‘ملامسه’ (Mulāmasah): A deal in which a person, without thinking, just touches the other person’s cloth and a deal is made in this manner.25

‘منابذه’ (Munābadhah): A deal in which people throw something towards one another and, in this way, a bargain is made.26

‘بيع الى حبل الحبله’ (Bay’ ilā Habl al-Hablah): A deal in which people sell camels by saying: ‘Whatever offspring this camel gives birth to and when that offspring gets pregnant, whatever it gives birth to, then the [last] offspring is bought by me’.27

‘بيع الحصاة’ (Bay’u’l-Hisāh): In pre-Islamic times, such a bargain existed generally in two forms: (a) people would make a deal about a piece of land and then the buyer would throw a pebble; the distance covered by the pebble would be regarded as the length of the sold land, and (b) people would throw a pebble and say that whatever thing it touched would be considered as sold.28

Selling fruits of a tree before their quality and characteristics become evident.29

Selling spikes before they turn white and become safe from calamities.30

Selling a commodity which is defective, except when the buyer is informed of its defects.31

Holding the milk of camels and goats in their udders before selling it.32

Intercepting tradesmen and buying their merchandise before they reach the markets.33

Making a deal by giving money in advance such that a person obtains the item after it is ready except if this transaction is carried out for a fixed measure, a specified weight and a definite period of time.34

‘مخابره’ (Mukhābarah): Adopting methods of crop-sharing in which the profit of the landlord is fixed before hand.35

Adopting methods of crop-sharing in which the production of a particular area of land is regarded as the right of the landlord.36

Selling jointly owned properties without giving the shareholders a chance to buy them except if the ownership divisions are determined and the paths are separated.37

Selling property which lies on a pathway that is common with a neighbor’s house without giving him the chance to purchase it.38

Storing commodities of general use to create a shortage and thereby increase their prices in the market. The Prophet (sws) utterly forbade this and is reported to have said:

مَنْ دَخَلَ فِي شَيْءٍ مِنْ أَسْعَارِ الْمُسْلِمِينَ لِيُغْلِيَهُ عَلَيْهِمْ فَإِنَّ حَقًّا عَلَى اللَّهِ تَبَارَكَ وَتَعَالَى أَنْ يُقْعِدَهُ بِعُظْمٍ مِنْ النَّارِ يَوْمَ الْقِيَامَةِ. (مسندأحمد: رقم ١٩٨٠٢)

Anyone who interfered in the markets of Muslims merely to increase the rates [of the commodities], then the Almighty has the right to make a big fire his abode on the Day of Judgment. (Musnad Ahmad: No. 19802)

These are the various forms of sale and purchase and crop-sharing which the Prophet (sws) prohibited in his times. Since all the above mentioned directives are based on the underlying bases of deceit and damage, the directive of prohibition will stand dissolved in circumstances in which these bases no longer exist, just as if, as a result of evolution and development of civilizations, these bases emerge in some new economic activity, then those charged with authority can prohibit that activity.

Gambling and interest also belong to this category of devouring wealth through evil means. This writer will now venture to elaborate the view of the Qur’ān in detail on these two hideous crimes.

Gambling

Gambling, everyone knows, is merely chancing one’s luck. The Qur’ān has called it ‘رِجْسٌ مِنْ عَمَلِ الشَّيْطَانِ’ (from among the filthy works of Satan). Obviously, this expression has been employed because gambling gives rise to moral misconduct in a person which gradually encompasses his personality. The reason is that if an economic activity is based on rights and services and rational decisions, it develops a high moral character, and if an economic activity is based on mere chance, fortune and fortuity, it produces an attitude which is based on avoidance of hard work and service. This gives rise to such mean qualities as cowardice and faint-heartedness which subsequently eliminate the innate qualities of honor, integrity, sincerity and self-respect. As a result, a person becomes unmindful to the remembrance of the Almighty and to prayer, and instead of having love and affection for his fellow beings, he has nothing but enmity and hatred for them. The Qur’ān says:

يَاأَيُّهَا الَّذِينَ آمَنُوا إِنَّمَا الْخَمْرُ وَالْمَيْسِرُ وَالْأَنصَابُ وَالْأَزْلَامُ رِجْسٌ مِنْ عَمَلِ الشَّيْطَانِ فَاجْتَنِبُوهُ لَعَلَّكُمْ تُفْلِحُونَ  إِنَّمَا  يُرِيدُ الشَّيْطَانُ  أَنْ يُوقِعَ بَيْنَكُمْ  الْعَدَاوَةَ وَالْبَغْضَاءَ فِي الْخَمْرِ وَالْمَيْسِرِ وَيَصُدَّكُمْ عَنْ ذِكْرِ اللَّهِ وَعَنْ الصَّلَاةِ فَهَلْ أَنْتُمْ مُنتَهُونَ (٥ :٩٠١)

O you who believe: this liquor and gambling and idols and these divining arrows are abominations devised by Satan. Avoid them that you may succeed. Satan seeks to stir up enmity and hatred among you by means of liquor and gambling and to keep you from the remembrance of Allah and from the prayer. Will you not then abstain from them? (5:90-1)

An important point to note is that gambling in pre-Islamic times was a means through which the rich showed their generosity and helped the poor and needy. In winters, when cold winds blew in and caused conditions akin to drought, the courageous would gather at various places, drink liquor and in their state of inebriation would slaughter any camels they could get hold of. They would pay the owner of the camels whatever price he demanded. They would then gamble on the meat of the slaughtered camels. Whatever parts of meat a person won in this gambling, he would generously distribute them among the poor who would gather around them on such occasions. In pre-Islamic Arabia, this was a matter of great honor and people who took part in this activity were considered very philanthropic and generous. The poets would narrate the accounts of their benevolence in their odes. On the other hand, people who stayed away from this activity would be called ‘Barm’ (stingy).

It was this very utility of liquor and gambling which prompted people to inquire when they were regarded as prohibited items. The Qur’ān asserted in its reply that in spite of possessing this benefit, they were instrumental in producing moral misconduct in an individual, which in no case can be allowed:

يَسْأَلُونَكَ عَنْ الْخَمْرِ وَالْمَيْسِرِ قُلْ فِيهِمَا إِثْمٌ كَبِيرٌ وَمَنَافِعُ لِلنَّاسِ وَإِثْمُهُمَا أَكْبَرُ مِنْ نَفْعِهِمَا (٢١٩:٢)

They ask you about liquor and gambling. Tell them: there is great sin in them and some profits as well for people. But their sin is greater than their profit. (2:219)

Interest

Interest is also a similar sin that morally pollutes a person as well as the institutions involved in its transactions. Those who lend on interest totally safeguard their capital by not risking it in any way and extort profit from the poor borrower. In Arabic, it is called Ribā and the Qur’ān has used this very word for it. Everyone who understands Arabic, knows that it implies a fixed increase which a lender demands from the borrower just because he has given him the permission to use his money for a certain period. The Qur’ān has vehemently prohibited it in the following words:

الَّذِينَ يَأْكُلُونَ الرِّبَا لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنْ الْمَسِّ ذَلِكَ بِأَنَّهُمْ قَالُوا إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا فَمَنْ جَاءَهُ مَوْعِظَةٌ مِنْ رَبِّهِ فَانتَهَى فَلَهُ مَا سَلَفَ وَأَمْرُهُ إِلَى اللَّهِ وَمَنْ عَادَ فَأُوْلَئِكَ أَصْحَابُ النَّارِ هُمْ فِيهَا خَالِدُونَ (٢٧٥:٢)

Those who devour interest will rise up on the Day of Judgment like the man whom Satan has driven to madness by his touch because they claim that trading is like interest and how strange it is that Allah has permitted trading and forbidden interest. Consequently, he who received this warning from the Almighty and desisted [in obedience thereto], then whatever he has taken in the past belongs to him and his fate is in the hands of Allah. And those who repeat [the offence] will be companions of the Fire and will abide therein forever. (2:275)

It is further stated:

يَاأَيُّهَا الَّذِينَ آمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنْ الرِّبَا إِنْ كُنتُمْ مُؤْمِنِينَ فَإِنْ لَمْ تَفْعَلُوا فَأْذَنُوا بِحَرْبٍ مِنْ اللَّهِ وَرَسُولِهِ وَإِنْ تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ (٢: ٢٧٩٨٠)

O you who believe! Fear Allah and give up what remains of your demand for interest. If you do it not, beware of war from Allah and His Prophet. And if you repent, then you can have your principal amount. Neither will you be allowed to deal unjustly nor will you be dealt with unjustly. (2:278-9)

The reason why devourers of interest will be raised up on the Day of Judgment as madmen owes itself to their expression of amazement on the fact that the Almighty has not prohibited trading while He has prohibited interest, whereas there is no difference between the two. They maintain that if a trader can demand profit on his capital, why can’t a lender on interest demand profit on his capital. According to the Qur’ān, only a madman can give such an insane statement and such insanity demands that its reward be no different than insanity itself. So in accordance with the law of similarity between the deed and its reward, such people would be raised up as madmen on the Day of Judgment.

Imām Amīn Ahsan Islāhī, while commenting on this expression of amazement of interest-devourers, remarks:

It is evident from the objection raised by the interest devourers that the breed of people who regard interest and trading as analogous to one another is not very rare after all. It was found even in olden times. The Qur’ān has not even commented on this foolish objection since its baseless nature is self evident and only sheds light on the insanity of those who raise it. A trader invests his capital in a trade which is in demand from the people. He makes his merchandise available to people through hard work and by taking a lot of risk. These people, in the first place, were not in a position to produce this merchandise themselves, and if they were able to then it was only at a heavy cost. Moreover, a trader spews his capital in the open market for competition and his profit is determined by the low and high trends of the market itself. He may end up losing all his money due to these trends and he may be able to make some profit. So his hands are tied in this enterprise as he cannot earn a single penny of profit in selling his merchandise until  his invested capital enters the market after being exposed to the risks and fluctuations of the market forces and after once again providing service to society.

So how can the enterprise of a trader, who takes risk and provides service to the society when he invests his capital, be compared to that of an interest devourer whose enterprise is mean, callous, cowardly and hostile to humanity in its very nature. He is a person who is not willing to take the slightest risk with his capital but is very eager to extort profit.39

It is because of this fiendish nature of interest that the Prophet (sws) is reported to have said:

الرِّبَا سَبْعُونَ حُوبًا أَيْسَرُهَا أَنْ يَنْكِحَ الرَّجُلُ أُمَّهُ (ابنِ ماجه: رقم ٢٣٠٤)

So great a sin is interest that if it is divided into seventy parts, then the lightest of these parts is equal in its extent to fornication with one’s mother. (Ibn Mājah: No. 2304)

Here it should be kept in mind that the Qur’ān has prohibited only the charging of interest; it has not prohibited the giving of interest. People who have to pay interest on a loan they have acquired in fact suffer injustice at the hands of the interest-devourers.

What also needs to be appreciated is that without any genuine reason a person who acts as an agent of an interest-devourer or writes down its transaction or bears witness to it, must be regarded as an equal criminal on the principle of ‘تعاون على الاثم’ (co-operation with evil). It is narrated by Jābir (rta):

لَعَنَ رَسُولُ اللَّهِ صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ آكِلَ الرِّبَا وَمُؤْكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ وَقَالَ هُمْ سَوَاءٌ (مسلم: رقم ١٥٩٨)

The Prophet has severely condemned the devourer of interest and the one who pays interest and those who write an agreement [for such lending] and the two who are the witnesses to this document and has said: ‘All of them are equal’. (Muslim: No. 1598)

The Prophet (sws) has emphatically directed people to refrain from the slightest possible trace of interest while borrowing in barter as well:

الذَّهَبُ بِالذَّهَبِ وَزْنًا بِوَزْنٍ مِثْلًا بِمِثْلٍ وَالْفِضَّةُ بِالْفِضَّةِ وَزْنًا بِوَزْنٍ مِثْلًا بِمِثْلٍ فَمَنْ زَادَ أَوْ اسْتَزَادَ فَهُوَ رِبًا (مسلم: رقم ١٥٨٨)

If you lend gold, then take back the same type and the same amount of gold; and if you lend silver, then take back the same type and the same amount of silver; for he who gave more or desired more, then this is precisely what is interest. (Muslim: No. 1588)

الْوَرَقُ بِالذَّهَبِ رِبًا إِلَّا هَاءَ وَهَاءَ وَالْبُرُّ بِالْبُرِّ رِبًا إِلَّا هَاءَ وَهَاءَ وَالشَّعِيرُ بِالشَّعِيرِ رِبًا إِلَّا هَاءَ وَهَاءَ وَالتَّمْرُ بِالتَّمْرِ رِبًا إِلَّا هَاءَ وَهَاءَ (مسلم: رقم ١٥٨٦)

If you lend gold in exchange for silver, then there is a possibility of interest in this.40 Similarly, for wheat in exchange for another type of wheat41, barley in exchange for another type of barley, date for another type of date. Indeed if the exchange is done on the spot, then there is no harm. (Muslim: No. 1586)

This is the correct meaning of the above quoted Āhadīth. If all the Āhadīth on this topic had remained intact, the scholars of our Ummah would not have faltered in interpreting them. However, owing to the misinterpretation of the narrators in some chains of narration, the words ‘هَاءَ وَهَاءَ’ (on the spot), or similar words in the second Hadīth quoted above, were incorporated in the first one; similarly, the word ‘الذَّهَبُ بِالذَّهَب’ (gold in exchange for gold) of the Hadīth quoted first were put in place of the words ‘الْوَرَقُ بِالذَّهَبِ’ (if you lend silver in exchange for gold) of the second. It is because of this intermingling of words that our jurists have erroneously derived the concept of Ribā al-Fadl from such Āhadīth, whereas the correct concept in this regard is what the following words of the Prophet (sws) say:

إِنَّمَا الرِّبَا فِي النَّسِيئَةِ (مسلم: رقم ١٥٩٦)

Ribā is only in transactions of loan. (Muslim: No. 1596)

It should be borne in mind that interest pertains only to those transactions in which a commodity is borrowed for the purpose of ‘using it up’ whereby the borrower would be burdened to recreate it in order to return it to the lender. If any additional amount is demanded over and above it, then this no doubt is injustice as affirmed both by reason and revelation. On the contrary, transactions in which the commodities and items in question are ‘used’ rather than being ‘used up’ relate to lease, and the money demanded by the owner on providing this service, which is termed as rent, can in no way be objected to.

Similarly, it should also remain clear that whether a loan is acquired for personal, business or welfare purposes, the real meaning of Ribā is not ascertained on these bases. It is an indisputable fact that in the Arabic language the word Ribā, irrespective of the aim of the lender and the condition of the borrower, just implies a pre-determined increase acquired on a loan. Consequently, the Qur’ān itself has clarified this fact: during its own period of revelation, lending on interest for business purposes was quite rampant and these loans were given with the intention of prospering through the wealth of others. The Qur’ān says:

وَمَا آتَيْتُمْ مِنْ رِبًا لِيَرْبُوَا فِي أَمْوَالِ النَّاسِ فَلَا يَرْبُوا عِنْدَ اللَّهِ وَمَا آتَيْتُمْ مِنْ زَكَاةٍ تُرِيدُونَ وَجْهَ اللَّهِ فَأُوْلَئِكَ هُمْ الْمُضْعِفُونَ (٣٩:٣٠)

That which you give as loan on interest that it may increase on [other] people’s wealth, it has no increase with Allah; but that which you give as Zakāh seeking Allah’s countenance, it is these people who shall get manifold [in the Hereafter] of what they gave. (30:39)

The expression ‘…that it may increase on [other] people’s wealth’ is not only inappropriate for application to interest-based loans given to the poor for their personal use, but is also clearly indicative of the fact that interest based loans were generally given for business purposes and in this way they ‘increased on other people’s wealth’ according to the Qur’ān.

It is to this fact that the following verse also points:

وَإِنْ كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَى مَيْسَرَةٍ وَأَنْ تَصَدَّقُوا خَيْرٌ لَكُمْ إِنْ كُنتُمْ تَعْلَمُونَ (٢٨٠:٢)

If the borrower is in difficulty grant him respite until it is easy for him to repay and if you write off [the debt], it is better for you, if you only knew. (2:280)

Imām Amīn Ahsān Islāhī comments on this verse in the following words:

Today some naive people claim that the type of interest which prevailed in Arabia before the advent of Islam was usury. The poor and the destitute had no option but to borrow money from a few rich money-lenders to fulfill their personal needs. These money-lenders exploited the poor and would lend them money at high interest rates. It is only this type of interest which the Qur’ān has termed as Ribā and forbidden. As far as commercial interest is concerned, it neither existed at that time nor did the Qur’ān prohibit it.

The verse categorically refutes this ‘allegation’. When the Qur’ān says that if the borrower is in difficulty, he should be given respite until he is able to pay back his debt, it clearly points out that in those times even the rich used to acquire loans. In fact, if the style and stress of the verse are correctly understood, it becomes clear that it was mostly the rich who used to procure loans. Indeed, there was a strong chance that the borrower would find himself in difficulty even to pay the original amount. The money-lender, therefore, is directed to give him more time and if he forgoes the original amount it would be better for him. The words of this verse strongly indicate this meaning. The actual words of the verse are: ‘وَإِنْ كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَى مَيْسَرَةٍ’. The particle of condition ‘ِانْ’ (if) is not used for general circumstances, but, in fact, is used for rare and unusual circumstances. For general circumstances the particle ‘اِذَا’ (if) is used. In the light of this, it is clear that the borrower in those times was generally affluent (‘ذُوْمَيْسَرَة’), but in some cases was poor or had become poor after acquiring the loan and in that case, the Qur’ān has directed the money-lenders to give them a time rebate.42

He has concluded this discussion by saying:

Obviously, the affluent would have turned to the money-lenders not to fulfill their personal needs, but, of course, their business needs. So what is the difference between these loans and the commercial loans of today.43

6. Documentation and Evidence

I

يا أَيُّهَا الَّذِينَ آمَنُوا إِذَا تَدَايَنتُمْ  بِدَيْنٍ إِلَى أَجَلٍ  مُسَمًّى فَاكْتُبُوهُ  وَلْيَكْتُبْ  بَيْنَكُمْ كَاتِبٌ بِالْعَدْلِ وَلَا يَأْبَ كَاتِبٌ أَنْ يَكْتُبَ كَمَا عَلَّمَهُ اللَّهُ فَلْيَكْتُبْ وَلْيُمْلِلْ الَّذِي عَلَيْهِ الْحَقُّ وَلْيَتَّقِ اللَّهَ رَبَّهُ وَلَا يَبْخَسْ مِنْهُ شَيْئًا فَإِنْ كَانَ الَّذِي عَلَيْهِ الْحَقُّ سَفِيهًا أَوْ ضَعِيفًا أَوْ لَا يَسْتَطِيعُ أَنْ يُمِلَّ هُوَ فَلْيُمْلِلْ وَلِيُّهُ بِالْعَدْلِ وَاسْتَشْهِدُوا شَهِيدَيْنِ مِنْ رِجَالِكُمْ فَإِنْ لَمْ يَكُونَا رَجُلَيْنِ فَرَجُلٌ وَامْرَأَتَانِ مِمَّنْ تَرْضَوْنَ مِنْ الشُّهَدَاءِ أَنْ تَضِلَّ إِحْدَاهُمَا فَتُذَكِّرَ إِحْدَاهُمَا الْأُخْرَى وَلَا يَأْبَ الشُّهَدَاءُ إِذَا مَا دُعُوا وَلَا تَسْأَمُوا أَنْ تَكْتُبُوهُ صَغِيرًا أَوْ كَبِيرًا إِلَى أَجَلِهِ ذَلِكُمْ أَقْسَطُ عِنْدَ اللَّهِ وَأَقْوَمُ لِلشَّهَادَةِ وَأَدْنَى أَلَّا تَرْتَابُوا إِلَّا أَنْ تَكُونَ تِجَارَةً حَاضِرَةً  تُدِيرُونَهَا  بَيْنَكُمْ فَلَيْسَ عَلَيْكُمْ جُنَاحٌ أَلَّا تَكْتُبُوهَا وَأَشْهِدُوا إِذَا تَبَايَعْتُمْ وَلَا يُضَارَّ كَاتِبٌ وَلَا شَهِيدٌ وَإِنْ تَفْعَلُوا فَإِنَّهُ فُسُوقٌ بِكُمْ وَاتَّقُوا اللَّهَ وَيُعَلِّمُكُمْ اللَّهُ وَاللَّهُ بِكُلِّ شَيْءٍ عَلِيمٌ (٢٨٢:٢)

O you who believe! When you acquire a loan for a fixed period, record it in writing, and let a scribe write it down between you with fairness; he who can write should not refuse to write, and just as Allah has taught him to write, he also should write for others; the one who has acquired the loan should have [the document] written down and fearing Allah his Lord, he should not make any reduction in it. If he on whom rests the responsibility of writing is indiscreet or feeble or unable to have it written, then let his guardian do so with justice. And call in two male witnesses from among your men, but if two men cannot be found, then one man and two women from among your likable people so that if one of them gets confused, the other reminds her. And witnesses must not refuse when they are summoned. And whether the loan is big or small, be not negligent in documenting the deal up to its period. This is more just in the sight of Allah, it ensures accuracy in testifying and is the most appropriate way for you to safeguard against doubts. But if it be an everyday transaction, it does not matter if you do not write it down. And call in witnesses also if you sell or purchase anything. And let no harm be done to the scribe or the witness. If you do so, then this will be a transgression which will cling to you. And fear Allah. Allah is teaching you. He has knowledge of all things. (2:282)

This verse directs the Muslims to document monetary transactions whether in cash or in credit to safeguard against any dispute that may arise. Imām Amīn Ahsan Islāhī has summarized the directives mentioned in this verse in his Tadabbur-i-Qur’ān in the following words:

1. Whenever a loan is acquired for a certain period, the transaction should be written down in the form of a document.

2. This document should be written down in a just manner by some scribe in the presence of both the parties. He should not be fraudulent in writing this down. A person who knows how to write should not refuse if he is called upon to do so. The skill of writing is a blessing of Allah, and, in gratitude to this, a person should help others whenever the need arises. The need for this piece of advice arose because in those times very few people knew how to write. Formal and legal documentation and registration had not begun and neither was its inception an easy affair.

3. The responsibility of writing down the document rests on the borrower. The document should state the name of the person from whom he has borrowed, and like the person who has been entrusted with the responsibility of writing down, he too should uphold the virtue of piety in this affair, and in no way try to damage the parties involved.

4. If the borrower is naïve, feeble or is not in a position to write down the document, then his guardian or attorney should have it written down on his behalf with justice and fairness.

5. Two male witnesses should testify over this document. The words used are ‘مِنْ رِجَالِكُمْ’ (from among your men), which imply two things simultaneously: firstly, the witnesses should be Muslims and known to the parties involved. The second thing which is specified in this regard is that the witnesses should be honest and trustworthy and of sound character.

6. If two male Muslims having the said qualities are not available, then one man and two women can be selected to fulfill this responsibility. The requirement for two women is because if one of them commits an error the other may correct her. This is not because women are inferior, but because this responsibility is not very suited to their temperament and general sphere of interests and the environment they are used to. Consequently, the Sharī’ah has given them some relief and assistance in it. This topic is discussed in detail in Sūrah Nisā.

7. People who have borne witness to a document should not desist from giving their testimony when they are called upon to do so because bearing witness to a truth is a great social service also, and as witnesses to the truth, it is a responsibility of the Ummah imposed on it by the Qur’ān.

8. If the loan, whether it be small in amount or large, is acquired for a period and is not an everyday loan, one must not show aversion to writing it down. People who ignore this by considering it a burden, sometimes get involved in severe disputes which produce far reaching results merely because of this slackness.

9. All these directives are in accordance with justice, and they safeguard testimonies and protect people from doubts and disputes. So it is necessary to follow them for the general well-being of the society.

10. Everyday loans and transactions are not required to be written down.

11. Witnesses, however, should be called upon important deals and transactions to resolve any disputes that may arise.

12. It is not proper for a party to harm the scribe or the witness if a dispute arises. Scribes and witnesses do a great social service, and if they are harmed, honest and cautious people will start avoiding these responsibilities and, except for professional witnesses, people will have difficulty in finding witnesses who are reliable. In present times, the reason honest and serious minded people avoid these responsibilities is that whenever some dispute arises in such an affair, the witnesses have to face a lot of trouble and discomfort. They become the targets of defamation, suffer monetary losses and even get killed. The Qur’ān has stopped people from such excesses and warned that this is not a small offence that may be forgiven. It is a transgression which will cling on to them, and they will not be able to save themselves from its evil consequences. This is nothing but an effort to raze down the foundation of the pillar of bearing witness to the truth – the very objective of this Ummah. 44

II

يَاأَيُّهَا الَّذِينَ آمَنُوا شَهَادَةُ بَيْنِكُمْ إِذَا حَضَرَ أَحَدَكُمْ  الْمَوْتُ حِينَ الْوَصِيَّةِ اثْنَانِ ذَوَا عَدْلٍ مِنْكُمْ أَوْ آخَرَانِ مِنْ غَيْرِكُمْ إِنْ أَنْتُمْ ضَرَبْتُمْ فِي الْأَرْضِ فَأَصَابَتْكُمْ مُصِيبَةُ الْمَوْتِ تَحْبِسُونَهُمَا مِنْ بَعْدِ الصَّلَاةِ فَيُقْسِمَانِ بِاللَّهِ إِنْ ارْتَبْتُمْ لَا نَشْتَرِي بِهِ ثَمَنًا وَلَوْ كَانَ ذَا قُرْبَى  وَلَا نَكْتُمُ شَهَادَةَ اللَّهِ إِنَّا إِذًا لَمِنْ الْآثِمِينَ  فَإِنْ عُثِرَ عَلَى أَنَّهُمَا اسْتَحَقَّا  إِثْمًا  فَآخَرَانِ يَقُومَانِ مَقَامَهُمَا مِنْ الَّذِينَ اسْتَحَقَّ عَلَيْهِمْ الْأَوْلَيَانِ فَيُقْسِمَانِ بِاللَّهِ لَشَهَادَتُنَا أَحَقُّ مِنْ شَهَادَتِهِمَا وَمَا اعْتَدَيْنَا إِنَّا إِذًا لَمِنْ الظَّالِمِينَ  ذَلِكَ أَدْنَى أَنْ يَأْتُوا بِالشَّهَادَةِ عَلَى وَجْهِهَا  أَوْ يَخَافُوا أَنْ تُرَدَّ أَيْمَانٌ بَعْدَ أَيْمَانِهِمْ وَاتَّقُوا اللَّهَ وَاسْمَعُوا وَاللَّهُ لَا يَهْدِي الْقَوْمَ الْفَاسِقِينَ (٥ :١٠٦٨)

Believers! When death approaches someone among you, and he is making a bequest, the testimony will take place in a way that two just men from among you will act as witnesses, or if you are traveling and the calamity of death overtakes you, then two just men from outside you should discharge this responsibility. Detain them [ – the two just Muslims –] after the prayer, and then if you have any doubts, they should swear by Allah: ‘We will not accept any price for this testimony even if some kinsman offers it, neither will we hide this testimony of Allah. If we do this, then we would be among the sinners’. But if it becomes known that they have proved dishonest, then let two others stand forth in their places from among the people who have been deprived of their right by these two witnesses; then they should swear by Allah, saying: Our testimony is truer than theirs and that we have not trespassed [beyond the truth] in our testimony. If we do this, then we indeed should be among the wrongdoers. In this way, it is more likely that they will bear true witness or at least they will fear that their testimony may get refuted by that of the others. [Do this], and fear Allah and listen and [remember that] Allah never guides the evil-doers. (5:106-8)

In these verses, believers are directed about their wills and bequests with the same stress and emphasis as they are in matters of loan and other transactions. A summary of these directives is presented below:

1. If death stares a person in his face and he has to make a will regarding his wealth, then he should call in two just witnesses from among his Muslim brethren.

2. If death approaches him during a journey, and two Muslim witnesses are not available there, then as a last resort he can call in two non-Muslim witnesses.

3. If there is a possibility that those selected from among the Muslims as witnesses might show some bias to someone by altering their testimony, then as a precautionary measure, they can be held back after a congregational prayer in the mosque and be asked to swear by Allah that they will not alter their testimony for some worldly gain or in partiality of someone even if he be their close relative, and, if they do some alteration, then they will be sinners.

4. The witnesses should know that this testimony is ‘شهادة الله’ (the testimony of Allah). So even if they are dishonest in the slightest way, it would mean that they are dishonest not only to their brethren but also to the Almighty.

5. In spite of this, if it comes to surface that these witnesses have shown bias to someone contrary to the will made by the deceased, then two people from among the brethren of the person who has become the victim of this injustice should stand up and swear that they are truer than the previous witnesses; that they have not committed any excess in this regard and that they will be wrongdoers before the eyes of Allah if they do so.

6. It is likely that after this further measure, the witnesses will not give a false testimony for they will have the fear hovering over them that if they commit any wrong, others will negate their oaths and in spite of being given preference, their oaths will be refuted.

7. Distribution of Inheritance

I

كُتِبَ عَلَيْكُمْ إِذَا حَضَرَ أَحَدَكُمْ الْمَوْتُ إِنْ تَرَكَ خَيْرًا  الْوَصِيَّةُ  لِلْوَالِدَيْنِ  وَالْأَقْرَبِينَ بِالْمَعْرُوفِ حَقًّا عَلَى الْمُتَّقِينَ  فَمَنْ بَدَّلَهُ بَعْدَمَا سَمِعَهُ فَإِنَّمَا إِثْمُهُ عَلَى الَّذِينَ يُبَدِّلُونَهُ إِنَّ اللَّهَ سَمِيعٌ عَلِيمٌ فَمَنْ خَافَ مِنْ مُوصٍ جَنَفًا أَوْ إِثْمًا فَأَصْلَحَ بَيْنَهُمْ فَلَا إِثْمَ عَلَيْهِ إِنَّ اللَّهَ غَفُورٌ رَحِيمٌ (٢ :١٨٠٢)

When death approaches any one of you and you are leaving behind some wealth, it is incumbent upon you to make a will in favour of your parents and relatives according to the conventions [of society]. This is an obligation imposed upon the God-fearing. Then if anyone changes the will after hearing it, then its sin shall rest on those who change it. Indeed, God hears and knows [all things]. But anyone who fears partiality or wrongdoing on the part of the person who has made the will, and he makes peace between them, then there is nothing sinful in this. For Allah is Forgiving, Ever-Merciful. (2:180-2)

The verses of Sūrah Nisā (quoted below) which ascertain a specific share for each heir and their placement in the Qur’ān clearly show that the above mentioned directive of making a will for the parents and relatives according to the conventions of society was revealed earlier. These verses of Sūrah Nisā also explain that the reason the Almighty has ascertained the shares of parents and relatives in the legacy of a deceased is that man cannot know who among his relations is near to him in benefit. Also, in these verses, the Almighty has called this ascertaining of shares as His will, against which no Muslim, it is evident, should dare make his own will. The following verse also corroborates this fact:

لِلرِّجَالِ نَصِيبٌ مِمَّا تَرَكَ الْوَالِدَانِ وَالْأَقْرَبُونَ وَلِلنِّسَاءِ نَصِيبٌ مِمَّا تَرَكَ الْوَالِدَانِ وَالْأَقْرَبُونَ مِمَّا قَلَّ مِنْهُ أَوْ كَثُرَ نَصِيبًا مَفْرُوضًا(7:4)

From what is left by parents and those nearest related, there is a share for men and a share for women whether small or large – a fixed share. (4:7)

In view of this, it is clear that the verses of Sūrah Nisā abrogate the above quoted directive of Sūrah Baqarah. However, the purpose of this abrogated directive in the words of Imām Amīn Ahsan Islāhī was:

The directive of making a will in favour of one’s parents and relatives mentioned in this verse was contingent upon the conventions of the society, and was given in the interim period when the Islamic society had not become stable enough to be given the directives which were later revealed in Sūrah Nisā. It was revealed as a temporary directive before circumstances became conducive for detailed directives in this regard. It had two basic objectives: first, to immediately safeguard the rights of those relatives which were being usurped by influential relatives and second to revive once again the conventions of the society in this regard which had existed in the nobility of Arabia but were engulfed in the dust of the age of ignorance (Jāhiliyyah); this revival would pave the way for the detailed law that was to be revealed later.45

II

يُوصِيكُمْ اللَّهُ فِي أَوْلَادِكُمْ لِلذَّكَرِ مِثْلُ حَظِّ الْأُنثَيَيْنِ فَإِنْ كُنَّ نِسَاءً فَوْقَ اثْنَتَيْنِ فَلَهُنَّ ثُلُثَا مَا تَرَكَ وَإِنْ كَانَتْ وَاحِدَةً فَلَهَا النِّصْفُ (١١:٤)

God enjoins you about your children that a boy’s share is equal to that of two girls’. And, if there are only girls among the children and they are more than two, then they shall receive two-thirds of the inheritance, and, if there is only one girl, then her share is half. (4:11)

It is this directive of the sūrah which abrogates the verse of Sūrah Baqarah quoted before. It first of all mentions the share of the children:

The sentence ‘يُوصِيكُمْ اللَّهُ فِي أَوْلَادِكُمْ’ (God enjoins you about your children) acts as a prelude to ‘لِلذَّكَرِ مِثْلُ حَظِّ الْأُنثَيَيْنِ’ (a boy’s share is equal to that of two girls’). The word ‘اولاد’ (awlād) denotes both the female and the male offspring. Hence, the correct sentence analysis in this writer’s opinion is:   ‘للذكرمنهم مِثْلُ حَظِّ الْأُنثَيَيْنِ’ ([among the children] a boy’s share is equal to that of two girls’).

If this directive had ended on the words ‘لِلذَّكَرِ مِثْلُ حَظِّ الْأُنثَيَيْنِ’ (a boy’s share is equal to that of two girls’), then it would have meant:

(i) If the children of a deceased are only a boy and a girl, then the boy will receive twice as much as the girl.

(ii) If the number of boys and girls exceed this, then the inheritance shall be divided among them in a manner that each boy receives twice the share of a girl.

(iii) If there are only boys or only girls, then the whole inheritance shall be given to whoever among the two is present.

The third case is also, quite evidently, an essential outcome of the style and pattern of the verse. If it is said that this money is to be distributed among beggars and a male beggar is to be given twice the amount of a female beggar, then this means nothing except that the money is actually meant for the beggars; hence if all beggars are men, all the money shall be distributed among them and if all the beggars are women, then also the same procedure shall be adopted. But the directive does not end here: an exception immediately follows, thereby amending it.

The sentence ‘فَإِنْ كُنَّ نِسَاءً فَوْقَ اثْنَتَيْنِ فَلَهُنَّ ثُلُثَا مَا تَرَك’ (and if there are only girls among the children and they are more than two, then they shall receive two thirds of the inheritance) is an exception to ‘لِلذَّكَرِ مِثْلُ حَظِّ الْأُنثَيَيْنِ’ (a boy’s share is equal to that of two girls’). This means that if among the children of the deceased there are girls, then whether they are two or more, their share is two-thirds. The words ‘وَإِنْ كَانَتْ وَاحِدَةً فَلَهَا النِّصْف’ (and if there is only one girl, then her share is half) are co-ordinated to this exception by the copulative particle (harf-i-‘atf)  ‘وَ’ (and).

This writer has interpreted the meaning of ‘فَوْقَ اثْنَتَيْنِ’ as ‘two or more than two’. The reason behind this is that before it, the word ‘اثْنَتَيْنِ’ (two) has been suppressed, which is owing to the style and pattern of the Arabic language. If, in the language of the Qur’ān, the share of a girl and of two or more girls are to be stated separately owing to a difference in their proportions, then there can be two ways of doing so. If an ascending order arrangement is adopted, then the share of one girl shall be stated first followed by the share of two girls. If the share of more than two girls is to be the same as that of two girls, then there is no need to mention it in words. After specifying the share of two girls after that of one, owing to a difference in their amount, if a silence follows, then this is a clear indication that the share of two or more girls is equal to that of two girls’. If a descending order arrangement is employed, then again, the words ‘فَوْقَ اثْنَتَيْنِ او اثنتين’ (more than two or two) are inappropriate as regards the linguistic style and pattern of Arabic; so after stating the shares of more than two girls, the share of one girl will be stated. In this style and arrangement, the commencement of a sentence by ‘فَوْقَ اثْنَتَيْنِ’ bears evidence to a suppression of the word ‘اثْنَتَيْنِ’ before it. A little deliberation shows that the verse readily suggests this fact. The order of the arrangement demands that ‘اثْنَتَيْنِ’ should come after ‘فَوْقَ اثْنَتَيْنِ’, while linguistic considerations dictate that ‘اثنتين’ should come before ‘فَوْقَ اثْنَتَيْنِ’. To fulfill both these requirements, the Qur’ān has suppressed the word ‘اثْنَتَيْنِ’ by adopting an elliptical style of expression in the descending order arrangement. In the last verse of Sūrah Nisā, these shares are stated in an ascending order. Accordingly, we observe there that ‘فَوْقَ اثْنَتَيْنِ’ is suppressed after ‘اثْنَتَيْنِ’:

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Is only Usury forbidden?

Economic Issues
Question asked by .
Answered by Asif Iftikhar

Question:

Some people argue that only usury (interest at such an exorbitant rate that it exploits the debtor) has been declared unlawful by Islam. Therefore, interest at a mutually acceptable rate can be charged, which is usually the case in loans given for commercial purposes. It is in loans given for the purposes of personal needs that the possibility of exploitation exists. The following verse of Qur’ān is presented to support this point of view:

 Believers! Do not devour interest, doubling and redoubling. (3:130)

 I am really confused. Please advise.

Answer:

I am afraid this is not correct. This verse does not support the argument. It merely indicates the gravity of the failing of those who, at a time when infāq (spending in the way of Allah) in relation to jihād (holy war) was affording great opportunities to the Muslims to earn Allah’s forgiveness, were busy earning interest. This style is used in a language to reprimand a person for the heinousness of his attitude of not only doing something wrong but also showing total disregard for values in doing so.1 For example, when one says (in English) ‘For God’s sake, [at least] don’t flirt with another woman in front of your wife’, it does not mean that one is suggesting that one should flirt with another woman while one’s wife is not around. To take an example from the Qur’ān, consider the following verse:

 Force not your slave-girls into prostitution that you may seek pleasures of the life of the world, if they would preserve their chastity. (24:33)

 Obviously, this verse does not mean that if the slave-girls are willing, prostitution may be allowed. It merely points out the intensity of the sin of those who force such slave-girls to prostitution as wish to avoid the despicable crime.

The Qur’ān has not defined Ribā (interest). It didn’t have to. The meaning of the word was already clear to those who understood the Qur’ānic Arabic. Just as the Qur’ān did not have to define Khamr, it did not have to define Ribā. It merely prohibited both. In Qur’ānic Arabic, Ribā refers to the gain which the lender demands at a predetermined rate from the borrower on the loan that he gives him for a specific period of time. Moreover, it is also clear from the following verse of the Qur’ān that those people gave interest for commercial purposes as well, for it is this form of interest which increases ‘in other’s wealth’, not the interest on loans given for personal needs of the debtor:

 And the interest bearing loan that you give that it may increase in the wealth of others does not increase with Allah; and the Zakāh that you give to earn Allah’s pleasure, these are the people who shall get manifold [in the Hereafter]. (31:39)

 Therefore, if anyone advocates that the word is also used in a sense different from its denotation, the onus of proof is on him.

Furthermore, the following verses of the Qur’ān leave no room for the argument that only such interest was declared unlawful as put the debtor in difficult circumstances:

 O you who believe! Observe your duty to Allah, and give up what remains [due to you] from the interest, if you are [in truth] believers. (2:278)

 And if the debtor is in straitened circumstances, then [let there be] postponement to the time of ease… (2:280)

 These two verses have the same context and therefore can be taken together to show that interest has not been prohibited merely in cases where the debtor is in difficult circumstances. The words ‘And if the debtor is in straitened circumstances’ indicate an exceptional case, and point out that the prohibition in the previous verse (2:278) is of interest at a normal mutually acceptable rate.

According to Farāhī, the particle ‘idhā’ (when) would have been used instead of ‘in kāna’ (if), if the words were not indicative of an exceptional case.2

To take an example from the English language, let us assume that a police officer says to his subordinates ‘free all these culprits tomorrow. And if a culprit has helped the police, free him today’. As the context of the two sentences is the same, the second sentence makes it obvious that not all the culprits have helped the police. Similarly, when the Qur’ān says: Give up what remains [due to you] from interest… and if the debtor is in difficult circumstances [let there be] postponement to the time of ease….’, it is clear from the second portion that the case of the debtor being in difficult circumstances has been mentioned as an exceptional one. In other words, the prohibition of interest in the first portion pertains to the general cases of loans given to such people as are not in straitened circumstances Amīn Ahsan Islāhī concludes his discussion on this verse by saying:

 Obviously, the affluent would have turned to the money-lenders not to fulfill their personal needs, but, of course, their business needs. So what is the difference between these loans and the commercial loans of today?3

 Therefore, it is evident from the Qur’ān that interest of all kinds has been prohibited, including that which does not necessarily put the debtor in distressing circumstances, as is the case with interest on commercial loans.

1. Amīn Ahsan Islāhī, Tadabur-i-Qur’an, 4th ed., vol. 2 (Lahore: Faran Foundation, 1991), pp. 177-78.

2. Amīn Ahsan Islāhī, Tadabur-i-Qur’ān, 5th, ed., vol. 1, (Lahore: Faran Foundation, 1993), pp. 638 – 639.

Difference between Interest and Rent

Economic Issues
Question asked by .
Answered by Asif Iftikhar

Question:     

What is the difference between interest and rent. Why can’t the amount demanded for a loan given be classified as rent? After all you are using the money the way you use an item rented out to you.

Answer:

If the nature of the transaction is such that the asset given for a period of time is to be ‘used’ by the receiver, but, by the nature of the transaction, cannot be ‘used up’ by him, the predetermined gain would be categorized as rent not interest.

Consider the hypothetical situation where Mr A leases out his house to Mr B for one year at a rent of Rs. 5000 per mensem. In the third month, Mr B is unable to pay the rent, and, in accordance with the terms of his contract, he has to vacate the premises. To do this, he does not have to ‘re-create’ the building as the nature of the whole arrangement was such that he could not ‘use up’ the property.

On the other hand, Mr A gives a sack of wheat to Mr C for a certain time period, during which Mr C has to pay Rs. 50 every week to Mr A over and above the value of wheat. Now, in the second week Mr C is unable to pay Rs. 50. In this case, he might have to ‘re-create’ the sack of wheat to return the loan as he might have consumed it, or ‘used it up’.

To use accounting terminology, one might say that interest is charged on circulating capital whereas Rent on fixed capital.

It is also important to note that it is the nature of the transaction, not the nature of the commodity, which determines whether the capital is circulating or fixed, that is whether it can or cannot be ‘used up’. For example, a machine hired to produce goods may be categorized as fixed capital as, by the nature of the transaction, it cannot be ‘used up’, whereas the same equipment borrowed as stock-in-trade for sale by a fellow trader may be categorized as circulating capital as, by the nature of the transaction, it may be ‘used up’ to generate revenue.

Consequently, one can say that in case of an interest bearing transaction:

i) there is a gain at a predetermined rate on the loan, and

ii) the nature of the transaction is such that the commodity borrowed can be ‘used up’ to generate revenue.

It is needles to say that money is a commodity which, by its nature, involves transactions in which the loaned capital sum may be ‘used up’ by the borrower. Therefore, whenever money is lent, any gain at a predetermined rate on the principal is interest.

Taking Interest from Non-Muslims

Economic Issues
Question asked by .
Answered by Shehzad Saleem

Question:

I live in India. Here the government is non-Muslim. I wanted to know if bank interest is Halāl in a non-Muslim country as I heard that there is a Hadīth which says so?

Answer:

Answer: Taking Interest is prohibited whether in a Muslim country or in a non-Muslim country because of the fact that it is inherently an unethical contract. Things which are unethical are prohibited whether they be with Muslims or non-Muslims. In other words, just as one should be honest not only with Muslims but also with non-Muslims, similarly one should also not be selective on the basis of religion in taking interest.

The Hadīth you have referred to is not an authentic one1 and is also not found in the six major books of Hadīth . Its content also contradicts the Qur’ān. As a result, I am afraid it cannot be accepted.

1. The Hadīth is Mursal and reads thus:

There is no interest between a Muslim and his enemy with whom he is at war. (Bahqī)

Stability of Interest Based Economies

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Question asked by .
Answered by Shehzad Saleem

Question:

Being a Muslim it is our faith that whatever Islam presents is the most correct thing and of course has some benefits for humanity. My question is that interest is prohibited in Islam; naturally there must be some curse in it. But if we look at the western developed countries, interest is fully present but still their economies are stable and booming day by day. How would you reject this argument?

Answer:

According to Islam, a contract between a lender and borrower should be an equitable one. It should ensure justice to both parties and safeguard their rights on equal footings. If one party’s rights are protected more than the other even minutely, injustice creeps in. In a Ribā (interest) contract, justice to both parties is not ensured. While the lender is ensured a safe return, the borrower is not – and the lender is least bothered with it. This is unethical. Various measures have been suggested by economists that reduce risk for the lender. All said and done, these measures may be efficient, but the fact remains that they do not ensure equal justice to both parties. Injustice, you’ll agree, is something very objectionable and cannot be tolerated at any level.

The fact that a certain unjust act might cause an economic boom is not reason enough that it should be legalized. There are many practices which may be ethically incorrect but which may boost the economy of a country. Drug trafficking and smuggling, for example, can sometimes be very beneficial for a country. Similarly, in the far eastern countries, child pornography is a very lucrative way of earning. In some African countries, slave trading is very profitable. So you see that if a thing is economically profitable, it does not necessarily mean that it is morally correct. Interest is prohibited because of the fact that it is an unethical contract. You would perhaps agree that economic boom is only commendable if it is based on ethical contracts.

Using Interest received to pay Interest

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Answered by Shehzad Saleem

Question:

Accounts that I have at the bank all pay varying rates of interest. I usually donate the interest amounts to charity. Now, if I undertake a loan in which I pay an interest rate and only pay the interest amount due with the interest that I receive from my accounts (but pay the principle amount with my own earnings). Am I, in your opinion, in error?

Answer:

I think that there is no harm in this dealing. The interest you are getting is not your right Islamically, while the interest you are paying is an injustice you are encountering. So, it is merely a situation of paying something that was not your right in order to pay off something that should not have been demanded from you in the first place.

A Justification for Interest

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Question asked by .
Answered by Shehzad Saleem

Question:

I want to ask you a question about interest. Actually I have an Indian friend, who gave me a simple example to justify interest: Suppose Ahmad borrows some money from Ali and promises that he will refund it within a month, but fails to do that. Because of Ahmad’s failure to return t on time, Ali charges 10% as interest! Would this be unfair? If it is unfair to Ahmad that interest be charged, then wouldn’t it be unfair to Ali also that interest not be charged because he waited more than their decided time period. So, we can say that this 10% is a reward for Ali’s patience, and if he were able to obtain his money from Ahmad on time, he could have completed many of his urgent tasks by his money. Now, I am unable to refute this justification. Can you help me in the points raised by my friend?

Answer:

I am afraid the example given by your friend is not analogous with interest-based transactions. Interest deals do not work the way this example describes.

In the example, the borrower is in default by virtue of his non-payment at the appointed time. Therefore, a penalty cannot be objected to if it is agreed upon by both the parties beforehand. However, in all interest deals, the borrower is liable to the penalty (ie the interest amount) even if he returns his money on the appointed time. For example, if I borrow Rs 5000 from you and return it to you within the stipulated period, I will still be required to pay an extra amount to you. So, you see, this is different from the example your friend has given.

Benefiting from Interest Money

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Question asked by .
Answered by Shehzad Saleem

Question:

I have a bank account. It is a ‘low interest-paying current account’. I normally get only about £30/year as interest. But the bank charges for day to day transactions are quite high (which is unfair). Hence by the end of the year they might charge me £40 +/- for their services. (e.g: bank draft costs £3, withdrawing your own money costs £0.20 per cheque etc). Under these circumstances, can I use the £30 (interest) in paying them for their services, that is to say ‘giving them back their own money’?

Answer:

Islam forbids interest since it is morally not justified. Therefore, a person should not in any way use the interest money even if his bank account is ‘forcibly’ credited with it.

The bank charges you have referred to are an absolutely legitimate remuneration of the various services a bank provides you. If their rates are high, it certainly does not mean that you can use money obtained from forbidden means to pay for them. Instead of using the interest money for your own self or for such purposes, it seems befitting that you give it away to the poor or to some welfare projects. This money actually belongs to the society and should accordingly be spent on its needs.

Taking Interest for a Noble Cause

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Answered by Shehzad Saleem

Question:

We are going to start a clinic in our town in India. The total expense to run the clinic is USD 1200 per month, but it is difficult for us to raise this amount every month. We will get money from some people every month but this will not be enough. So we want to ask if we deposit USD 100,000 in a bank to earn interest because by adding the interest to the collected money, we will manage to reach the required target of USD 1200 per month. So is this allowed? The clinic is for all communities, and free for all. Can we use the interest money for such philanthropic causes?  

Answer:

Taking interest is forbidden in Islam even if it is taken for a noble cause. Islam requires that both the means and the objective of an enterprise be morally justified. It does not condone the ‘Robin Hood’ concept of achieving noble objectives through ignoble means. Its objective is to purify a person’s concepts and his deeds from any semblance of evil. Its message is to strive in the right direction whether the objective is achieved or not – for achieving an objective depends not on a person’s efforts; it depends on the will of Allah. It is not our obligation by any means to spend money on philanthropic causes when we do not have it from the right means.

An example from the Qur’ān may help in illustrating this point: gambling and drinking in pre-Islamic times were a means to help the poor and needy. The generous would gather at various places, drink liquor and, in their state of inebriation, slaughter any camels. The meet of the slaughtered camels would be placed for gambling. Whatever parts of meat a person won in this gambling, he would generously distribute them among the poor who would gather around on such occasions. It was this very benefit of drinking and gambling which prompted people to make an inquiry when they were regarded as prohibited items. The Qur’ān asserted in its reply that in spite of serving this noble cause, they were instrumental in producing moral misconduct in an individual, which in no case can be allowed:

They ask you about liquor and gambling. Tell them: there is great sin in them and some profits as well for people. But their sin is greater than their profit. (2:219)

In other words, despite having utility, drinking and gambling were prohibited since they cause moral misconduct. Therefore, I would advise you to think of some other alternative.

Earning Money through Lending

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Question asked by .
Answered by Shehzad Saleem

Question:

I know that interest is prohibited in Islam. But then, my question is that I want to invest money in the form of a loan and want to earn money through it. The reason is that I want to safeguard my original amount. Is there a way out?

Answer:

As you have rightly pointed out, interest is forbidden in Islam. The basic reason is that the rights of the borrower and lender are not protected on equal grounds. While the lender is ensured a safe return, the borrower is not and the lender is least bothered with it. This makes the contract an unethical one.

However, there is another way out for a person who does not want to earn money through interest (neither does he want to enter into a profit and loss agreement but wants to earn money through lending: The contract between the lender and the borrower should be made on the basis that the lender gives an undertaking to the borrower that he will be entitled to a percentage share in the profit only if the borrower earns profit on the investment made.

Inflationary Adjustments

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Question asked by .
Answered by Shehzad Saleem

Question:

I keep my money in a current account so that I may avoid interest. However, the funds do depreciate due to inflation. Does Islam recognise inflation and how does it compensate for devaluation and depreciation due to inflationary pressures?

Answers: Money in the form of paper currency has originated in the last few centuries. The issue of depreciation due to inflation has arisen because of the very nature of paper currency. Prior to this, goods were bought and sold on the basis of real commodities like gold and silver coins for example, and there was no ‘false’ depreciation. However, today, this change in situation certainly calls for some corrective measures.

Answer:

As such, in my opinion, there seems no reason for Islam to disregard inflation and depreciation of paper currency. Whether this measure will actually root out inflation may be debatable, but the point however is that the nature and extent of the corrective measure is such that it requires state authority. Only a state has the power to bind financial institutions and other sectors of the economy to make inflationary adjustments. The common man, you would perhaps agree, cannot do this. Therefore, unless the state realizes this problem, nothing much can practically be done.

Zakāh on Stocks

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Question asked by .
Answered by Shehzad Saleem

Question:

How should we calculate Zakāh on stocks and shares?

Answer:

Before I answer this question, let me draw your attention to an important aspect regarding its calculation: One of the heads on which Zakāh was levied in the time of the Prophet (sws) was on the harvested crop. It is evident that, contrary to wealth (on which Zakāh was levied annually at the rate of 2.5 %), crops form a different category. While in the former, no production is taking place, the latter are actually a form of produce. On crops grown on rainy lands, Zakāh was levied at the rate of 10 % of the produce at the time of produce, while on lands which needed human effort for water supply to grow crops, it was levied at the rate of 5 % of the produce at the time of produce. In other words, if the spirit of this directive is kept in consideration, Zakāh on any form of produce is either 10 % or 5%, whatever be its nature. In the times of the Prophet (sws), since agricultural produce was the only form of produce, therefore Zakāh was imposed on it on the above mentioned rates. Today by analogy, it should be levied at these very rates on any other form of produce. Industrial produce, in these times, for example is a very common form of produce.

As far as the difference in the two rates of produce (5% and 10%) is concerned, it is evident that where human effort is very little – that is it is confined to sowing seeds only and where water is actually supplied through rains, the rate of Zakāh is more, ie 10%. On the contrary, where this effort is considerable, the rate is reduced to 5 %. In other words, if one derives the principle underlying this calculation, one can safely conclude that Zakāh on all items which are produced both by the interaction of labour and capital is 5%, and on items which are produced such that the basic factor in producing them is either labour or capital, it is 10%.

It also needs to be appreciated that all the tools of production are exempted from Zakāh.

With this background, I now come to your question. By analogy, earning money through stocks seems to be a form of produce in which no labour is involved. It is the case of production made through capital only. If this derivation is true, then Zakāh should be levied at the rate of 10 % on the dividend earned. The total amount invested in stocks is, of course, exempt from Zakāh since it is basically the tool of production.

Zakāh on Loans

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Question:

I have lent some money to a close relative who is going through tough times in his life. I want to know if I am liable to pay Zakāh on the money I have lent?

Answer:

You are not liable to pay Zakāh on the amount you have lent for such purposes if your date for Zakāh giving arrives. It is serving the needs of the society. You will be now liable for Zakāh once you receive the money.

Can Zakāh be given to Non-Muslims?

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Question:

Can Zakāh be given to non-Muslims?

Answer:

The following Qur’ānic verse spells out the heads under which the Zakāh fund can be expended:

Zakāh is only for the poor and the needy, and for those who are ‘āmils over it, and for those whose hearts are to be reconciled [to the truth], and for the emancipation of the slaves and for those who have been inflicted with losses and for the way of Allah and for the wayfarers. (9:60)

It is evident from the verse quoted above that the Qur’ān does not discriminate between the recipients of Zakāh on the basis of their beliefs or religion. In other words, Zakāh money can be given to any needy person whatever his religion be. Consequently, the answer to your question is that you can give your Zakāh money to Non-Muslims.

Taxes Other than Zakāh

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Answered by Shehzad Saleem

Question:

There is a Hadīth which says that a Muslim govt. cannot ask its residents for any taxes other than Zakāh. On the other hand, we see that our so called Muslim governments seem to be running on the money collected through taxes. Is it religiously binding on us to pay these taxes? If not, then what should be the attitude of a pious person in this regard?

Answer:

We are bound by the Sharī’ah to follow and show obedience to the law of the land unless the situation arises in which obeying this law stops us from obeying the Sharī’ah itself.

In the situation you have referred to, the government is not stopping us from paying Zakāh (in which case one can refuse to obey the directive and face  the consequences as well); it is asking us to comply with its own interpretation of the directives of Zakāh. One group of scholars, it should be borne in mind, hold the view that taxes besides Zakāh can be imposed by an Islamic state. Our duty is to follow the state interpretation in letter and spirit and at the same time, if possible, to convince people in favour of our interpretation in a particular matter. If the majority accepts this view, it  will become the law of the land.

Until such a stage is reached, a person who believes that Zakāh is the only tax a Muslim government can impose on its Muslim citizens can deduct his Zakāh from the amount of tax and pay the balance as Zakāh. If the amount of taxes exceed the Zakāh he is liable to pay, he may not pay any Zakāh.

Calculation of Zakāh

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Answered by Shehzad Saleem

Question:

I have just converted to Islam, and want to pay Zakāh in the way prescribed by Islam. Please advise.

Answer:

You can calculate Zakāh in the following manner:

1. Fix any one day of the year for the calculation of Zakāh. On all subsequent years, Zakāh should be calculated on this day.

2. Subtract the value of 612 grams of silver from your total wealth on this particular day which includes value of your jewelry not worn everyday, value of other assets which are not of personal use (your personal house and car are examples of assets in personal use).

3. 2 1/2 % of this amount is the Zakāh to which you are liable. In case you are a salaried person you should also pay 10 %1 of your salary every time you receive it. You can deduct the amount the government has fixed as exemption to salaried persons and then pay the said percentage of the remaining amount as Zakāh.

Remember, if it is not possible to pay your Zakāh money in one go you can pay in installments as well.

4. Since Zakāh is the only tax which a government can impose on its citizens, you can deduct other taxes that you have paid from the your Zakāh amount. If the balance is negative you do not have to pay Zakāh.

1. If the basis of the Sunnah established in Zakāh is taken into consideration, production of all forms based on various skills must be classified as produce and not as wealth; therefore, its rates and nisāb should be those specified by the Prophet (sws) for land produce. Consequently, Zakāh on items which are produced such that the basic factor in producing them is either labour or capital is 10 % (in the case under question it is just labour).

Raffle-Tickets

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Answered by Asif Iftikhar

Question:

What is the position of raffle-tickets in Islam?

Answer:

Answer: This amounts to gambling. One of the arguments in favour of raffle tickets is that the scheme is widely used for philanthropic causes. It must be borne in mind that gambling in the Qur’ānic times in Arabia was no exception. In fact, owing to its philanthropic aspect, gambling was considered a boon rather than a bane. The rich would indulge in drinking and gambling and would give whatever they won to the poor. Indeed, the abstainer was regarded as niggardly. However, the Qur’ān very clearly pointed out that the moral corruption that ensues from such activities is greater them whatever benefit they provide:

They ask you about gambling and drinking. Say: There is great sin in both and also some benefit for people, but their sin is greater than their benefit. (2:219)

Of this moral corruption, one aspect particularly worth mentioning is that these so-called philanthropic schemes develop the attitude of selfishness and indifference. In an Islamic society, infāq, or spending in the way of Allah, is a basic value. The destitute, therefore, are the direct responsibility of the society and their problems cannot be left to the mere adjustments of demand and supply as in the laisser fair concept. It should be impossible for a Muslim to sleep with the peace of mind, if he finds out that a neighbour had not been able to eat at night owing to poverty. Destitution, poverty, misery and disease should be sufficient enough as reasons for impelling a Muslim to spend whatever he can spare. ‘Spend in the way of Allah that ye may be rewarded in the Hereafter’. ‘Spend in the way of Allah that ye may enter the Kingdom of Heaven’. Such adages used to be the underlying reason for infaaq. But whatever is this: ‘Spend in the way of Allah that ye may get a refrigerator (or a deep-freezer or a VCR)’? and ‘Spend in the way of Allah that ye may win tickets to Madame Noor Jehaan’s concert’?

Millions are spent merely on organizing these ‘philanthropic’ schemes – millions that could be directly spent on the poor – and thousands are spent by the gentry on the apparel they need for just one such occasion. It is the height of indifference, prodigality and selfishness that a person who can afford to spend thousands on buying tickets to the concert and thousands on new clothes for the function is not motivated to spend in the way of Allah by the misery of a fellow human being and by the reward in the Hereafter. The mere knowledge that a human being is in need of what a Muslim can spare should give the Muslim sleepless nights. Yet there are Muslims who can spare millions but do not take out a penny unless they are certain of a news items and a photograph lauding their altruism. Would that they were able to appreciate what Jesus (sws) had said:

Be careful not to do your ‘acts of righteousness’ before men, to be seen by them. If you do, you will have no reward from your Father in heaven. So when you give to the needy, do not announce it with trumpets, as the hypocrites do in the synagogues and on the streets, to be honoured by men. I tell you the truth, they have received their reward in full. But when you give to the needy, do not let your left hand know what your right hand is doing, so that your give may be in secret. Then your Father, who sees what is done in secret, will reward you. (Matt, 6:1-4)

The Qur’ān says:

O you who believe! do not mar your almsgiving by reminders of your generosity and by hurting the feelings [of the one you had helped], like the one who spends his wealth to be seen of men but believes neither in Allah nor the Final Day. (2:264)

And:

And if you allow them to be revealed when you do your alms, that too is good; but if you conceal them and make them reach the poor in secret, that is best for you. And Allah remains well aware of what you do. (2:271)

When a concert or a refrigerator not the ‘Kingdom of Heaven’ becomes the reason for charity, it means that the whole foundation of moral values, which are so essential to an Islamic society, has been impaired to the extent that the edifice that rests on it may collapse in the wake of the mildest of storms.

The raison d’etre for charity should be concern for others and the reward in the Hereafter not Madame Noor Jehaan’s concert or a refrigerator. Loss of values means the death of society. Loss of the spirit of infāq – a basic value in an Islamic society – means the death of Islamic society. That must never be.

Those who spend of their wealth [in charity] by night and by day, in secret and in public have their reward with their Lord. For them shall be no fear, nor shall they grieve. (2:274)

Inheritance and Gifts

Economic Issues
Question asked by .
Answered by Shehzad Saleem

Question:

The case in point is: A father during his life time gives a sum of money to all his daughters and says to them that this is your inheritance. The daughters take the money without saying anything to the father as they respect him. After a few years, the father dies and all the money as far as the sisters know is now with the one and only son, ie their brother. The father does not leave any instructions regarding the distribution of his wealth. The sisters know that the wealth of their father was much more than the amount given to the sisters as inheritance during the father’s life. Now my questions are:

1. If during the life, a father distributes his wealth, does he have to distribute it in accordance with Sharī’ah, or can he give the son much more than the daughters?

2. After his death, who is responsible for the distribution of his wealth as per the Sharī’ah?

Answer:

As a principle, a person in his own lifetime has the right to give or gift his wealth in any proportion to any or all of his children. In this regard, the Sharī’ah imposes no obligation on him except that he should be fair and just with all his children in this regard.

As far as his inheritance is concerned, it solely relates to the wealth and property which he leaves behind after his death. In this case, the Sharī’ah has fixed the shares of his heirs. They must be given their share in the prescribed proportion. All his heirs must sit together and distribute his wealth among themselves according to this proportion. If any one of them does any injustice in this distribution, he must know that according to the Qur’ān (4:13-14) he is doing a grave sin. The other heirs have the right to take this case to the court if they think that they are being deprived of their right by someone.

Consequently, whatever you received from your father in his life was a gift from him. It cannot be regarded as your share of inheritance. You still have a share in his wealth as his legal heirs, which of course you have the right to demand.

The Daughter’s Share in Inheritance

Economic Issues
Question asked by .
Answered by Shehzad Saleem

Question:

Why are women treated as inferior to men in Islam? Of the many things that have continued to bother my mind is the share daughters get in relation to their brothers. As a brother, I feel ashamed that I would be getting double my sister’s share. Please clarify.

Answer:

It needs to be appreciated that the law of inheritance as stated in the Qur’ān is based on the underlying cause of ‘the benefit of kinship’:

You know not who among your children and parents are nearest to you in benefit. This is the law of God. Indeed, God is Wise and all-Knowing. (4:11)

In other words, the directive in reality does not pertain to the relatives but is related to the underlying cause present in this relationship, which actually entitles them to become the heirs. Consequently, the basic reason why the share of a son is more than that of a daughter is the fact that in the life of parents the son is usually more beneficial to them than the daughter. This is so simple a fact that it can be easily understood in societies where the institution of family is still very strong and has deep roots. In a family system, parents become dependent on the children as they grow old. The ease and comfort they feel in living with a son is much more than what they feel while living with a daughter. The simple reason is that a son is independent in taking decisions while a daughter, once she gets married, is actually more dependent on her own husband and is not so independent. The modern western mind feels averse to this distribution because the family system is dwindling in their society. Parents are generally more uncomfortable in living with either the son or the daughter, both of whom become independent at a very early age. So I would say that they can only understand if they are first able to grasp the importance of the institution of family.

A point which may be worth mentioning here is that there may be cases even in societies having a strong family system where a daughter may prove more beneficial to her parent(s) than the son; in this case, the provision is there in Islamic law whereby a parent in his lifetime can gift as much wealth as is deemed necessary to the daughter. Similarly, there may be the case that the daughter in her specific circumstances may need more money; here again wealth can be gifted to her. Parents can even deprive a son(s) from inheritance if the son(s) becomes ‘non-beneficial’ to them in any way.

In short, the 2:1 ratio pertains to normal circumstances; in exceptional ones there are many remedies in Islamic law – some of which I have tried to explain.

Status of the Stock Exchange

Economic Issues
Question asked by .
Answered by Asif Iftikhar

Question:

I would like to know the position of the stock exchange viz a viz the Islamic Sharī’ah. Please give a detailed answer.

Answer:

The stock exchange is a market place where shares are bought and sold. By buying the shares of a company, you, in fact, share in the business. Therefore, if there is nothing against Islam in the nature of the business, there is nothing wrong in being the shareholder of that business and in getting dividends on those shares. Similarly, if you sell the shares at any point of time owing to some reason and get capital gains thereby, the transaction and the profit will not be wrong. However, when this trading moves beyond mere buying and selling, that is when the buyer and the seller do not remain a buyer and a seller, but become a ‘bear’ or a ‘bull,’ trouble begins.

Ideally, the market price of a share should be related to the performance of the company. But the speculators (euphemistically called investors) manipulate the prices by artificially stimulating the demand and the supply of shares. Forward contracts are made and further contracts are derived (financial derivatives) on that basis. The result is that the whole market activity is based on speculation rather than being based on entrepreneurship. The share price of a company doing perfectly well suddenly falls and that of a company in trouble suddenly rises. A person earns millions and loses millions in a day in this game. Obviously, such fluctuations have a negative impact on the economy, which is usually borne by the not-so-affluent sections of the society. One of the worst cases of such speculation was when on Oct. 19, 1987 – now known as the Black Monday – Wall Street crashed owing to the panic that had spread among the investors. Billions are lost in a day in such crashes. Since shares are sometimes bought and sold even before they have been actually bought and sold and, at times, are bought primarily on the basis of borrowed capital, stakes are high and the slightest fear may start a chain reaction, which can result in a major catastrophe. The reason for such timorousness is nothing except that the whole economic activity in these exchanges is based on speculation rather than on entrepreneurship. When such a large area of economic activity is based on speculation, the spirit of entrepreneurship suffers and moral corruption pervades the society.

Islam wants that the economic activity of its followers be based on entrepreneurship, hard work, creativity, moral principles and concern for others, whereas speculation is often detrimental to these values. The moral corruption that ensues from such activities as speculation far exceeds whatever material benefit they give. Therefore, it is closer to taqwā (fear of God) to avoid them. The pervading spirit in an Islamic society should be that of infāq (spending in the way of Allah). This spirit often dies in the absence of fear of God – and avarice and apathy become the deities.1

In an Islamic state, the government has the right to enact such laws as would eliminate the inherent risks of deception and loss by which either party can suffer in such activities as speculation on the stock exchange. However, until such laws are framed, it is up to the individual Muslim to decide when his trading becomes such speculation as would be detrimental to his taqwā. A good Muslim prefers to stick to nobler values even if they afford him less material benefit. Even in the absence of specific Divine injunctions or enacted laws, he should ask his own self whether his involvement in an activity is leading him away from God and inclining him towards the violation of moral values and ethics. His life should be marked by love of God, fear of His wrath, charity and concern for others. Losing these values for material benefit is a trade that a good Muslim never likes to make. But, as already said, that is a question which each Muslim must answer for himself. The rule here is sal nafsak (ask thy heart) – it will tell the truth.2

1. The following words of a famous economist bear witness to this reality:

For at least another hundred years, we must pretend to ourselves and to everyone that fair is foul and foul is fair, for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. (John Maynard Keynes, Essays in Persuasion, “The Future,” 1931).

2. It must also be remembered that in consideration of the way Allah Almighty revealed His laws through the Prophet (sws) and the way the Prophet (sws) implemented them, the State or an individual, in the desire to implement and follow Divine laws, should not hasten so much that an unnatural burden is put on one who is trying for his or her spiritual development. The approach of moving gradually towards the target is consistent with the spirit of Islam. The Sharī’ah is not difficult. It is not the purpose of the Sharī’ah to make life unnecessarily difficult for a person. Its purpose is to purify his or her soul. One should not try to make following the Sharī’ah unnecessarily difficult, especially in areas which it does not directly touch upon and in areas where there is a certainty or risk that not using the allowances given by the Sharī’ah or those that common sense points out will result in such burden as would result in greater evil than the one that is sought to be rooted out.

Why is Gambling Prohibited?

Economic Issues
Question asked by .
Answered by Shehzad Saleem

Question:

Why is gambling prohibited by Islam? Is betting on a horse in a horse race a form of gambling? Why can’t betting or gambling on horse racing be looked upon as an investment? You trade your inside knowledge and ability to predict results into reasonable winnings and if you can’t make it, then you simply quit.

Answer:

The basic objective of all Islamic directives is to cleanse the human soul from excesses. Economic activities, it is a common observation, have tremendous effects on a person’s character. Therefore, all such activities which produce negative or evil traits in a person are prohibited by Islam, since they tarnish the mirror of the soul. Let us take a look at some of the typical traits of a gambler:

i. He bases his economic activity on chance rather than his own technical ability which of course leads to cowardice and superstition.

ii. He loses the initiative to work hard, which can create severe financial problems for him and his family.

iii. He becomes selfish and mean since his life inevitably becomes caught in a vicious circle of gaining more and more.

iv. He is generally distracted from the higher ideals of life.

Such traits and other similar ones are generally the outcome of gambling. It is not necessary that they are produced in their ultimate form whenever a person indulges in gambling. The temperament of Islam is to bolt all pathways which lead to some evil. The line of prohibition is marked much before the evil starts itself so that a person is discouraged much before.

Yes, betting on a horse in a horse race is a form of gambling. Also, there is a world of difference between betting and investment. Betting or gambling in a horse race cannot be called an investment in any sense of the word since in this case the money involved is not brought in the market as a means of providing service to the society which is necessary. Besides however much you may be able to predict the ‘skill of a horse’ the uncertainty factor is still tremendous.

GP Fund

Economic Issues
Question asked by .
Answered by Shehzad Saleem

Question:

In a scheme like GP Fund (or CBF), an employee contributes a certain percentage of his salary (e.g. 8%). An equal amount is contributed by the employer in the account of the employee. This is a kind of forced saving by the employee. Is it lawful to take benefit from this facility. What about the interest on this accumulated money?

Answer:

In schemes like the GP fund, the employee has no option but to accept the forced deduction made by the government. It is a well-known fact that the part contributed by the government is raised through interest transactions. However, it should not be the concern of the employee as to how the employer raises this amount to meet his part of the ‘forced’ contract.

The interest accrued on the amount is unlawful. A person should not benefit from it. He can spend it on the poor and needy without being hopeful of a reward from the Almighty, since this money actually is not his prerogative and in fact belongs to the society. By spending the money on the poor and needy the money is utilized for the society.

Insurance

Economic Issues
Question asked by .
Answered by Shehzad Saleem

Question:

I wish to know about the concept of Insurance in Islam? Are Muslims allowed to take an insurance policy? In this policy we pay an annual premium and of course after 10-20 years the policy expires and we receive our money with profit. Please explain this concept to me.

Answer:

In its classical concept, insurance is a means of helping individuals who are afflicted with damage and loss. Therefore, in its essence, it is a philanthropic and humanitarian undertaking. As such its underlying spirit seems very noble.

Today, particularly due to the absence of a state system of security and insurance in most underdeveloped countries, there are a number of insurance companies in the private sector which are doing this job. Also, it is known that many of them are based on interest. However, buying an insurance policy cannot be regarded as forbidden since one is not taking interest in doing so. At best, in some cases, it can be regarded as furthering and promoting an evil, which according to the Qur’ān (5:2) is ta’āwun ‘alā al-ithm (co-operation with an evil), and which should be avoided as much as possible. So, a careful approach would be to benefit from insurance policies only if a person feels that it is necessary to do so in his circumstances. A person must decide for himself in this regard instead of asking some external authority – since it is only he who is the best judge of any genuine plea that he may have.

Prize Bonds

Economic Issues
Question asked by .
Answered by Shehzad Saleem

Question:

I want to know about the legality of prize-bonds? Are they allowed in Islam. If they are, then how should I pay on them?

Answer:

Money earned through prize-bonds is not an allowable in Islam. When you buy a prize bond you basically lend money to the government and the gain you get on it is actually amounts interest since it is the fixed return you get on this loan.

Moreover, it also carries the spirit of gambling in it since a person actually chances his luck in this enterprise.

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