Q. Respectable
Mufti Saheb : Kindly forgive me for intruding on your precious time and
specially during the Holy Month of Ramadan when you will be too busy.
Also please forgive me in addressing this letter in English as perhaps
I may not be able to express myself more clearly in Urdu.
You have been making research on various Islamic laws and principles which
remain not clear in minds of people like me who have no knowledge or study
of matters. As a learned scholars and having vast experience and knowledge
of both Islamic Laws and practices of modern period, I hope to get a rely
of my query from you. Matter is the same old one- what is the position
of bank interest or profit - by whatever name it is called according to
Shariah. To express whatever I understand I give below my feelings:-
1. Authentic definition of 'Riba' which has been declared by Allah
and Holy Prophet (S.A.W) in Qur'an as "Haram"?
2. As far as I can see the charges of profit or interest one expects
to get in return of his providing money to a needy person to fulfill his
requirement of daily needs in the absence of any source to fulfill these
is 'Riba' but any such return on money used for business, to earn more
money, should not come under the definition of 'Riba'.
3. Generally it is said that if rate of profit is fixed it comes
under definition of 'Riba' and becomes 'Haraam' but if it linked with
profit earned, it is not 'Riba'. in my humble opinion this position is
different. For example 'A' has got Rs. 100,000/= and he constructs a shop
and gives it is fixed monthly rental for business. Or if he gives Rs.
100,000/= in cash for another business.What is the difference as far as
'A' is concerned. He is parting with his money, in one case he is giving
it in kind and in another case in cash. Why return in both the cases be
distinguished? Shop's rent is not dependent on profit or loss to the shopkeeper.
If rent paid for shop is 'rental for shop why fixed return on cash is
not rental of money'?
This letter is just to clarify the position and correct my thinking and
in no way to convert Haraam into Halaal. After all after 15 Centuries,
our concept should be clear at least on basic principles of our faith
and we should not find excuses for justif- ication of our (mis) deeds.
I shell be greatful to have your considered opinion for my guidance at
your earliest convenience.
(M.A. Siddiqui, Operations Director, Matiari Sugar Mills Limited)
A. I received your letter dated 27th January 1997 and apologize
for the delay in replying it. It was due to my over whelming involvements
both here and abroad. I hope you will forgive me for this delay. The questions
you have posed have been discussed thoroughly in a number of books written
on the subject both in Urdu and English. If you wish to benefit from Urdu
writings I would advise you to read the following books:
"The Questions of Interest : Mufti Shafi (R.A.)" "Islam
& Modern Business : Mufti Taqi Usmani" You may also benefit from
the book or Dr. Anwar Iqbal Qureshi, titled "Islam and the theory
of Interest". I think if you want to be very clear on this point
you should at least study these books. However, I am giving here very
brief answers to your questions:
1) The legal definition of any prohibited act is seldom given in
the Holy Qur'an itself. For example, wine has been prohi- bited but no
definition of wine has been given. Similarly, adultery, telling lies,
back-biting and bribery have been prohibited by the Holy Qur'an but the
definitions of these acts have not been provided. Reason for it is that
all these concepts were too clear in the minds of the addresses to need
any such definition. The same is the case of Riba. The concept of Riba
was widely recognized among the addresses of the Holy Qur'an and it is
that concept which is reflected in the legal definition provided for Riba
either in the Hadithor in the later literature of Islamic jurisprudence.
According to this definition any tra- nsaction of loan where the payment
of an additional amount on the principal is made conditional to the advance
of such loan is called Riba.
2) There is no distinction in Shariah between advancing a loan
to a needy person or advancing it to a business concern. The principle
is that the person who advances money to another person should clearly
decide whether he wishes to assist him or he wants to share in his profits.
In the former case, he should withdraw from any claim of additional amount
(in the form of interest) while in the latter case he should share his
loss also. It is not promitted by Shariah that he claims profit but does
not agree to share his loss.
Another point which needs attention here is that the distinction between
a needy and a rich person in commercial matters is totally irrelevant.
If a shopkeeper sells a commodity to a poor person with a margin of profit
which is not excessive no- body can say that it would be more advisable
for the shop keeper to give him the commodity either as a charity or at
cost without charging a profit but it cannot be said that the marginal
profit charged here is not Halaal. If charging an additional amount on
a loan is not in itself Haraam then the same analogy should have been
applied here meaning thereby that if a creditor charges a marginal interest
on the loan he has advanced to a poor person it should not be condemned
or declared as Haraam, but even the modernists who hold the commercial
interest as Halaal admit that this kind of transaction is Riba and prohibited
by the Holy Qur'an. It proves that the basis of the prohibition is not
linked to the poverty of the debtor. Had it been so, charging profit from
a poor person would also have been declared as Haraam. Therefore, the
only basis for the distinction between a sale and a transaction of Riba
is that the former relates to commodity while the latter relates to money.
3) There are several differences between interest and rent. The
basic principle of Shariah is that profit is justified where a person
has undertaken the risk of the thing given to another person. In a transaction
of loan, after advancing money, the creditor does not take any risk of
the money because if the money is lost in the hands of the debtor after
he has taken delivery thereof the debtor is lost in the hands of the debtor
after he has taken delivery thereof the debtor is bound to repay the loan.
As the creditor did not take any risk of it, therefore he cannot charge
additional profit thereon. While in the case of the property leased out
to the lease, the lessor has taken the risk of the property, if the property
is destroyed, he will bear the loss, therefore, it is justified for him
to charge rent from the lessee. Another difference is that the property
is always subject to depreciation while money does not depreciate. Therefore,
charging of rent in the first case is justifiable while it is not so in
the later case.
I hope that these brief answers will at least explain the basic concepts.
However, for greater details you should study the books I have referred
to above.
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