Q. 1. "The
finance Company is asked by clients for Machinery, Cars, Equipment, etc
on credit. Can it purchase these and other items by cash or credit and
then sell them at either 20%, 30% or 40% profit in conformity to payments
periode and mutual agreement. Is the above form of contracts permissible
or not? The above stated percentage of profit are to be paid in cash by
the client while the balance is paid over agreed terms.
(Y.Loonat, Mozambique)
A. The proposed transaction is called Murabaha and it can be permissible
in Shari'ah subject to the following conditions:
1. The machinery or equipment etc should first come into ownership
and possession of the Finance Company and sho- uld remain in its risk
for a certain period, then it should be sold to the client. It will not
be permissible to give the client the amount of purchasing price by which
he himself purchases the equipment for himself and it is presumed that
the Financial Company has sold it to the client.
2. The price of which the commodity will be sold to the client
as well as the period of payment should be fixed without any ambiguity.
3. Once the price is fixed it will not be changed due to any delay
in the payment by the client.
Q. 2. "Can
Motor cars amd Machinery be leased to the clients on the following basis:
a) Leasing only. b) Leasing with an option to purchase at the price at
which the vehicle was initially purchased. b.1) Cars leased will be provided
only if a stated percentage of either 20% or 30% (as mutually agreed)
of the vehicle, or equipment or machinery value is left as a guarantee
and would be returned at the end of the lease period.
(Ibid)
A. Leasing is permissible in Shari'ah subject to the condition
that the leased assets are owned by the Lessor and he will have to bear
the risk relatable to the Corpus of the leased assets. Therefore, if the
leased asset is destroyed due to some unav- oidable natural calamity,
the owner will have to suffer the loss. Any condition to the contrary,
as in vogue in the contempo- rary financial leases, will render the contract
of lease void in Shariah. It is not permissible in Shariah to link the
Contract of lease with a contract of sale at the end of the leased period.
The contract of lease should be independent, and it will be open to both
the parties at the end of the lease period to enter into the contract
of sale or not to enter into it. If the contr- act of lease is subject
to the condition that the owner shall sell the leased asset at the end
of the lease period to the Lessee, the contract shall not be valid according
to some jurists, while some other jurists take it as permissible. Therefore,
this condition should be avoided as far as possible.
The Lessee can be asked to deposit with the Lessor a certain amount as
security for the prompt payment of the periodi- cal rent. This amount
shall remain as a deposit with the Lessor and shall be refundable to the
Lessee at the end of the lease period.
Q. 3. "In
our country, the drivers of the vehicles that meet an accident are immediately
sent to jail until a court case is held. This can take six months, one
year or more. If the accident causes injury to any person, the driver
is sent to prison till the injured person recovers.
Can we, therefore, take insurance cover to prevent ourselves from the
above inconveniences since the regulations of our country allow an insured
party that is involved in an accident to be prevented from imprisonment.
A. All the methods of insurance in vogue in our times are unfortunately
based on interest and qimar, therefore they are not permissible according
to Shariah. However, in the situation referred to in this question one
can take an insurance cover in order to avoid inprisonmet only, but if
the Insurance company pays to him some amount, he cannot utilise it except
to the extent of the premium actually paid by him to the Insurance company.
Q. 4. (a) Can
the finance company take loans from an Insurance company?
(b) Can the company take loans from any other Company or private person
owning money?
Amounts forwarded are invested as above in No.2.
(c) These creditors
are given commission / part profit of the partnership contract. Is this
permissible?
A. The Finance Company can take a loan from any individual or institution,
but it should be free of any interest charged ther- eon. If the commission
to be given on a loan is fixed in relation to the principal amount, it
will be interest no matter whether it is charged under the name of interest
or under the name of commission, but if money is given on the condition
that any profit accruing on that amount after investing it in a Commercial
enterprise shall be distributed between the Financer and the client, it
will be partnership or Musharakah agreement which is permissible in Shariah.
Q. 5. (a) Banks
charge a commission for providing a guarantee to clients purchasing goods
etc. Can such a commission be added to the costs of the client? (b) Can
the Finance Company charge a commission for providing a Guarantee for
goods purchased by its client?
A. Any fee charged on a guarantee is not permissible in Shariah.
Therefore, any amount paid as a fee for a Guarantee cannot be added to
the cost of the commodity in transaction of Murabaha.
Q. 6. The finance
company buys cars, Machinery, equipment etc and sells the same to the
clients. Sometimes the clients :
a) Return the goods. b) Cannot pay for the goods.
Can the Finance Company retake the goods at a price less than that at
which the goods were originally sold to him.
A. In a case where the buyer could not pay the price of the goods
sold to him, it is not permissible for the seller to repurcase the same
goods from the buyer at a lesser price. However, if the commodity has
been subjected to depriciation, the seller can repurchase it at a depreciated
price according to the market valuation.
Q. 7.
(1) Can Zakat money be given to Non-Muslims
i.e. Christians and Hindus.
(2) Can Zakat be given to persons who are AleRasool i.e. Syed Ahle
Bait.
(3) A loan is given by housewife to a servant over a period which
he is unable to repay. Can it be adjusted to Zakat for current year.
A. (1) Zakat money cannot be given to a Non-Muslim
(2) Zakat cannot be given to aperson who is from the progeny of
Hashim, the grandfather of the Holy Prophet (S.A.W). Such persons should
be supported by other sources like gifts and presents, but Zakat should
not be given to them.
(3) Zakatcannot be paid through relieving a debtor from the amount
of loan advanced to him. If the housewife wants to adjust her loan to
the amount of Zakat, she can give to her servant the amount of zakat in
cash, then ask him to pay her loan out of that money, it will be permissible
for the housewife to receive it back.
Q. "I am
an Indian Muslim Business-man, staying in Saudi Arabia, since 9 years,
and a regular reader of albalagh Internatio- nal. may Allah reward you
in full, for your service to the Umma. I have few questions in mind, I
would be grateful if you answer them.
1. Can we take loan from government, Banks, Financiers, (in India)
for the purpose of doing business, or constructing a house, and we have
to pay interest. Heard some Muftees in India have permitted the businessmaen
to take loan. Is this allowed, in case of Dar-ul-Harb? The permission
is given on the basis, that if Muslim taks loan and does big business,
he will employee a big number of Muslim staff, and many unemployed Muslims
can get job, and it is a matter of sawab. If we don't it do it, the Non-Muslims
are doing it, and all big business will be only in the hands of Kafirs.
This is practical prob- lem. Could you please comment?
2. If no is the answer to my above question, Can you please let
us know the way to do big business in India, without taking loan? I think
it's impossible, and when I studied this carefuly I found more than 95%
of Muslim Industrialists, Expo- rters, and big trading groups, do take
loan, just to be save from the govt.
As you cannot declare you white money, if you do, you have to pay heavy
taxes. So the best way to show the source of income or cash money is loans
from Bank, and to pay tax on this money is easy. I am really confused,
and this is the main reason, I have never started business in India. Can
you please solve this problem? Jazakallah Khair.
(H. R. Salaman, Saudi Arabia)
A. According to the overwhelming majority of the Muslim jurists,
there is no difference between darul-Islam and Darul-Harb in the prohibition
of Riba. A transaction of Riba is totally prohibited, no matter whether
the other party to the transaction is a Muslim or a non-Muslim. Although
Imam Abu Hanifah has allowed interest in a non-Muslim Country with certain
conditions, yet this view has not been approved by the majority of jurists,
including a large number of Hanafi jurists them- selves.
In the early days of the Holy Prophet (S.A.W) many Muslims used to enter
into Riba transactions with non-Muslims, but when Riba was prohibited,
they stopped this practice totally. The verses of the Holy Quran which
prohibited Riba did not differentiate between a Muslim and non-Muslim.
Similarly there is no example in the days of the Sahabah (RA) where any
one of the Sahabah entered into a Riba transaction with a non-Muslim after
the prohibition was enforced.
Therefore, one cannot be advised to take an interest-bearing loan, even
in a non-Muslim country. I have heard of some Indian Muslims (in Bombay)
who are tying to establish an Islamic bank or a financial institution
to be run on the basis of Islamic modes of financing. You should approach
them for your financial requirements. They may help you in this respect.
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