Is That Islamni Bank Offering Halal Interest by the Name Of
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Is that Islamni Bank Ofering halal interest by the name o “Mudaraba” ? The literal meaning of interest or Al-RIBA as it is used in the Arabic language mean to excess or increase. In the Islamic terminology interest means eortless pro t or that pro t which comes free from compensation or that extra earning obtained that is free of exchange. Riba best translated today as the charging of any interest meaning money earned on the lending out of money itself. The prohibition on paying or recei!ing xed interest is based on the Islamic tenet that money is only a medium of exchange a way of de ning the !alue of a thing" it has no !alue in itself and therefore should not be allowed to gi!e rise to more money !ia xed interest payments simply by being put in a ban# or lent to someone else. The human eort initiati!e and ris# in!ol!ed in a producti!e !enture are more important than the money used to nance it. There is no real $lending$ in Islam since all $lenders$ obtain ownership interests i assets that they nance or earn a pro t-share or purely fee-based remuneration. In order for an Islamic ban# to earn a return on money lent it is necessary to obtain e%uity or ownership interest in a non-monetary asset. This re%uires the lender to also participate in the sharing of ris#. How Is Interest Illegal The de nition of interest has already been mentioned as well as that it is prohibite If we explore the &ur'an we will come across at least four places where Allah has mentioned interest. The rst one is in (urah Al-ba%arah !erse no.)*+ ,Those who de!our usury will not stand except as stands one whom the (atan by his touch has dri!en to madness. That is because they say ,trade is li#e usury, bu Allah has permitted trade and has forbidden usury, In the next !erse !erse )* in the same place he says ,Allah will depri!e usury of all blessing and will gi!e increase for deeds of chari for he does not lo!e any ungrateful sinner., Two !erses later in !erse )* he says ,/h you who belie!e0 1ear Allah and gi!e up what remains of your demand for usury if you are indeed belie!ers., In !erse )*2 he says
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Transcript of Is That Islamni Bank Offering Halal Interest by the Name Of
Is that Islamni Bank Offering halal interest by the name of Mudaraba ?
The literal meaning of interest or Al-RIBA as it is used in the Arabic language means to excess or increase. In the Islamic terminology interest means effortless profit or that profit which comes free from compensation or that extra earning obtained that is free of exchange.
Riba best translated today as the charging of any interest, meaning money earned on the lending out of money itself. The prohibition on paying or receiving fixed interest is based on the Islamic tenet that money is only a medium of exchange, a way of defining the value of a thing; it has no value in itself, and therefore should not be allowed to give rise to more money, via fixed interest payments, simply by being put in a bank or lent to someone else. The human effort, initiative, and risk involved in a productive venture are more important than the money used to finance it.There is no real 'lending' in Islam since all 'lenders' obtain ownership interests in the assets that they finance, or earn a profit-share or purely fee-based remuneration. In order for an Islamic bank to earn a return on money lent, it is necessary to obtain an equity, or ownership, interest in a non-monetary asset. This requires the lender to also participate in the sharing of risk.How Is Interest IllegalThe definition of interest has already been mentioned as well as that it is prohibited. If we explore the Quran we will come across at least four places where Allah has mentioned interest.
The first one is in Surah Al-baqarah verse no.275
"Those who devour usury will not stand except as stands one whom the Satan by his touch has driven to madness. That is because they say, "trade is like usury", but Allah has permitted trade and has forbidden usury",
In the next verse verse 276 in the same place he says,
"Allah will deprive usury of all blessing, and will give increase for deeds of charity, for he does not love any ungrateful sinner."
Two verses later in verse 278 he says,
"Oh you who believe! Fear Allah and give up what remains of your demand for usury if you are indeed believers."
In verse 279 he says,
"If you do not, take notice of war from Allah and his Messenger sallallahu alaihe wasallm but if you repent you shall have your capital sum. Deal not unjustly and you shall not be dealt with unjustly."
In the second place in Surah Aal-Imran, verse no.130 Allah says,
"Oh you who believe! Devour not usury doubled and multiplied; but fear Allah that you may prosper."
In the third place in Surah Al-Nisaa Allah states in verse 161,
"That they took usury though they were forbidden and they devoured peoples wealth wrongfully; we have prepared for those amongst them who reject faith a grievous chastisement."
In the fourth place, Surah Al-Room, verse no.39 Allah mentions
"That which you give in usury for increase through the property of people will have no increase with Allah: but that which you give for charity seeking the countenance of Allah, it is these who will get a recompense multiplied."
Mudaraba :
Mudaraba is a partnership in profit whereby one party provides capital and the other party provides skill and labour. The provider of capital is called Shahib al-maal while the provider of skill and labour is called Mudarib.Theoretically, the definition of Mudarabah is a contract in which a party provides capital
to the other party who offers his labor with the hopes of getting profits which will be
distributed among the parties according to the ratio agreed on between them in the
contract.
Profit & Loss in mudaraba : Profit should be for both Shahib al-maal and Mudarib as per agreed ratio. Loss should be borne by the Shahib al-maal.
