Dawoodi Bohra Forum

omabharti,

Since I don't want to end up retarded like you, you can have the last word. I'm done.

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Since I don't want to end up retarded like you,
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What you mean. YOU ARE ALREADY A RETARDED TALIBAN
CANNOT GET ANY WORST THAN THAT.

Banking for the rich - For whom is Islamic Finance Industry actually relevant?

An interesting read.

It is an interesting read. However, the question Firas Ahmed poses will not be solved as long as he and the rest believe that “that Islamic Finance industry [has worked hard] to develop interest-free home buying”

As I have illustrated previously, Islamic Banking is a sham that exists by reclassifying interest as rent, lease , dividend etc. As Firas’ article points out (though he does not go far enough in his analysis or he would have found the obvious answer) this banking system hinges on fully collateralized loans. Be it a home, car or mutual funds. Dividends and interest can be reclassified as long as there is an asset owned or being purchased by the applicant that the bank owns through a trust, and the risk is limited to depreciation of the collateral. Qarde Hasana also requires 100% collateral, predominantly gold. This scam falls apart when there is no collateral or when it is an intangible, like an education.

Average,

As the quran says, people who justify interest will classify fees, lease, rent or even grocery shopping as interest.

Everything else that you posted for difficult for me to understand due to my qualification.

The question of ‘Riba ‘(interest) in Islam is controversial as the verse on ‘Riba’ was one of the last verses revealed on holy Prophet (pbuh) and he died before explaining every thing connected with ‘Riba”.

Imam Fakhruddin Razi, Maulana Abul Aala Maududi, Abdulla Yusuf Ali and Maulana Abul Kalam Azad have defined ‘Riba’ as ‘Usury’. Qura’n uses very strong words for condemnation of ‘Riba’. According to these jurists and commentators of Qura’n-e-Majid, ‘Riba’ means growth of wealth. In Qura’nic terminology ‘Riba’ means an unearned growth or also unjust growth of wealth whether it is through usury or through other exploitative means including hoarding, profiteering, extortion etc. It also finds supports from other verses of Qura’n.

Qura’n lays great emphasis on working and making efforts to deserve wealth. (Verse 53:39). Qura’n strongly condemns any unjust growth or any growth for which a person has not worked or strived. In Qura’nic system it is a cardinal sin.

In a just Islamic society no one is allowed to accumulate wealth, without working for it. Any effort to multiply wealth without working for it is therefore strongly condemned by Qura’n.

Imam Fakhruddin Razi gives one prominent reason for prohibiting ‘Riba’. He says the ‘Riba’ or unjust growth of wealth is prohibited because it would lead to end of sympathy, goodness and spirit of benevolence. Riba leads to greed for wealth and possession. Thus the ‘Riba’ works on the principle of exploitation of weak by strong. It leads to ever increasing greed for worldly wealth which Qura’n has describes as “takhbbut al-Saitan.

According to Maulana Azad, the true religion wants to create love and sympathy between human being. But a usurer’s mentality is just the opposite. He tries to exploit the needy person for multiplying his own wealth rather helping him. According to Azad If this selfishness is not checked the human beings will become heartless beast.

Any exploitative instrument for increasing ones wealth is treated as ‘Riba’ as Qura’nic social ethics is on ‘adl’ and ‘ahsan’ (justice and benevolence). A Muslim society, bereft of these two virtues can not claim to be an Islamic society at all. A just Islamic society cannot permit any kind of exploitation of poor by rich. No religion in the human history has been so concerned and so sensitive about the weaker sections of the society as Islam has been.

There one aspect of modern capitalist economy which we should keep in mind. This economy is an inflationary economy in which a depositor looses due to inflation whereas the borrower earns huge profits. Thus an interest-free bank in an inflationary economy is likely to become exploitative for the small depositors. Without interest or any form of compensation the depositor would loose on his/her deposit.

Banks’ interest-bearing transactions should not be condemned if it is fulfilling the basic requirement of a growing economy. Banks’ interest-bearing transactions catering the need of petty businessmen, vendors, cottage industries or helping poor and needy persons wanting to purchase modest house, agricultural instruments, taxi or rickshaw drivers, artisans, mechanics etc. at nominal interest should not condemned.

The understanding of ‘Riba’ is at most important for the Dawoodi Bohras who are mainly traders on one side and who are financially exploited day in day out on the other hand. The entire Dawoodi Bohra priestly class is a non-working class solely dependent on the extortion from the community and it is this class of Shahzadas, Amils, Tanzeem and Jamat committee members who are accumulating huge wealth without actually working for it. To hide this cardinal sin they are the ones who are raising their voices against bank interest and further harming this community of poor and small shop-owners financially.Thousands have lost their jobs with the banks and business.

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In a just Islamic society no one is allowed to accumulate wealth, without working for it. Any effort to multiply wealth without working for it is therefore strongly condemned by Qura’n.
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Br. Insaf
Could you be more specific on term "WORK"
If I am a financial Analyst or Stock Broker who plays stock market and because of the prudent judgments I make, profit on my investment, would that be ok.
OR THE WORK MEANS HARDWORK AND SWEAT

Originally posted by S. Insaf:
In a just Islamic society no one is allowed to accumulate wealth, without working for it. Any effort to multiply wealth without working for it is therefore strongly condemned by Qura’n.

This would then be in direct conflict with inheritance which is accepted in Islam /Quran.

Average,

There is a difference between accumulating wealth without working for it and inheriting wealth. I am sure you understand the difference. If you don't it's time to strip you of your honorary MBA.

In a stock market a lot of times when people are making money, others are actually loosing it. You might attribute it to prudent judgment on your part and stupidity on the part of the one who lost it. But if no one were to loose money, no one would even make money. This is the wealth that you are accumulating without working for.

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Br. OB
AS

Investing in stock market is OK as far as you invest in companies not dealing in Alcohole, Gambling or has havy debt. You must hold your investment for reasonalbe time. Investment means you are exposing yourself to up or down risk.

Amana Fund is Islamic fund. You can read thier investment method here .
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Originally posted by anajmi:
Average,

There is a difference between accumulating wealth without working for it and inheriting wealth. I am sure you understand the difference.

Actually I don't, please elaborate as to how they are different.

Br. MF
Thank you
That was exactly the point. I do have AMANA funds in my portfolio but I do also invest in Drug companies, NO alcohol, gambling or tobacco.
So as I understand it is okay to invest in long term or short term markets. (WOULD DAY TRADING BE CONSIDERED OK)

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Day trading! I do not know. I believe when you buy stocks you become part owner, you pay for your share and profit or loose when you sell. You also earn profit (called devident but it is not interest).

Day trading is iffy proposition. You play margins etc. etc.. You must ask some body eslse.

Wasalaam
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Originally posted by Muslim First:
Investing in stock market is OK as far as you invest in companies not dealing in Alcohole, Gambling or has havy debt.

Brother MF,

When you say "as long as they don't invest in companies dealing with heavy debt you accept the interest paid on this debt. You are saying it is OK to pay interest as long as it is not "heavy interest", which violates Sharia.

Dear Omabharti,
You have asked:
Could you be more specific on term "WORK"
If I am a financial Analyst or Stock Broker who plays stock market and because of the prudent judgments I make, profit on my investment, would that be ok. OR THE WORK MEANS HARDWORK AND SWEAT?

The early Islamic society was essentially a trading society and the whole economy worked on exchanged, not on production. Thus ‘Riba’ was a strong instrument of exploitation and hence prohibited.
Today the modern industrial economy has evolved many other instruments of exploitation.
1) The policy of pricing of products,
2) Creation of artificial needs in the areas of high profit at the cost of genuine needs of common man,
3) Unchecked consumerism promoted through high-pitched advertisement campaign,
Manipulation in financial resources,
4) Speculation in land prices, etc.
These play havoc with the weaker section of the society.
The whole philosophy of functioning of stock exchange is based on speculation. Speculation and all other unfair practices are “haram” in Islam.
Speculation leads to unfair gains without working for them.

Average,

Accumulating wealth without working for it is when you take that which belongs to others without having worked for it, either you stole it or got it through deception or some other way which was either illegal or immoral or both.

Inheritance is wealth that was given to you with free will. You didn't ask for it but got it because someone else thought you deserved it.

Br AB

Where did you read that I was in favor of interest? Read again, what I said is this "Investment in Companies with heavy debt". What I meant was companies which borrow capital instead of raise it in equity.

When you borrow heavily you pay interest. When you raise money by equity you are selling partnership in company.

Technically charging any interest will violate Sharia.

Wasallam
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When you earn money by specuating in market, who profits?

You may loose are profit.

Brokers, Analysts, Business Publications and Advisers definitely profit.

Was anything physically produced by this activity?

Did any worker got a penny from this?

So why a thinking Muslim will partake in this activity except for greed!
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Dear Muslim First and all others who doubt efforts of stock brokers or analysts....i would like to point out that being an analyst myself...i can say with pride that i earn every penny that i work for .....u ask if any physical commodity is created...no ...but its becuz of us...that good companies are successful...n bad companies fail......cuz we see to it taht capital is allocated to the deserving candidate...n in todays world..do we really look at wat physical produce is created...i mean wat does a softare designer 'physically produce'......i take great pride in my work..cuz i m not sucking the blood out of poor people as many wud perceive..but helping the economy develop so that those poor people get jobs n have an opportunity to better their lives......i agree with Mr Insaf understanding that it all comes down to wat u give to society....n in return society pays u back......

With regards to speculation.....n other malpractices....like insider trading...etc...these activities exist in all jobs....there will be a few who work unethically......but u can blame all analysts n brokers for that

A Russian author Gregory Kozlowski who wrote a book on his research work “Muslim Endowments and Society in British India” in 1985 has come out with a very interesting point about waqaf properties. He says, and rightly so, that Islam advises his followers to spend the surplus (if any) in the way of Allah and therefore, for Muslims large and enduring estates would be hard to create if the holy Qura’n were strictly followed.

Qura’n says: “And we sent a Warner unto any township, but it’s rich and affluent ones declared: Lo! We are disbelievers in that which you bring to us.” The Qura’n warns these wealthy ones, “It is not your wealth nor your children that will bring you to Allah, but he who believes and does good.” Thus it is clearly indicated in the Qura’n that real unbelievers (Kafirs) are those who accumulate riches and perpetuate injustice in the society.

But as time passed Muslims did acquired wealth and properties and then passed them on one’s descendants as waqf as an alternative to Qura’nic method of inheritance.

Qura’n says: “And we sent a Warner unto any township, but it’s rich and affluent ones declared: Lo! We are disbelievers in that which you bring to us.” The Qura’n warns these wealthy ones, “It is not your wealth nor your children that will bring you to Allah, but he who believes and does good.” Thus it is clearly indicated in the Qura’n that real unbelievers (Kafirs) are those who accumulate riches and perpetuate injustice in the society.

I think the above quote is not relevant in today's world.....the problem with "accumulating" wealth in those days was...that people dint invest it back...but misused to earning exorbitant interest rates n looted poor people....this was primarily becuz of lack of education n also a poor financial system which dint support a free market for loans......a free market for laons...as we find to an extent in todays world has helped bring interest rates down due to interaction of supply and demand......in todays world most savings are ivnested back helping generate jobs...n economic activity.......for example..if u consider the 5 ladies who started lijjat papad....they now employ 40,000 women...which means their initiative has helped establish lives for 40,000 families..... its better to help the poor by giving them jobs..rather than jus doling out money as the former wud help them stand up for themselves.......i believe this is way business and entrepreneurship is so highly regarded in islam......

It has been argued that money is a "producer good" and that the lender should receive a share of the extra wealth that these goods produce. Yet this is illogical on several points. The only true producer of wealth (i.e. goods and services) is Labour when it is applied to either Land or Capital. Unlike Land, Money is infinite when not artificially restricted, which it often is. Money is man-made out of nothing and at tiny real cost. This credit creation confers enormous economic power and influence on those usually private institutions who have secured for themselves monopoly rights in this money issue.

That private banks create money out of nothing is a fact too little known amongst the public. Our national debt stands at over 200 billion pounds, and that of other industrialised countries is of similar magnitude. Have you ever asked yourself who is that fabulous lender who always seems to have all the money which the government does not have? Whom does the nation owe the national debt? The truth is that when banks create money (as cheque-money or blips on computer screens) they lend what they have not got to reap where they did not sow. Their loans are not backed by any real wealth on their behalf. Nor do they lend out depositors' money (or when did the bank last tell you that you can't take out money from your account, because it has been lent to someone else?). When you give your house or business as guarantee for their money, this money is not backed by gold, silver or tangible wealth. It is an empty promise except for the fact that the govenment, with the central bank as lender of the last resort, is ready to bail out the banks should a run on their money occur. Bank-created credit is based on the nation's capacity to produce and consume in the sense that whilst it is not issued nor backed by the government, the government - being the largest debtor - guarantees a certain return in debt service payments from its revenue. An increasing part of local and national government taxation today is raised for the purpose of servicing the interest payments on local and national govemment debt. So whether you personaily borrow or not, you pay the interest on that fictitious rnoney. Likewise, when you take a bank loan, you pay at least twice: you give a guarantee of real wealth in case of default, and you pay a penalty (as interest) for accepting money as a loan which costs the lender nothing and did not exist until it was created as a loan to you. Heads you lose, tails you lose again...

http://www.mustaqim.co.uk/usury.htm

Originally posted by Muslim First:
Br AB
Where did you read that I was in favor of interest? Read again, what I said is this "Investment in Companies with heavy debt"

Again, I am questioning the term "heavy debt". All debt carries interest, is it your contention that companies with "some debt" is OK as long as it is not "heavy" debt ?

That would be a reasonable assumption and render the Amana Fund (great performing fund by the way), un-Islamic.

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Br. AB

No business is affluent enough to meet business finance requirements without having some line of credit. This credit line is safety line.

Heavy debt would be heavy borrowing to finance infrastructure etc. instead of raising capital thru equity.

Of course all businesses have some form of line of credit to tie them over in case of cash flow problems. My small business has a line of credit which I have only used twice in last 20 years.

Interest has become a problem which requires collective scholarly approach.

Wasalaam
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MF,

That's what I thought you were saying, a "little bit" of interest is OK as long as it is not "heavy interest". How is Amana then a Sharia compliant fund ?

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I did not certify AMANA as Sharia Complied fund. I do not think any fund meets Strict Sharia.

If you want a strict fund then you have to look something like Gramin model. Find borrowers and then find investors. Borrowers use fund to finance business, Share profit with investors and fund manager takes cut.

Wasalaam
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Br AB
My mistake.

I should have said AMANA fund claims to be Islamic Fund.

Wasalaam
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