Dawoodi Bohra Forum

Why is interest haram, where does in qurant it says interest is haram?

As per my knowledge interest is not haram, But excessive interest is haram. Here is the ayat of quran: -

[2:275] Those who charge usury are in the same position as those controlled by the devil's influence. This is because they claim that usury is the same as commerce. However, GOD permits commerce, and prohibits usury. Thus, whoever heeds this commandment from his Lord, and refrains from usury, he may keep his past earnings, and his judgment rests with GOD. As for those who persist in usury, they incur Hell, wherein they abide forever

The Quran forbids usury, not interest. Quite a few states in USA have laws against usury. Usury is defined as excessive interest.

Well, then I guess I am not going to hell after all.

Salamun alaikum,

This is a good thread..Well lets list down the views of different schools of thought on this through authentic sources..

I would like to know if usury is excessive intrest what is the maximum intrest which is not called usury?

H_S

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Bank Interest

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Riba
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We have been over this topic many times before. Can MF or any Muslim brother offer me a loan of $60,000, which I can pay back in 60 monthly instalments of $1,000, with no strings attached?

There would be no fee, nothing, and after 5 years I will owe nothing.

I know that some Bohras have obtained such loans from Karz-e-hasana. That is the only way I know of at the moment and, I believe, only Bohras in good standing with Jamaat can obtain such loans.

Commission is interest, and therfore ruled out.

Loan set-up fee, which includes salary for the person who sets it up, cost of paper and ink, and any other device that necessitates expenditure for the loan being set up should be calculated according to "Shariat" and not based on the amount of loan. That would be Islamically reasonable. This 'set-up' fee would be less than an hourly pay for an average worker, say $15, no matter what the amount of loan is.

Where would MF and other Muslims get the money to disburse such a loan? Obviously from "true" Muslims. So, please let me know where I can obtain such a "Muslim" loan?

If Muslims cannot offer me this type of loan, then they are dealing in interest. This is also true of Muslim Banks.

And do not give me the crap of zero-interest financing. Interest, by any other name, is built in the price. Renting is paying interest. Leasing your car is paying interest. There is no avoiding it. Saving your money will involve you interest.

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Br. Porus

Br. Salim asked for for Sunni view so I posted links to what offical view on interest is. Being a business person I understand value of money and cost of money.

This is view based on Sharia. We need to come up with some other way to make our money work. Suppose you had $20K sitting in non interest bearing account. Can this money be used to buy a auto rickshaw and given to some person say on hire purchase. Both investor and driver share profit and return the original in some regulated fashion? I am sitting here in USA and needy people are in India. I have done that once for a distant relative. It needs to be done in some organized fashion.

Can Ismaili brothers give Official Sharia view of their Imaam!

Wasalaam
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Br. MF,

You are only going to give your saving to a relative or a close friend. This is because you are willing to take a loss for these people close to you.

Think about what these savings represent. In the final analysis, it is your claim against the Government that issued the dollar bills.

Governments often print money to finance their projects. This floods the economy with money. Economy is subject to laws of demand and supply and the new money will chase the same level of goods and services causing the prices to rise. That is, until the new money has a chance to inject new goods ands services in the economy. Then it is too late and money has lost value due to inflation. This is continuous.

Thus the value of money always decreases. People want to protect against this erosion. This is done by charging interest, fee, etc. If you want to take risk in business, that mechanism is available to you too. You can buy stock in company.

The only way you can avoid interest is to stop dealing with money altogether. This will necessitate going back to barter system. Turning the clock back to exchange is the way Muslims want to go.

Muslim view of interest is a symptom of tackling issues that do not do anything for Muslims except bickering. Look at what happened to the guy who chose to convert to Christianity in Afghanistan. A clear message to the world that Muslims are backward, obscurantist and want to interpret the scriptures in a fashion to satisfy blood-thirsty mullahs.

For all Muslims, literal interpretation of the scripture is that interest is 'haraam'. This is true for all Muslims, Shia and Ismailies included. But some choose to interpret it more liberally. Until they can come up with organization of modern civilization without money, they are in no position to teach anybody. They can quote Sharia, but what is the use of that if they cannot practise its 'directive' on interest.

For those interested in interest-free mortgage, please visit Lariba

porus,

I have loaned a total sum of Rs 1,000,000 - That would be about $22,500 interest free to people in India. Some I know, some I don't. I gave them this money about 3 years back.

I would've actually been able to pay off my car loan if I hadn't given them that money. But they needed it more than I did.

Besides, I haven't taken any guarantees from them, even though the propher shariah way is to do paperwork.

And if I had $60,000 and if you were in real need, I would've gladly given it to you.

Besides, interest is not to protect the value of your money. Interest is to make profit.

You aren't that naive are you?

One of the components of interest is the cost of money and its future value, and the rest is profit as it should be.

Our individual charitable efforts are completely irrelevant in this discussion. When I give money with little or no chance of payback, it is a charitable contribution and not a testament to interest free banking. Furthermore, based on your interchange with Pardesi, you will do or say anything to make a point. Per your own admission, often a lie.

Bottom line is that if you borrow $1, and pay back more than $1, you are paying interest.

Originally posted by anajmi:
Besides, interest is not to protect the value of your money. Interest is to make profit.

If interest is profit, then why is it haraam?

Interest protects value and includes element of profit. Profit is the amount earned above the cost of providing service. It is not haraam. Interest is haraam. Hence Muslim banks pretend that they only charge profit, not interest.

But, as I have explained previously, money in the form of treasury notes, must involve interest to offset inflation, a necessary byproduct of printing money.

That means, if you use dollar bills, British Pounds, Indian rupee, or any other currency, you are involvred in interest.

Since all Muslims handle and use money, they are all involved in interest. They are all hypocrites when they pretend they are not. And this includes all Imams, maulanas, and others Sunni, Shia, Ismaili etc.

Assalamuallaikum!!!!
it was very depressing to see the comments of the above two people
INTEREST is haram
it is an open war with Holy Prophet(pbuh) and ALLAH ta Ala
what ever yuo say there is no justification for this....
see........
when you told after you become rational i mean at the age of 4 or 5
that your parents are your real parents i mean they make you call themselves parent you dont argue when you get older that why are you our parents why not some one else.....
similarly when Quran and hadith which is the final authority tells you in a clear cut manner that Interest is HAram there can be no arguments or favours......
similarly people will now say that Wine is halal too because in olden days wine had a heavy addiction but now adays it is made in a way that there is no adiction......

as the facts go on.........
Mat ALLAH ta Ala give us courage to fight the evils
"""A time will come before Qayamat that no person. will be saved from the haram interest sood bribery in directly or directly""
Please pay a little heed here
Longing for the prayers
saif- bombay

CA is nothing but ......
life less iffs and buts......

Usury or Riba, though not defined perfectly, is forbidden according to sharia. But as Quran is ambigeous about the definition of usury, thus the confusion is rampant and definitions multiple by all school of thoughts.

Rasulilah used to do commerce for Jews, including Hazrat Khadija, jews were particular about thier money and the return on it. They devised a scheme, so that their money or wealth could enhance significantly in shortest possible time.

Jews have that perception since the birth of Judaism, that they are the chosen ones, and superior to other fellow beings. Usury was first introduced in medina by jews. Arabs as people were ignorant, selfish and greedy. The gambling was rampant. Due to this habit, they were always in need of liquidity. Jews, as they were business minded, invented usury. Loan some money, keep slaves and cattles as colateral, return the money with appreciation. Usury used to be small in early sixth century.

As the time passed, the need and use of loan grew many fold. It became a matter of demand and supply. Usury also grew manifold, and became unbearable for borrower.

History shows, that Jews after coming into this business, they abondoned the usual commerce. Rasulilah SAW very much saw this happening, as he used to do Tijjarah for them.

As quran entirely is based on the back ground of seventh century arabia in language and substance, therefore it had to address this crucial issue, which it did.

Fast forward to 21st century, the dynamics of money are quiet different from what was in seventh centruy. The intrest is no longer usury. It is kind of service charge, that may be constured as user fee.

AM,

If it is per my own admission, it is not a lie.

porus,

The prophet said, even if you do not deal in interest, the dust of it is definitely going to touch you. So you are right, the dust is touching you. But to say that since Muslims buy grocery using paper money they are dealing in interest is a bit disingenuous if not an outright lie.

And then to say that since you are already dealing in interest now it is ok to actually deal in interest, is pure advise from satan, if you know what I mean.

Ofcourse, my advise to all muslims is that the next time you buy onions, ask Allah for forgiveness.

And since, usury and interest are not the same, may be muslims don't even have to worry about doing that.

A win win situation for Muslims.

I know porus and AM were hoping that Muslims are going to hell for dealing in interest while buying groceries, but unfortunately that doesn't seem to be happening.

porus,

If interest is profit, then why is it haraam?

C'mon porus, is everything that is profit, halaal? For you, it may be, but is it really?

I think enough has been said about this topic on this board. It is becoming boring.

Besides, since a lot of people are also bored, considering the fact that they are reading my entire conversations, I don't think there is any point in continuing this pointless discussion.

This will be my last post on this topic. I promise.

salim,

You asked why interest is haraam.

Interest is haraam, because you are making money for which somebody else is working. When you buy a car or a house on interest, the bank that pays the money and charges the interest never looses in this deal. It doesn't matter if the buyer goes broke, that is the reason why banks these days are so eager to loan money. That is how the system has been designed.

An average American moron will die without paying off his debt. All because of interest.
Illegal wars are funded because of interest. Most countries on earth are in debt because of interest.

A smart few have designed the system to work for them, not for everyone. That is where religion comes in, to even things out. And then, out comes the opposition to religion.

In 80s, a massive project was taken to get rid of interest from Banking.
I was part of that exercise. A team of religious scholars, accountants, bankers, economists, system analysts etc etc. were invited in the working group.
After 3-4 years of futile exercise with significant waste of resources
nothing achieved except some banking products were wrapped with
new fancy Islamic names like Al Mudharabah, Al Ijarah, Al Musyarakah,
Al Murabahah.
So agree with Anajmi - the topic will end where it had started. Period.

Your Late Fees, Their Millions

Here is how companies like Sallie Mae make millions on student loan interest and screw students into paying double or triple their original loan and then bribe the congressman for favourable laws so that they can keep making that money.

I was watching 60 minutes today where they had a segment dedicated to how these guys screw the students and how a lot of the students are suffering, and the CEO of this company is worth $250 million and building his own private golf course.

has anyone looked into interest free loans of the internet. how does it work?

quote from anajmi:

I would've actually been able to pay off my car loan if I hadn't given them that money. But they needed it more than I did.
________________________________________________

Bro,
Are you loaning money to other people when you have to pay interest on your own loan ?

Do you justify either of your loan ?

zeal,

I am not justifying my interest. Interest is haraam and I am sure I will have to pass through hell before I enter heaven.

Seeker110,

For interest free loans, please visit Lariba. It is based on the concept that you purchase your home jointly with the lender on a lease-to-purchase basis. You rent the house you partially own. Your make monthly payment to yourself and the lender in the ratio of ownership. However, the rent you earn is used to purchase additional shares. This goes on until to completely own the house. It is explained in detail on their website.

O.K. I believe the Holy Quran clearly illustrates the difference between usury and interest. Allah says that when the loan is compounded over and over and over again, this is usury.

Well, if you default in paying your credit card balance in time, you are charged about 20-or-so% interest. This is usury, since the market rate for this commodity...that is money...is 6-8%.

It does say in the Holy Quran that it is better to give Qardhan than to charge interest. In other words, helping a fellow muslim andnot profitting from him is better.

As for Lariba, etc. Did you know who funds Lariba? It is Fanny Mae. Fanny Mae "gives" Lariba a loan at a set interest rate, then Lariba turns around and "partners" with you for a property for a set "profit" which is actually interest. They appraise the property's rental value, and "fix" the rental value. If you actually calculate the "profit" Lariba makes out of this deal, it is phenomenal.....this rate-of-return is far higher than the loans you can get from commercial banks. Now, isn't this moving from Interest to Usury?

The question is this: Is it O.K. to make exhorbitant "profit" but not O.K. to charge nominal interest for money or goods?

IF I go to, say, WalMart and I can get an item for say $10.00, and I go to Safeway, and the same exact item is for $15.00, isn't this a worse evil by any stretch of the imagination?

Al-Muizz,

As for Lariba, etc. Did you know who funds Lariba? It is Fanny Mae. Fanny Mae "gives" Lariba a loan at a set interest rate, then Lariba turns around and "partners" with you for a property for a set "profit" which is actually interest. They appraise the property's rental value, and "fix" the rental value. If you actually calculate the "profit" Lariba makes out of this deal, it is phenomenal.....this rate-of-return is far higher than the loans you can get from commercial banks. Now, isn't this moving from Interest to Usury?

I'm sure you've done your own research to reach this conclusion. However, this is what Lariba claims at its website.

"In April 2001, LARIBA was the FIRST Islamic Finance Operation in the West to be approved for investing Freddie Mac’s money using the LARIBA Islamic Home Finance Model. In 2002 LARIBA became the ONLY US-Based Shari’aa Compliant Riba-Free Finance Company to be approved by the largest mortgage investor in the world, Fannie Mae. We thank Allah for these historic achievements and the dedicated quality work of all LARIBA Professionals.

LARIBA DOES NOT BORROW MONEY FROM FREDDIE MAC / FANNIE MAE NOR SELL LOANS. Freddie Mac / Fannie Mae is an investor in the LARIBA Financed Homes. Every single home is presented to Freddie Mac / Fannie Mae on line for approval or disapproval. If approved, LARIBA would forward the money from its own funds to purchase the house and is paid within a week or less by Freddie Mac / Fannie Mae. LARIBA does not charge Freddie Mac / Fannie Mae interest for using the money during that week’s time."

I'm not associated with Lariba and I've nothing more to add to it. I happened to come across this website and thought I'd pass on the information to folks looking for interest-free loans. Anyone seeking further clarification can visit Lariba-FAQ.

Rahi,
I have nothing against Lariba....I think they are a needed institution. However, they get their loans from Fanny Mae. Whne you apply for a loan from them, they pass their information to Fanny Mae, who tell them that it's a "good"investment or not. Fanny Mae essentially foots the money. If Fanny Mae does not deem the investment worthy, Lariba will turn down your loan.