Questions and Answers on Riba
Question: Is
a Muslim allowed to place his money in a savings account or a fixed deposit in
a bank?
Answer: No!
That would yield an increase which would be interest or riba. And
Allah the Most High and the Prophet (s) have prohibited Muslims from
consuming riba.
Question: Is
a Muslim prohibited from paying interest (riba)?
Answer:
Yes! Whether it be interest on a loan for buying a house, or car, or for paying
for college education, or interest payments on credit cards etc. Muslims have
been prohibited from paying interest. The Prophet (s) cursed all four
and said that they were all equally guilty, - the one who accepted riba;
the one who paid riba, the one who recorded the transaction and
the two witnesses. He said that they were all equally guilty.
Question: If
a Muslim has already entered into riba for purchasing a house,
what can he do in order to obey Allah the Most High, and His Prophet (s)?
Answer: He
can sell the house and pay off the bank loan. He can then live in a rented
property until he can afford to purchase a house with cash. If houses are
expensive and he cannot afford to purchase one with cash he should follow the Sunnah
and be content with the smallest house or apartment which can be built or
purchased without having to borrow.
Or he can make an effort to attract a sufficient number
of investors who would put up the money with which to pay off the bank. If the
market value of the house was $100.000, and he owed the bank $50.000, then the
investors who paid off the bank would have a 50% ownership of the house, and he
would have 50%. He would then rent the house from the partnership (which now
owns the house). If the rent is $1000 per month $500, would be returned to him
as his share of the return on investment. He would then enter into a second agreement
to purchase from the investors their equity in the property in accordance with
a schedule of payments which is mutually agreeable. Every year, however there
will be a new appraisal of the value of the property. Eventually when he has
purchased the entire equity of his partners, he will be the sole owner of the
house.
Question:
Can a Muslim invest in the stock market?
Answer:
First of all what is a stock? A stock is a part of a company; if you buy the
stock of a company therefore, you have become a part owner of the company. You
are now entitled to share in both profits and losses of the company. Investors
earn dividend payments from their stocks. They can also realize a profit by
selling their stocks for more than what they paid.
The stock market in a free
market is a valid and legitimate economic Institution. But a free market no
longer exists in the world today. The stock market in a capitalist economy is
permeated with riba; indeed it is usually a den of gamblers and
thieves. Speculation is the dominant force in today's stock market. And
speculative transactions are riba. What is a speculative
transaction? It is a transaction in which one buys anticipating that the price
would eventually rise. When it does, one sells and makes a profit. It can also
be a transaction in which one sells anticipating that the price will fall. When
it falls one then buys back what one had sold and thus make a profit!
Speculative transactions are no different from gambling. A Muslim should rather
invest in his own business of failing that, invest in a halal business owned
and operated by someone, or by a group of people who are honest and who have
business acumen.
Today’s stock market
operates on the basis of access to information. Whoever gets information first
can exploit that knowledge and make money. Titus one of the keys to consistent
gain in the stock market is access to timely information. Access to information
is usually obtained through bribery and patronage. It thus becomes insider
information. Insider information from official government sources is sometimes
obtained as quid pro qua for political campaign contributions made at election
time. Those honest investors who do not have access to insider information and privilegeded
information stand no chance of success in a stock market which thus operates by
way of deception, and hence by riba.
Question: Can
a Muslim own and use a credit card?
Answer: A
credit card is a card which permits its owner to borrow a certain amount within
a period of time (usually one month). If that loan is repaid within the
stipulated period then that loan would be an interest-free loan. If a on the
other hand, the loan is not repaid within the stipulated time then interest (riba)
would be charged on the loan. A Muslim is prohibited from paying interest, and
so a Muslim who pays all his credit card debts on time, and never has to pay
interest, may argue that he has not violated the law in using a credit card. Bui consider
the following; The agreement with which one acquires a credit card is an
agreement with provisions for riba. Such an agreement is haram
for a Muslim. Thus by entering into the agreement one has entered into riba.
Can a Muslim accept credit
on the condition that if at is not repaid on time the Muslim commits himself to
drink a glass of whisky? No! Can a Muslim accept credit-on the condition that
if it is not repaid on time the credit or will have the right to sleep with his
wife? No! Well, then, how can a Muslim accept credit on the condition that if
it is not repaid on time he will be obliged to pay riba?
Secondly, whatever leads to
haram is itself haram. While one person may display financial responsibility to
the extent of paying all credit card loans on time, there will be ninety-nine
who will not, and who will enter directly into paying riba. To
accept such a possibility one would have to adopt the principle in life of
every man unto himself and the devil take the hindmost. A Muslim is prohibited
from living such a life.
to be continued . . . .
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