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Is only Usury forbidden?
Question: Some people argue that only usury (interest at such an exorbitant rate that it exploits the debtor) has been declared unlawful by Islam. Therefore, interest at a mutually acceptable rate can be charged, which is usually the case in loans given for commercial purposes. It is in loans given for the purposes of personal needs that the possibility of exploitation exists. The following verse of Qur’an is presented to support this point of view:
Believers! Do not devour interest, doubling and redoubling. (3:130)
I am really confused. Please advise.
Answer: I am afraid this is not correct. This verse does not support the argument. It merely indicates the gravity of the failing of those who, at a time when infaq (spending in the way of Allah) in relation to jihad (holy war) was affording great opportunities to the Muslims to earn Allah’s forgiveness, were busy earning interest. This style is used in a language to reprimand a person for the heinousness of his attitude of not only doing something wrong but also showing total disregard for values in doing so.1 For example, when one says (in English) ‘For God’s sake, [at least] don’t flirt with another woman in front of your wife’, it does not mean that one is suggesting that one should flirt with another woman while one’s wife is not around. To take an example from the Qur’an, consider the following verse:
Force not your slave-girls into prostitution that you may seek pleasures of the life of the world, if they would preserve their chastity. (24:33)
Obviously, this verse does not mean that if the slave-girls are willing, prostitution may be allowed. It merely points out the intensity of the sin of those who force such slave-girls to prostitution as wish to avoid the despicable crime.
The Qur’an has not defined Riba(interest). It didn’t have to. The meaning of the word was already clear to those who understood the Qur’anic Arabic. Just as the Qur’an did not have to define Khamr, it did not have to define Riba. It merely prohibited both. In Qur’anic Arabic, Riba refers to the gain which the lender demands at a predetermined rate from the borrower on the loan that he gives him for a specific period of time. Moreover, it is also clear from the following verse of the Qur’an that those people gave interest for commercial purposes as well, for it is this form of interest which increases ‘in other’s wealth’, not the interest on loans given for personal needs of the debtor:
And the interest bearing loan that you give that it may increase in the wealth of others does not increase with Allah; and the Zakah that you give to earn Allah’s pleasure, these are the people who shall get manifold [in the Hereafter]. (31:39)
Therefore, if anyone advocates that the word is also used in a sense different from its denotation, the onus of proof is on him.
Furthermore, the following verses of the Qur’an leave no room for the argument that only such interest was declared unlawful as put the debtor in difficult circumstances:
O you who believe! Observe your duty to Allah, and give up what remains [due to you] from the interest, if you are [in truth] believers. (2:278)
And if the debtor is in straitened circumstances, then [let there be] postponement to the time of ease... (2:280)
These two verses have the same context and therefore can be taken together to show that interest has not been prohibited merely in cases where the debtor is in difficult circumstances. The words ‘And if the debtor is in straitened circumstances’ indicate an exceptional case, and point out that the prohibition in the previous verse (2:278) is of interest at a normal mutually acceptable rate.
According to Farahi, the particle ‘idha’ (when) would have been used instead of ‘in kana’ (if), if the words were not indicative of an exceptional case.2
To take an example from the English language, let us assume that a police officer says to his subordinates ‘free all these culprits tomorrow. And if a culprit has helped the police, free him today’. As the context of the two sentences is the same, the second sentence makes it obvious that not all the culprits have helped the police. Similarly, when the Qur’an says: Give up what remains [due to you] from interest... and if the debtor is in difficult circumstances [let there be] postponement to the time of ease....’, it is clear from the second portion that the case of the debtor being in difficult circumstances has been mentioned as an exceptional one. In other words, the prohibition of interest in the first portion pertains to the general cases of loans given to such people as are not in straitened circumstancesAmin AhsanIslahi concludes his discussion on this verse by saying:
Obviously, the affluent would have turned to the money-lenders not to fulfill their personal needs, but, of course, their business needs. So what is the difference between these loans and the commercial loans of today?3
Therefore, it is evident from the Qur’an that interest of all kindshas been prohibited, including that which does not necessarily put the debtor in distressing circumstances, as is the case with interest on commercial loans.
(Asif Iftikhar)
Difference between Interest and Rent
Question: What is the difference between interestand rent. Why can’t the amount demanded for a loan given be classified as rent? After all you are using the money the way you use an item rented out to you.
Answer: If the nature of the transaction is such that the asset given for a period of time is to be ‘used’ by the receiver, but, by the nature of the transaction, cannot be ‘used up’ by him, the predetermined gain would be categorized as rent not interest.
Consider the hypothetical situation where Mr A leases out his house to Mr B for one year at a rent of Rs. 5000 per mensem. In the third month, Mr B is unable to pay the rent, and, in accordance with the terms of his contract, he has to vacate the premises. To do this, he does not have to ‘re-create’ the building as the nature of the whole arrangement was such that he could not ‘use up’ the property.
On the other hand, Mr A gives a sack of wheat to Mr C for a certain time period, during which Mr C has to pay Rs. 50 every week to Mr A over and above the value of wheat. Now, in the second week Mr C is unable to pay Rs. 50. In this case, he might have to ‘re-create’ the sack of wheat to return the loan as he might have consumed it, or ‘used it up’.
To use accounting terminology, one might say that interestis charged on circulating capital whereas Rent on fixed capital.
It is also important to note that it is the nature of the transaction, not the nature of the commodity, which determines whether the capital is circulating or fixed, that is whether it can or cannot be ‘used up’. For example, a machine hired to produce goods may be categorized as fixed capital as, by the nature of the transaction, it cannot be ‘used up’, whereas the same equipment borrowed as stock-in-trade for sale by a fellow trader may be categorized as circulating capital as, by the nature of the transaction, it may be ‘used up’ to generate revenue.
Consequently, one can say that in case of an interestbearing transaction:
i) there is a gain at a predetermined rate on the loan, and
ii) the nature of the transaction is such that the commodity borrowed can be ‘used up’ to generate revenue.
It is needles to say that money is a commodity which, by its nature, involves transactions in which the loaned capital sum may be ‘used up’ by the borrower. Therefore, whenever money is lent, any gain at a predetermined rate on the principal is interest.
(Asif Iftikhar)
Taking Interest from Non-Muslims
Question: I live in India. Here the government is non-Muslim. I wanted to know if bank interest is Halal in a non-Muslim country as I heard that there is a Hadith which says so?
Answer:Taking Interest is prohibited whether in a Muslim country or in a non-Muslim country because of the fact that it is inherently an unethical contract. Things which are unethical are prohibited whether they be with Muslims or non-Muslims. In other words, just as one should be honest not only with Muslims but also with non-Muslims, similarly one should also not be selective on the basis of religion in taking interest.
The Hadith you have referred to is not an authentic one1 and is also not found in the six major books of Hadith . Its content also contradicts the Qur’an. As a result, I am afraid it cannot be accepted.
(Shehzad Saleem)
Stability of Interest Based Economies
Question: Being a Muslim it is our faith that whatever Islam presents is the most correct thing and of course has some benefits for humanity. My question is that interest is prohibited in Islam; naturally there must be some curse in it. But if we look at the western developed countries, interest is fully present but still their economies are stable and booming day by day. How would you reject this argument?
Answer: According to Islam, a contract between a lender and borrower should be an equitable one. It should ensure justice to both parties and safeguard their rights on equal footings. If one party’s rights are protected more than the other even minutely, injustice creeps in. In a Riba (interest) contract, justice to both parties is not ensured. While the lender is ensured a safe return, the borrower is not – and the lender is least bothered with it. This is unethical. Various measures have been suggested by economists that reduce risk for the lender. All said and done, these measures may be efficient, but the fact remains that they do not ensure equal justice to both parties. Injustice, you’ll agree, is something very objectionable and cannot be tolerated at any level.
The fact that a certain unjust act might cause an economic boom is not reason enough that it should be legalized. There are many practices which may be ethically incorrect but which may boost the economy of a country. Drug trafficking and smuggling, for example, can sometimes be very beneficial for a country. Similarly, in the far eastern countries, child pornography is a very lucrative way of earning. In some African countries, slave trading is very profitable. So you see that if a thing is economically profitable, it does not necessarily mean that it is morally correct. Interest is prohibited because of the fact that it is an unethical contract. You would perhaps agree that economic boom is only commendable if it is based on ethical contracts.
(Shehzad Saleem)
Using Interest received to pay Interest
Question: Accounts that I have at the bank all pay varying rates of interest. I usually donate the interest amounts to charity. Now, if I undertake a loan in which I pay an interest rate and only pay the interest amount due with the interest that I receive from my accounts (but pay the principle amount with my own earnings). Am I, in your opinion, in error?
Answer: I think that there is no harm in this dealing. The interest you are getting is not your right Islamically, while the interest you are paying is an injustice you are encountering. So, it is merely a situation of paying something that was not your right in order to pay off something that should not have been demanded from you in the first place.
(Shehzad Saleem)
A Justification for Interest
Question: I want to ask you a question about interest. Actually I have an Indian friend, who gave me a simple example to justify interest: Suppose Ahmad borrows some money from Ali and promises that he will refund it within a month, but fails to do that. Because of Ahmad’s failure to return t on time, Ali charges 10% as interest! Would this be unfair? If it is unfair to Ahmad that interest be charged, then wouldn’t it be unfair to Ali also that interest not be charged because he waited more than their decided time period. So, we can say that this 10% is a reward for Ali’s patience, and if he were able to obtain his money from Ahmad on time, he could have completed many of his urgent tasks by his money. Now, I am unable to refute this justification. Can you help me in the points raised by my friend?
Answer: I am afraid the example given by your friend is not analogous with interest-based transactions. Interest deals do not work the way this example describes.
In the example, the borrower is in default by virtue of his non-payment at the appointed time. Therefore, a penalty cannot be objected to if it is agreed upon by boththe parties beforehand. However, in all interest deals, the borrower is liable to the penalty (ie the interest amount) even if he returns his money on the appointed time. For example, if I borrow Rs 5000 from you and return it to you within the stipulated period, I will still be required to pay an extra amount to you. So, you see, this is different from the example your friend has given.
(Shehzad Saleem)
Benefiting from Interest Money
Question: I have a bank account. It is a ‘low interest-paying current account’. I normally get only about £30/year as interest. But the bank charges for day to day transactions are quite high (which is unfair). Hence by the end of the year they might charge me £40 +/- for their services. (e.g: bank draft costs £3, withdrawing your own money costs £0.20 per cheque etc). Under these circumstances, can I use the £30 (interest) in paying them for their services, that is to say ‘giving them back their own money’?
Answer: Islam forbids interest since it is morally not justified. Therefore, a person should not in any way use the interest money even if his bank account is ‘forcibly’ credited with it.
The bank charges you have referredto are an absolutely legitimate remuneration of the various services a bank provides you. If their rates are high, it certainly does not mean that you can use money obtained from forbidden means to pay for them. Instead of using the interest money for your own self or for such purposes, it seems befitting that you give it away to the poor or to some welfare projects. This money actually belongs to the society and should accordingly be spent on its needs.
(Shehzad Saleem)
Taking Interest for a Noble Cause
Question: We are going to start a clinic in our town in India. The total expense to run the clinic is USD 1200 per month, but it is difficult for us to raise this amount every month. We will get money from some people every month but this will not be enough. So we want to ask if we deposit USD 100,000 in a bank to earn interest because by adding the interest to the collected money, we will manage to reach the required target of USD 1200 per month. So is this allowed? The clinic is for all communities, and free for all. Can we use the interest money for such philanthropic causes?
Answer: Taking interest is forbidden in Islam even if it is taken for a noble cause. Islam requires that both the means and the objective of an enterprise be morally justified. It does not condone the ‘Robin Hood’ concept of achieving noble objectives through ignoble means. Its objective is to purify a person’s concepts and his deeds from any semblance of evil. Its message is to strive in the right direction whether the objective is achieved or not – for achieving an objective depends not on a person’s efforts; it depends on the will of Allah. It is not our obligation by any means to spend money on philanthropic causes when we do not have it from the right means.
An example from the Qur’an may help in illustrating this point: gambling and drinking in pre-Islamic times were a means to help the poor and needy. The generous would gather at various places, drink liquor and, in their state of inebriation, slaughter any camels. The meet of the slaughtered camels would be placed for gambling. Whatever parts of meat a person won in this gambling, he would generously distribute them among the poor who would gather around on such occasions. It was this very benefit of drinking and gambling which prompted people to make an inquiry when they were regarded as prohibited items. The Qur’an asserted in its reply that in spite of serving this noble cause, they were instrumental in producing moral misconduct in an individual, which in no case can be allowed:
They ask you about liquor and gambling. Tell them: there is great sin in them and some profits as well for people. But their sin is greater than their profit. (2:219)
In other words, despite having utility, drinking and gambling were prohibited since they cause moral misconduct. Therefore, I would advise you to think of some other alternative.
(Shehzad Saleem)
Earning Money through Lending
Question: I know that interest isprohibited in Islam. But then, my question is that I want to invest money in the form of a loan and want to earn money through it. The reason is that I want to safeguard my original amount. Is there a way out?
Answer: As you have rightly pointed out, interest is forbidden in Islam. The basic reason is that the rights of the borrower and lender are not protected on equal grounds. While the lender is ensured a safe return, the borrower is not and the lender is least bothered with it. This makes the contract an unethical one.
However, there is another way out for a person who does not want to earn money through interest (neither does he want to enter into a profit and loss agreement but wants to earn money through lending: The contract between the lender and the borrower should be made on the basis that the lender gives an undertaking to the borrower that he will be entitled to a percentage share in the profit only if the borrower earns profit on the investment made.
(Shehzad Saleem)
Inflationary Adjustments
Question: I keep my money in a current account so that I may avoid interest. However, the funds do depreciate due to inflation. Does Islam recognise inflation and how does it compensate for devaluation and depreciation due to inflationary pressures?
Answers: Money in the form of paper currency has originated in the last few centuries. The issue of depreciation due to inflation has arisen because of the very nature of paper currency. Prior to this, goods were bought and sold on the basis of real commodities like gold and silver coins for example, and there was no ‘false’ depreciation. However, today, this change in situation certainly calls for some corrective measures.
As such, in my opinion, there seems no reason for Islam to disregard inflation and depreciation of paper currency. Whether this measure will actually root out inflation may be debatable, but the point however is that the nature and extent of the corrective measure is such that it requires state authority. Only a state has the power to bind financial institutions and other sectors of the economy to make inflationary adjustments. The common man, you would perhaps agree, cannot do this. Therefore, unless the state realizes this problem, nothing much can practically be done.
(Shehzad Saleem)
Zakah on Stocks
Question: How should we calculate Zakah on stocks and shares?
Answer: Before I answer this question, let me draw your attention to an important aspect regarding its calculation: One of the heads on which Zakah was levied in the time of the Prophet (sws) was on the harvested crop. It is evident that, contrary to wealth (on which Zakah was levied annually at the rate of 2.5 %), crops form a different category. While in the former, no production is taking place, the latter are actually a form of produce. On crops grown on rainy lands, Zakah was levied at the rate of 10 % of the produce at the time of produce, while on lands which needed human effort for water supply to grow crops, it was levied at the rate of 5 % of the produce at the time of produce. In other words, if the spirit of this directive is kept in consideration, Zakah on any form of produce is either 10 % or 5%, whatever be its nature. In the times of the Prophet (sws), since agricultural produce was the only form of produce, therefore Zakah was imposed on it on the above mentioned rates. Today by analogy, it should be levied at these very rates on any other form of produce. Industrial produce, in these times, for example is a very common form of produce.
As far as the difference in the two rates of produce (5% and 10%) is concerned, it is evident that where human effort is very little – that is it is confined to sowing seeds only and where water is actually supplied through rains, the rate of Zakah is more, ie 10%. On the contrary, where this effort is considerable, the rate is reduced to 5 %. In other words, if one derives the principle underlying this calculation, one can safely conclude that Zakah on all items which are produced both by the interaction of labour and capital is 5%, and on items which are produced such that the basic factor in producing them is either labour or capital, it is 10%.
It also needs to be appreciated that all the tools of production are exempted from Zakah.
With this background, I now come to your question. By analogy, earning money through stocks seems to be a form of produce in which no labour is involved. It is the case of production made through capital only. If this derivation is true, then Zakah should be levied at the rate of 10 % on the dividend earned. The total amount invested in stocks is, of course, exempt from Zakah since it is basically the tool of production.
(Shehzad Saleem)
Zakah on Loans
Question: I have lent some money to a close relative who is going through tough times in his life. I want to know if I am liable to pay Zakah on the money I have lent?
Answer: You are not liable to pay Zakah on the amount you have lent for such purposes if your date for Zakah giving arrives. It is serving the needs of the society. You will be now liable for Zakah once you receive the money
(Shehzad Saleem)
CanZakahbe given to Non-Muslims?
Question: Can Zakah be given to non-Muslims?
Answer: The following Qur’anic verse spells out the heads under which the Zakah fund can be expended:
Zakahis only for the poor and the needy, and for those who are ‘amils over it, and for those whose hearts are to be reconciled [to the truth], and for the emancipation of the slaves and for those who have been inflicted with losses and for the way of Allah and for the wayfarers. (9:60)
It is evident from the verse quoted above that the Qur’an does not discriminate between the recipients of Zakah on the basis of their beliefs or religion. In other words, Zakah money can be given to any needy person whatever his religion be. Consequently, the answer to your question is that you can give your Zakah money to Non-Muslims.
(Shehzad Saleem)
Taxes Other than Zakah
Question:There is a Hadith which says that a Muslim govt. cannot ask its residents for any taxes other than Zakah. On the other hand, we see that our so called Muslim governments seem to be running on the money collected through taxes. Is it religiously binding on us to pay these taxes? If not, then what should be the attitude of a pious person in this regard?
Answer:We are bound by the Shari‘ah to follow and show obedience to the law of the land unless the situation arises in which obeying this law stops us from obeying the Shari‘ah itself.
In the situation you have referred to, the government is not stopping us from paying Zakah (in which case one can refuse to obey the directive and face the consequences as well); it is asking us to comply with its own interpretation of the directives of Zakah. One group of scholars, it should be borne in mind, hold the view that taxes besides Zakah can be imposed by an Islamic state. Our duty is to follow the state interpretation in letter and spirit and at the same time, if possible, to convince people in favour of our interpretation in a particular matter. If the majority accepts this view, it will become the law of the land.
Until such a stage is reached, a person who believes that Zakah is the only tax a Muslim government can impose on its Muslim citizens can deduct his Zakah from the amount of tax and pay the balance as Zakah. If the amount of taxes exceed the Zakah he is liable to pay, he may not pay any Zakah.
(Shehzad Saleem)
Calculation of Zakah
Question:I have just converted to Islam, and want to pay Zakah in the way prescribed by Islam. Please advise.
Answer:You can calculate Zakah in the following manner:
1. Fix any one day of the year for the calculation of Zakah. On all subsequent years, Zakah should be calculated on this day.
2. Subtract the value of 612 grams of silver from your total wealth on this particular day which includes value of your jewelry not worn everyday, value of other assets which are not of personal use (your personal house and car are examples of assets in personal use).
3. 2 1/2 % of this amount is the Zakah to which you are liable. In case you are a salaried person you should also pay 10 %1 of your salary every time you receive it. You can deduct the amount the government has fixed as exemption to salaried persons and then pay the said percentage of the remaining amount as Zakah.
Remember, if it is not possible to pay your Zakah money in one go you can pay in installments as well.
4. Since Zakah is the only tax which a government can impose on its citizens, you can deduct other taxes that you have paid from the your Zakah amount. If the balance is negative you do not have to pay Zakah.
(Shehzad Saleem)
Inheritance and Gifts
Question:The case in point is: A father during his life time gives a sum of money to all his daughters and says to them that this is your inheritance. The daughters take the money without saying anything to the father as they respect him. After a few years, the father dies and all the money as far as the sisters know is now with the one and only son, ie their brother. The father does not leave any instructions regarding the distribution of his wealth. The sisters know that the wealth of their father was much more than the amount given to the sisters as inheritance during the father’s life. Now my questions are:
1. If during the life, a father distributes his wealth, does he have to distribute it in accordance with Shari‘ah, or can he give the son much more than the daughters?
2. After his death, who is responsible for the distribution of his wealth as per the Shari‘ah?
Answer:As a principle, a person in his own lifetime has the right to give or gift his wealth in any proportion to any or all of his children. In this regard, the Shari‘ah imposes no obligation on him except that he should be fair and just with all his children in this regard.
As far as his inheritance is concerned, it solely relates to the wealth and property which he leaves behind after his death. In this case, the Shari‘ah has fixed the shares of his heirs. They must be given their share in the prescribed proportion. All his heirs must sit together and distribute his wealth among themselves according to this proportion. If any one of them does any injustice in this distribution, he must know that according to the Qur’an (4:13-14) he is doing a grave sin. The other heirs have the right to take this case to the court if they think that they are being deprived of their right by someone.
Consequently, whatever you received from your father in his life was a gift from him. It cannot be regarded as your share of inheritance. You still have a share in his wealth as his legal heirs, which of course you have the right to demand.
(Shehzad Saleem)
The Daughter’s Share in Inheritance
Question: Why are women treated as inferior to men in Islam? Of the many things that have continued to bother my mind is the share daughters get in relation to their brothers. As a brother, I feel ashamed that I would be getting double my sister’s share. Please clarify.
Answer: It needs to be appreciated that the law of inheritance as stated in the Qur’an is based on the underlying cause of ‘the benefit of kinship’:
You know not who among your children and parents are nearest to you in benefit. This is the law of God. Indeed, God is Wise and all-Knowing. (4:11)
In other words, the directive in reality does not pertain to the relatives but is related to the underlying cause present in this relationship, which actually entitles them to become the heirs. Consequently, the basic reason why the share of a son is more than that of a daughter is the fact that in the life of parents the son is usually more beneficial to them than the daughter. This is so simple a fact that it can be easily understood in societies where the institution of family is still very strong and has deep roots. In a family system, parents become dependent on the children as they grow old. The ease and comfort they feel in living with a son is much more than what they feel while living with a daughter. The simple reason is that a son is independent in taking decisions while a daughter, once she gets married, is actually more dependent on her own husband and is not so independent. The modern western mind feels averse to this distribution because the family system is dwindling in their society. Parents are generally more uncomfortable in living with either the son or the daughter, both of whom become independent at a very early age. So I would say that they can only understand if they are first able to grasp the importance of the institution of family.
A point which may be worth mentioning here is that there may be cases even in societies having a strong family system where a daughter may prove more beneficial to her parent(s) than the son; in this case, the provision is there in Islamic law whereby a parent in his lifetime can gift as much wealth as is deemed necessary to the daughter. Similarly, there may be the case that the daughter in her specific circumstances may need more money; here again wealth can be gifted to her. Parents can even deprive a son(s) from inheritance if the son(s) becomes ‘non-beneficial’ to them in any way.
In short, the 2:1 ratio pertains to normal circumstances; in exceptional ones there are many remedies in Islamic law – some of which I have tried to explain.
(Shehzad Saleem)
Raffle-Tickets
Question: What is the position of raffle-tickets in Islam?
Answer: This amounts to gambling. One of the arguments in favour of raffle tickets is that the scheme is widely used for philanthropic causes. It must be borne in mind that gambling in the Qur’anic times in Arabia was no exception. In fact, owing to its philanthropic aspect, gambling was considered a boon rather than a bane. The rich would indulge in drinking and gambling and would give whatever they won to the poor. Indeed, the abstainer was regarded as niggardly. However, the Qur’an very clearly pointed out that the moral corruption that ensues from such activities is greater them whatever benefit they provide:
They ask you about gambling and drinking. Say: There is great sin in both and also some benefit for people, but their sin is greater than their benefit. (2:219)
Of this moral corruption, one aspect particularly worth mentioning is that these so-called philanthropic schemes develop the attitude of selfishness and indifference. In an Islamic society, infaq, or spending in the way of Allah, is a basic value. The destitute, therefore, are the direct responsibility of the society and their problems cannot be left to the mere adjustments of demand and supply as in the laisser fair concept. It should be impossible for a Muslim to sleep with the peace of mind, if he finds out that a neighbour had not been able to eat at night owing to poverty. Destitution, poverty, misery and disease should be sufficient enough as reasons for impelling a Muslim to spend whatever he can spare. ‘Spend in the way of Allah that ye may be rewarded in the Hereafter’. ‘Spend in the way of Allah that ye may enter the Kingdom of Heaven’. Such adages used to be the underlying reason for infaaq. But whatever is this: ‘Spend in the way of Allah that ye may get a refrigerator (or a deep-freezer or a VCR)’? and ‘Spend in the way of Allah that ye may win tickets to Madame Noor Jehaan’s concert’?
Millions are spent merely on organizing these ‘philanthropic’ schemes – millions that could be directly spent on the poor – and thousands are spent by the gentry on the apparel they need for just one such occasion. It is the height of indifference, prodigality and selfishness that a person who can afford to spend thousands on buying tickets to the concert and thousands on new clothes for the function is not motivated to spend in the way of Allah by the misery of a fellow human being and by the reward in the Hereafter. The mere knowledge that a human being is in need of what a Muslim can spare should give the Muslim sleepless nights. Yet there are Muslims who can spare millions but do not take out a penny unless they are certain of a news items and a photograph lauding their altruism. Would that they were able to appreciate what Jesus (sws) had said:
Be careful not to do your ‘acts of righteousness’ before men, to be seen by them. If you do, you will have no reward from your Father in heaven. So when you give to the needy, do not announce it with trumpets, as the hypocrites do in the synagogues and on the streets, to be honoured by men. I tell you the truth, they have received their reward in full. But when you give to the needy, do not let your left hand know what your right hand is doing, so that your give may be in secret. Then your Father, who sees what is done in secret, will reward you. (Matt, 6:1-4)
The Qur’an says:
O you who believe! do not mar your almsgiving by reminders of your generosity and by hurting the feelings [of the one you had helped], like the one who spends his wealth to be seen of men but believes neither in Allah nor the Final Day. (2:264)
And:
And if you allow them to be revealed when you do your alms, that too is good; but if you conceal them and make them reach the poor in secret, that is best for you. And Allah remains well aware of what you do. (2:271)
When a concert or a refrigerator not the ‘Kingdom of Heaven’ becomes the reason for charity, it means that the whole foundation of moral values, which are so essential to an Islamic society, has been impaired to the extent that the edifice that rests on it may collapse in the wake of the mildest of storms.
The raison d’etre for charity should be concern for others and the reward in the Hereafter not Madame Noor Jehaan’s concert or a refrigerator. Loss of values means the death of society. Loss of the spirit of infaq – a basic value in an Islamic society – means the death of Islamic society. That must never be.
Those who spend of their wealth [in charity] by night and by day, in secret and in public have their reward with their Lord. For them shall be no fear, nor shall they grieve. (2:274)
(Asif Iftikhar)
Status of the Stock Exchange
Question: I would like to know the position of the stock exchange viz a viz the Islamic Shari‘ah. Please give a detailed answer.
Answer:The stock exchange is a market place where shares arebought and sold. By buying the shares of a company, you, in fact, share in the business. Therefore, if there is nothing against Islam in the nature of the business, there is nothing wrong in being the shareholder of that business and in getting dividends on those shares. Similarly, if you sell the shares at any point of time owing to some reason and get capital gains thereby, the transaction and the profit will not be wrong. However, when this trading moves beyond mere buying and selling, that is when the buyer and the seller do not remain a buyer and a seller, but become a ‘bear’ or a ‘bull,’ trouble begins.
Ideally, the market price of a share should be related to the performance of the company. But the speculators (euphemistically called investors) manipulate the prices by artificially stimulating the demand and the supply of shares. Forward contracts are made and further contracts are derived (financial derivatives) on that basis. The result is that the whole market activity is based on speculation rather than being based on entrepreneurship. The share price of a company doing perfectly well suddenly falls and that of a company in trouble suddenly rises. A person earns millions and loses millions in a day in this game. Obviously, such fluctuations have a negative impact on the economy, which is usually borne by the not-so-affluent sections of the society. One of the worst cases of such speculation was when on Oct. 19, 1987 – now known as the Black Monday – Wall Street crashed owing to the panic that had spread among the investors. Billions are lost in a day in such crashes. Since shares are sometimes bought and sold even before they have been actually bought and sold and, at times, are bought primarily on the basis of borrowed capital, stakes are high and the slightest fear may start a chain reaction, which can result in a major catastrophe. The reason for such timorousness is nothing except that the whole economic activity in these exchanges is based on speculation rather than on entrepreneurship. When such a large area of economic activity is based on speculation, the spirit of entrepreneurship suffers and moral corruption pervades the society.
Islam wants that the economic activity of its followers be based on entrepreneurship, hard work, creativity, moral principles and concern for others, whereas speculation is often detrimental to these values. The moral corruption that ensues from such activities as speculation far exceeds whatever material benefit they give. Therefore, it is closer to taqwa (fear of God) to avoid them. The pervading spirit in an Islamic society should be that of infaq (spending in the way of Allah). This spirit often dies in the absence of fear of God – and avarice and apathy become the deities.1
In an Islamic state, the government has the right to enact such laws as would eliminate the inherent risks of deception and loss by which either party can suffer in such activities as speculation on the stock exchange. However, until such laws are framed, it is up to the individual Muslim to decide when his trading becomes such speculation as would be detrimental to his taqwa. A good Muslim prefers to stick to nobler values even if they afford him less material benefit. Even in the absence of specific Divine injunctions or enacted laws, he should ask his own self whether his involvement in an activity is leading him away from God and inclining him towards the violation of moral values and ethics. His life should be marked by love of God, fear of His wrath, charity and concern for others. Losing these values for material benefit is a trade that a good Muslim never likes to make. But, as already said, that is a question which each Muslim must answer for himself. The rule here is sal nafsak (ask thy heart) – it will tell the truth.2
(Asif Iftikhar)
Why is Gambling Prohibited?
Question: Why is gambling prohibited by Islam? Is betting on a horse in a horse race a form of gambling? Why can’t betting or gambling on horse racing be looked upon as an investment? You trade your inside knowledge and ability to predict results into reasonable winnings and if you can’t make it, then you simply quit.
Answer: The basic objective of all Islamic directives is to cleanse the human soul from excesses. Economic activities, it is a common observation, have tremendous effects on a person’s character. Therefore, all such activities which produce negative or evil traits in a person are prohibited by Islam, since they tarnish the mirror of the soul. Let us take a look at some of the typical traits of a gambler:
i. He bases his economic activity on chance rather than his own technical ability which of course leads to cowardice and superstition.
ii. He loses the initiative to work hard, which can create severe financial problems for him and his family.
iii. He becomes selfish and mean since his life inevitably becomes caught in a vicious circle of gaining more and more.
iv. He is generally distracted from the higher ideals of life.
Such traits and other similar ones are generally the outcome of gambling. It is not necessary that they are produced in their ultimate form whenever a person indulges in gambling. The temperament of Islam is to bolt all pathways which lead to some evil. The line of prohibition is marked much before the evil starts itself so that a person is discouraged much before.
Yes, betting on a horse in a horse race is a form of gambling. Also, there is a world of difference between betting and investment. Betting or gambling in a horse race cannot be called an investment in any sense of the word since in this case the money involved is not brought in the market as a means of providing service to the society which is necessary. Besides however much you may be able to predict the ‘skill of a horse’ the uncertainty factor is still tremendous.
(Shehzad Saleem)
GP Fund
Question: In a scheme like GP Fund (or CBF), an employee contributes a certain percentage of his salary (e.g. 8%). An equal amount is contributed by the employer in the account of the employee. This is a kind of forced saving by the employee. Is it lawful to take benefit from this facility. What about the interest on this accumulated money?
Answer: In schemes like the GP fund, the employee has no option but to accept the forced deduction made by the government. It is a well-known fact that the part contributed by the government is raised through interest transactions. However, it should not be the concern of the employee as to how the employer raises this amount to meet his part of the ‘forced’ contract.
The interest accrued on the amount is unlawful. A person should not benefit from it. He can spend it on the poor and needy without being hopeful of a reward from the Almighty, since this money actually is not his prerogative and in fact belongs to the society. By spending the money on the poor and needy the money is utilized for the society.
(Shehzad Saleem)
Insurance
Question:I wish to know about the concept of Insurance in Islam? Are Muslims allowed to take an insurance policy? In this policy we pay an annual premium and of course after 10-20 years the policy expires and we receive our money with profit. Please explain this concept to me.
Answer:In its classical concept, insurance is a means of helping individuals who are afflicted with damage and loss. Therefore, in its essence, it is a philanthropic and humanitarian undertaking. As such its underlying spirit seems very noble.
Today, particularly due to the absence of a state system of security and insurance in most underdeveloped countries, there are a number of insurance companies in the private sector which are doing this job. Also, it is known that many of them are based on interest. However, buying an insurance policy cannot be regarded as forbidden since one is not taking interest in doing so. At best, in some cases, it can be regarded as furthering and promoting an evil, which according to the Qur’an (5:2) is ta’awun ‘ala al-ithm (co-operation with an evil), and which should be avoided as much as possible. So, a careful approach would be to benefit from insurance policies only if a person feels that it is necessary to do so in his circumstances. A person must decide for himself in this regard instead of asking some external authority – since it is only he who is the best judge of any genuine plea that he may have.
(Shehzad Saleem)
Prize Bonds
Question: I want to know about the legality of prize-bonds? Are they allowed in Islam. If they are, then how should I pay on them?
Answer: Money earned through prize-bonds is not an allowable in Islam. When you buy a prize bond you basically lend money to the government and the gain you get on it is actually amounts interest since it is the fixed return you get on this loan.
Moreover, it also carries the spirit of gambling in it since a person actually chances his luck in this enterprise.
(Shehzad Saleem)