The Hypocricy of "Islamic" Banks.
-
peace all
could this be the reason why middle east countries are hiring "non-muslims" from everywhere in the world to work on their banks' insurance/loan departments? would this mean that they are not sure if what they are doing is riba; so the best alternative is not to work on this area thus, the need for foreign finance workers?
just asking. reality bites.
salams & God bless. ramon.
Highly unlikely. The more likely reason for employing "non-muslims" is that they have more experience with these systems of finance. If they were unsure of if it was "riba" or not then the middle-eastern countries would not be large investors in Western Banks which is definitely "riba."
-
My personal opinion is that interest is unethical. The reason is that money should not have an intrinsic value in itself. It should not be bought and sold. Money is a means of exchange, not an end in itself (I'm not really good at explaining, but I hope you can understand). Many philosophers even before Islam, agreed on this. If you think about it, when a bank gives you a loan, they are technically selling you money! I can understand selling a car, or a house, or fruits, etc...but selling cash itself - which is meant to be a means of exchange, not a "good" in itself - is unethical. >(
Both paper money and interest are ethical, convenient and best forms of trading. When a bank lends or you borrow a loan, it is technically a service and for this service they charge you "variable" interest based upon your credit standings and type of loan.Assume I go to a bank now and take a loan of $5,000 for a term of five years, with interest amount totalling $1,000. This means that after 5 years, I have to repay the loan as $6,000.
Conventional banks don't care what I am doing with this money. They don't care if it's being invested or not. They base their interest on absoulte future value. So, even if I take the money and put in in a drawer, and lock the drawer; after 5 years, I would still owe the bank $6,000. Hence, the money has "grown" by $1,000 for no reason other than time value!
That is not true and banks do care depending upon what type of loan, your credit standings and for what purpose you are requesting; such as mortage loans, personal loans, car loans, educational loans, refinance loans, etc., etc. It would be foolish for banks to hand over large sums of money blindfoldedly.Instead of going to a conventional "riba-consuming" bank, and taking a cash loan of $5,000 to buy a car, I decide to go to an "Islamic" bank and have them finance the car for me, and allowing me to repay it, in monthly installments, over a period of 5 years. Technically, the Islamic bank buys the car form the dealer for $5,000, and sells it to me for $6,000. However, they tell me that this extra $1,000 is not riba. It is lawful profit. As for the installments over 5 years, they have given it to me because they think I am credit-worthy, and they want to "help" me finance it.
This is true for all banking systems. Islamic banks don't actually buy cars from dealers and keep them in their lots to lend you money but they secure the car dealers and secure themselves by lending you a loan based upon the loan type, your criteria, your credit-worthiness, collateral, leins, etc.In the Islamic Murabah system, however, their is no such exemption. Even I repayed the loan after only one week, I would still have to pay the full $6,000, because the extra $1,000 is considered PROFIT, not riba. It has nothing to do with future value. So far, this is logical and acceptable.
Your example is misleading. The $1000 charge in interest by conventional loans may not be the same exact amount charged by Islamic banking due to variable interest rates and types of loans.Now the question is Why does the Islamic bank set their profit differently for different credit periods?
In teh above example, if I were to finance the car over 6 years instead of 5, they would raise their "profit" to $1,200. (Total repayment would equal $6,200). On the other hand, if the contract was over 4 years, the "profit" would only be $800!! (Total repayment = $5,800).
The same is true for conventional banking systems. If you were to take out a 30 year loan term instead of 15 years on a conventional lending, you automatically end up paying more. Interest rates depends upon economic situations, LIBOR, types of loans and credit standings.Why are they increasing their profits as the finance period is increasing??
When the finance period or term or number of years increases, the risk factor becomes greater and hence the "increased profits" on their part. This is common sense and justifiable.If the reason is because of increased risk, they could ask for extra guarantees or collaterals for credit periods over 5 years (perhaps a guarantor, a mortgage on a car, or to freeze a sum of money in the bank). But that does NOT give them the right to increase their profit.
Guarantees and collaterals are always considered by ALL BANKS and lenders and is the backbone of lending. One can either pay a little more or lose your collaterals?This is an example of double standards. They are applying the consequences of profit where it suits them ( by not dropping any profit for early settlement), but on the other hand, they are treating it the same as time-value interest when it comes to extending the credit period >(
You talk about double standards yet do not realize what is currently happening in the conventional westernized banking systems (USofA) that has shaken up the world in distress. This is the second time in recent history that the Western Banking Systems have gone into "Great Depression" which has taken the world in shock including the Islamic Banking Systems, but can you quote any Isalmic Banking Depression that has taken the Western Banking Systems and its own in "Great Depression? Why and How is that? -
Peace aalmakto
Salaam Imran,
I agree with you that excess would constitute any "savings" and "investment" money. The only way I feel saving is recommended is if you are saving for some foreseeable "event" like college, or a car.1247 He said ?You will plant regularly for seven years, and whatever you harvest you must leave it in its pods, except for the little that you will eat.?
In the above verse they are saving in order to survive the upcoming drought. They had a valid reason so it was fine that the "excess" was not donated.
I think that the important thing in the verse you quoted is that the situation was pertaining to the community as a whole. The storing was necesary in order to fulfil the amaanah wew are responsible for.
Imraan
-
Peace Wakas,
I recommend reading the following on savings
http//free-minds.org/forum/index.php?topic=8735.msg29090#msg29090I read the link. The problem, I think is that we cannot store wealth until the amaanah given to us as per 9111 (i.e distributing wealth until all creatures basic needs are met (116). (6152; 1731; 2960)) is fulfilled. Once this is done, it may be possible to store wealth.
Imraan
-
Peace Ramon,
Thank you for your kind words & encouragement.
You replied to Wakas
peace all
could this be the reason why middle east countries are hiring "non-muslims" from everywhere in the world to work on their banks' insurance/loan departments? would this mean that they are not sure if what they are doing is riba; so the best alternative is not to work on this area thus, the need for foreign finance workers?
just asking. reality bites.
salams & God bless. ramon.
I suggest you read Confessions of an Economic Hitman by John Perkins.
In his book John Perkins relates a story that led to expat industry in the Middle East. It was basically the Arabs' unwillingness to do the work themselves that sparked this industry. Also because they didn't loans from the IMF or WOrld Bank, they were convinced to deposit their money in US banks, while the massive amounts of interest generated would be used to pay US & other service providers for services in the Middle East.
THis is according to John Perkins, so I'm not sure how true it is, although he is a man who was on the inside & came clean.
Imraan
-
Peace Prissy
Both paper money and interest are ethical, convenient and best forms of trading. When a bank lends or you borrow a loan, it is technically a service and for this service they charge you "variable" interest based upon your credit standings and type of loan.
Could you please explain how this is ethical?
The history of not just paper money, but currency in general is based on falsehood. Indeed it is very ironic that Gordon Brown and others have stated recently that we need to restore trust in the bakning sector, when its very root was an absolute & total disregard for what was entrusted to them as banks. I think you may find it useful looking into the history of money, rather than basing your opinion on the situatioin as it presents itself today.
That is not true and banks do care depending upon what type of loan, your credit standings and for what purpose you are requesting; such as mortage loans, personal loans, car loans, educational loans, refinance loans, etc., etc. It would be foolish for banks to hand over large sums of money blindfoldedly.
HOwever, have you thought about the fact that when you take out a loan, of say $1000, you actually empower the bank with approximately $1900, of which $900 does not exist, & when you repay, say $100 back per month, you empower the bank with $190, of which $90 does not exist, etc., etc. It is not as foolish as you may think.
You talk about double standards yet do not realize what is currently happening in the conventional westernized banking systems (USofA) that has shaken up the world in distress. This is the second time in recent history that the Western Banking Systems have gone into "Great Depression" which has taken the world in shock including the Islamic Banking Systems, but can you quote any Isalmic Banking Depression that has taken the Western Banking Systems and its own in "Great Depression? Why and How is that?
I am not sure if this is in defence of Islamic Banking? If it is, could you please provide the Quranic basis for Islamic banking?
Imraan
-
Peace Wakas,
I read the link. The problem, I think is that we cannot store wealth until the amaanah given to us as per 9111 (i.e distributing wealth until all creatures basic needs are met (116). (6152; 1731; 2960)) is fulfilled. Once this is done, it may be possible to store wealth.
Imraan
peace,
I do not see how the verses you cited support what you said.
-
Peace Wakas
peace,
I do not see how the verses you cited support what you said.
God has placed the utmost value on life. He has pomised to provide "rizq" or means of sustenance for all living creatures.(116; 6152; 1731; 2960). He does not deliver rizq to each individual directly (3647). Our lives & wealth do not belong to us. They have been entrusted to us by God (9111). Excess wealth must be kept open for those whose basic needs are not met (2219).
Since our wealth does not belong to us, but to God, we should be using His wealth to meet the basic needs of everyone (i.e. acting as His "khalifah" on earth by distributing that which He has provided for all living creatures) before we use it for anything else.
We cannot look at savings & how it is permissible until nobody is wanting for basic needs such as food, clothing & shelter.
Imraan
-
peace Imraan,
Excess wealth must be kept open for those whose basic needs are not met (2219).
How is your statement supported by the verse you cite?
Since our wealth does not belong to us, but to God, we should be using His wealth to meet the basic needs of everyone (i.e. acting as His "khalifah" on earth by distributing that which He has provided for all living creatures) before we use it for anything else.
We cannot look at savings & how it is permissible until nobody is wanting for basic needs such as food, clothing & shelter.
Whilst it may be a nice sentiment, and perhaps even true if living in a Quranic society, I would need to see more evidence before agreeing with this position.
-
Peace Wakas
Quote
Excess wealth must be kept open for those whose basic needs are not met (2219).How is your statement supported by the verse you cite?
(2219) states that we should spend what is beyond our needs. I take this to mean what we don't need to support ourselves &
families in terms of the basic needs of food, clothing & shelter. This is supported by the fact that God has promised the provision of all
creatures. Since according to (9111), our wealth & lives belong to God & are left in trust with us, we can only spend it in the way God
intends us (i.e. fulfilling His promise to all creatures).It may, however, serve us well to take a few steps back to discuss this. If you'll indulge me, I'd like to pose a few question to you in order
to take this discussion further.- Do you accept that God provides sustenance for all creatures?
- Do you accept that He does not deliver sustenance to each individual directly?
- Do you accept that the lives & wealth of "mu'min" are only left in trust with them?
- Do you accept that fulfilment of trust in a trait of "mu'min"?
Quote
Since our wealth does not belong to us, but to God, we should be using His wealth to meet the basic needs of everyone (i.e. acting as His "khalifah" on earth by distributing that which He has provided for all living creatures) before we use it for anything else.We cannot look at savings & how it is permissible until nobody is wanting for basic needs such as food, clothing & shelter.
Whilst it may be a nice sentiment, and perhaps even true if living in a Quranic society, I would need to see more evidence before agreeing with this position.
We should always be striving to form a Quranic society as best we can, however small that society may be. For more evidenc, please resond
to my questions above that we may be able to investigate this & I think the Truth will be apparent if we are sincere in our search.Imraan
-
We should always be striving to form a Quranic society as best we can, however small that society may be. For more evidenc, please resond
to my questions above that we may be able to investigate this & I think the Truth will be apparent if we are sincere in our search.
ImraanPeace,
Respectfully.A society that lives totally according to The Quran already exists, we just need to be a majority so that we can change the existing country into Real Islamic country, God willing.
Like USA, Europe, ....etc. God willing.Glory be to our God,
Glory be to our God.Peace.
-
Peace Alan
Peace,
Respectfully.A society that lives totally according to The Quran already exists, we just need to be a majority so that we can change the existing country into Real Islamic country, God willing.
Like USA, Europe, ....etc. God willing.Glory be to our God,
Glory be to our God.Peace.
Can you point out this society to me?
Imraan
-
peace Imraan,
(2219) states that we should spend what is beyond our needs. I take this to mean what we don't need to support ourselves &
families in terms of the basic needs of food, clothing & shelter.That is your interpretation, a possibility, which is not a solid one I might add.
This is supported by the fact that God has promised the provision of all creatures.
That doesn't support your position at all. It more likely means that God has provided us with all the sustenance we need on earth and it is up to us how we use it. It is a bit like He has shown us the two paths (right and wrong) and is up to us which we take.
-
Do you accept that God provides sustenance for all creatures?
Yes. -
Do you accept that He does not deliver sustenance to each individual directly?
No, e.g. pick a fruit from a tree and eat it..... how does that fit with your view? -
Do you accept that the lives & wealth of "mu'min" are only left in trust with them?
I'll say yes. -
Do you accept that fulfilment of trust in a trait of "mu'min"?
Yes.
-
-
Peace,
Respectfully.A society that lives totally according to The Quran already exists, we just need to be a majority so that we can change the existing country into Real Islamic country, God willing.
Like USA, Europe, ....etc. God willing.Glory be to our God,
Glory be to our God.Peace.
Our God? What is that? Sounds like paganism to me.
-
Peace Wakas
(2219) states that we should spend what is beyond our needs. I take this to mean what we don't need to support ourselves &
families in terms of the basic needs of food, clothing & shelter.That is your interpretation, a possibility, which is not a solid one I might add.
What I mean by this is not that we shouldn't work & expect everything to be provided for us. I added to this in my previous post saying that (9111) states that our wealth & lives are only entrusted to us & in fact belong top God. It would be grossly unfair, in my opinion, to value one individual's work over another. Qarun stated that his wealth was given to him because of some knowledge he had (287. Also looking at (3949), it becomes clear that knowledge is not the basis for a right to more wealth. All people are created will the equal right to the provisions God has provided. In fact, (599) clearly directs us in how we should traet those in need, preferring their need to ours if their needs is more pressing. So if we are to prefer the needs of others to our own when their need is more pressing even if poverty is our lot, how can we in good concious claim that once our basic needs are met & there are others in need,that we can invest/save/purchase luxuries, etc. before taking care of their needs? I therefore feel that the Quran is closer to the socialist economy, which puts forward that each works according to ability & is remunerated according need, than to a free market economy.
This is supported by the fact that God has promised the provision of all creatures.
That doesn't support your position at all. It more likely means that God has provided us with all the sustenance we need on earth and it is up to us how we use it. It is a bit like He has shown us the two paths (right and wrong) and is up to us which we take.
I believe it to fully support my position in that your provision is not dependant on your ability to work (physically, intellectually, or in any other form), but rather on the fact that God has promised provision to all creatures.
-
Do you accept that God provides sustenance for all creatures?
Yes. -
Do you accept that He does not deliver sustenance to each individual directly?
No, e.g. pick a fruit from a tree and eat it..... how does that fit with your view? -
Do you accept that the lives & wealth of "mu'min" are only left in trust with them?
I'll say yes. -
Do you accept that fulfilment of trust in a trait of "mu'min"?
Yes.
As to your answer in the negative on point 2, I think you may be limiting your view on sustenance, since to sustain life food & water are essetial, but so is clothing, shelter, medical facilities, etc. As for "e.g. pick a fruit from a tree and eat it..... how does that fit with your view?", God provides the fruit on the tree & you should have the right to pick it, but if someone "owns" the tree, you could be arrested. Also, if we relied only on produce which is not under anyone's "ownership", there would not be enough produce available to fulfil the needs of all creatures today & we would be calling God a liar. By available I mean that everyone has a right to it. Instead God has provided us with the ways & means to discover the technology required to grow food in more abundance to satisfy the needs of the world today.
Again, it is important to remember that sustenance is more than just food & water. A look at (3647) with regard to God not providing to each individual directly may provide a change of opinion.
Imraan
-
-
Peace Wakas
peace Imraan,
You asked me 4 questions, I answered. I asked you one, and you avoided answering it.
I'm not interested in that type of discussion.
My apologies if I have not addressed your question. I am not sure which question you think I have avoided answering.
If it was the one you put foward below, I think I have responded.
2. Do you accept that He does not deliver sustenance to each individual directly?
No, e.g. pick a fruit from a tree and eat it..... how does that fit with your view?If you refer to the question you put forward in an earlier post, which I have reproduced below, then I think I have responded to that as well.
Quote
Excess wealth must be kept open for those whose basic needs are not met (2219).How is your statement supported by the verse you cite?
If you find that either of the responses are inadequate, I will endeavour to make another more satisfactory response. If it is some other question that I ahve avoided, it is unintentional as I'm not sure what it is. If the latter is the case please restate the question I have missed and I will respond.
Imraan
-
peace Imraan,
It was this one
- Do you accept that He does not deliver sustenance to each individual directly?
No, e.g. pick a fruit from a tree and eat it..... how does that fit with your view?
You avoided answering by adding your own made up conditions. The question is simple if no-one owns the tree, and someone picks fruit from it and eats it, what does that do to your view of "God does not provide sustenance to us directly" argument? Does it disprove it or not? If not, please explain clearly as to why not.
- Do you accept that He does not deliver sustenance to each individual directly?
-
Peace Wakas
peace Imraan,
It was this one
You avoided answering by adding your own made up conditions. The question is simple if no-one owns the tree, and someone picks fruit from it and eats it, what does that do to your view of "God does not provide sustenance to us directly" argument? Does it disprove it or not? If not, please explain clearly as to why not.
It does not disprove my statement at all. If my statement was "God does not provide fruit that grows on a tree to each individual directly", then maybe it would disprove my statement.
Also, my question was
2. Do you accept that He does not deliver sustenance to each individual directly? In order to clarify my question, I'll just mention the followingMaybe I should have used the word "rizq" rather than sustenance, as it would, I think give it a broader meaning. I am referring to God deciding that this person will have so much "rizq", and that person will have this much "rizq". Also, if as you say, God provides "rizq" for all His creatures, & does so for each individual directly, there shouldn't be anyone starving in the world. Yet there are, so the "rizq" provided by God is provided generally, not individually.
As far as the accusation you have made regarding my "own made up conditions", maybe you can point out which of the conditions you consider "made up" or "non-Quranic", and I can then either provide proof of its Quranic basis or concede that it is figment of my imagination / traditional upbringing / preconcieved idea, etc.
Imraan
