ECONOMY WITHOUT INTEREST

ECONOMY WITHOUT INTEREST
You can do this
dr. Zakir Naik

Interest-free economy
Says Allah the Exalted:
"Those who are interested in interest will rise as the one who was driven mad by the touch of the devil will rise, because they said, 'Interest is the same as trade.' And God allowed trade, and forbade interest. To him until the lesson of his Lord reaches - so give up, his is what he acquired before, his case will be solved by God; and those who do it again will be the inhabitants of Hell, they will remain in it forever. "

God destroys interest and promotes mercy. God does not love any unbelieving sinner.

Those who believe and do good deeds and perform prayer and give zakat await a reward with their Lord; and they will not be afraid of anything and they will not grieve for anything.

O believers, fear God and give up the rest of the interest, if you are true believers.

If you do not, then let you know - war from God and His Messenger! And if you repent, you will be left with the principal of your possessions, you will not harm anyone, nor will you be damaged.

And if he is in trouble, then wait until he has; and it is even better for you, you know, to pay the debt.

"And fear the Day when you will all return to God, when everyone will be rewarded for what they deserve - no one will be wronged." (Qur'an, chapter of Al-Baqara, paragraphs 275-281)

In the name of God, the Merciful, the Compassionate.
“O believers, fear God and give up the rest of the interest, if you are true believers. If you do not, then let you know - war from God and His Messenger! And if you repent, you will be left with the principal of your wealth, you will not harm anyone, nor will you be harmed. ”(Qur'an, Al-Baqarah, 278-279)

Definition of interest
The word interest is mentioned as many as eight times in the Qur'an: Byzantines, 39; En-Nisa, 161; Imran Family, 130; Al-Baqarah, 275, 276 and 278.

It is first mentioned in the following passage:
And the money that you give to increase with other people's money will not increase with God, and for the alms that you give to please God - such good deeds will multiply you. (Qur'an, chapter Byzantines, paragraph 39)

The Arabic word fish (interest) means increase, surplus. In the Qur'anic context, fish means forbidden surplus, ie. interest and greens. When the first paragraph on interest was published, it did not contain a ban, but a warning that it was of no use.

This formulation is similar to the first mention of alcohol in the Qur'an, after which the prohibition of alcohol was realized in three phases:
They ask you about wine and gambling. Say: "They bring great harm, and some benefit to people, only the harm from them is greater than the benefit." (Qur'an, chapter of Al-Baqara, paragraph 219.)

So, similar to the first mention of interest, alcohol is not unequivocally prohibited, but its harmfulness has been pointed out.

However, the second section on alcohol is stricter:
O believers, do not pray in a drunken way, until you know what you are saying. (Qur'an, chapter of An-Nisa, paragraph 43)

The final and unequivocal ban on alcohol followed in the third paragraph:
O believers, wine and dice and idols and divination arrows are disgusting things, the devil's work; so stay away from it to achieve what you want. (Qur'an, Table, Chapter 90)

After this passage was published, rivers of alcohol flowed through the streets of Medina, all the vessels were emptied and never filled again.

When the first paragraph on interest was published, it contained only a warning.

However, the second paragraph is stricter:
And because of the severe violence of the Jews, we forbade them some good food that was allowed to them, and because they discouraged many from God's way, and because they took interest, and it was forbidden to them, and because other people's property is illegal whether. (Qur'an, chapter of An-Nisa, paragraphs 160-161)

As early as the 130th chapter of the Imran family, the Exalted says:
O believers, do not be heartless greengrocers, and fear God, because that is how you will achieve what you want.

Today, some are trying to justify interest by arguing in this passage, arguing that the Qur’an forbids only greens, but not interest. Let's analyze what greenness means and what interest means.

According to the Oxford Dictionary, interest is the amount of money added to pledged money, and greenery is a high percentage of interest on borrowed money. However, as I have already said, the Qur’anic term fish means an illicit increment and surplus on the original amount of money. This covers both prohibited categories: both greens and interest, regardless of whether it was a small or a large percentage.

Some justify themselves by saying: "Interest is part of trade. Therefore, we do not see anything disputable in interest."

The answer to this fallacy is found in the Holy Qur'an:
Those who are interested in interest will rise as the one who was maddened by the touch of the devil will rise, because they said: "Interest is the same as trade." And God allowed trade, and forbade interest. To him until the lesson of his Lord reaches - so give up, his is what he acquired before, his case will be solved by God; and those who do it again - they will be the inhabitants of Hell, they will remain in it forever. (Qur'an, chapter of Al-Baqara, paragraph 275)

Here, God makes it clear that he allowed trade and forbade interest. All those who have to do with the turnover of interest, will end up as residents of the Fire.

In the following passage the Exalted says:
God destroys interest and promotes mercy. God does not love any unbeliever, sinner. (Qur'an, chapter of Al-Baqara, paragraph 276)

Some, again, are trying to prove that this passage refers to the fish el-istilah, i.e. when you set the interest rate on a cash loan, which the borrower will use to buy basic groceries. Other types of interest, they say, such as interest on bank savings and business loans, are not prohibited. Let’s analyze what the Qur’an says about it.

O believers, fear God and give up the rest of the interest, if you are true believers. (Qur'an, chapter of Al-Baqara, paragraph 278)

When this passage was published, Muhammad, peace be upon him, said, "I am the first to annul my claims in interest to Abbas ibn Abdul-Muttalib, may God be pleased with him."

Two systems of trade functioned in pre-Islamic Arabia. The first was called mudareba. It is a trade in which a man gives goods to a merchant, and the earnings are divided on the goods sold. The second system was interest: a person gives money to a trader for business purposes and demands a fixed amount of interest from him.

When the passages prohibiting interest were published, Muslims renounced all interest claims, regardless of whether it was al-istilah (interest on loans for basic necessities) or some other type of interest. Do you think that Abbas ibn Abdul-Muttalib, God was pleased with him, was like the Jews, who were greengrocers at that time? Not. He gave loans only to merchants and demanded a fixed amount of interest on them. After publishing the passages on interest, he waived all interest. Other Muslims did the same.

Declaration of war by God
If you do not, then let you know - war from God and His Messenger! And if you repent, you will be left with the principal of your possessions, you will not harm anyone, nor will you be damaged. (Qur'an, chapter of Al-Baqara, paragraphs 279)

Apart from interest, the Almighty God forbids other vices in the Qur'an, such as alcohol, gambling, divination and the like. However, the only sin for which God declares war is interest. Who dare to challenge God and His Messenger !? If you are involved in the interest business, you have already challenged them!

In the following, the Exalted God says:
And if he is in trouble, then wait until he has; and it is even better for you, you know, to pay the debt. (Qur'an, chapter of Al-Baqara, paragraph 280)

Apart from the Qur'an, interest is also forbidden in the hadiths (narrations) of the Messenger of God, peace be upon him. Al-Bukhaari records from Aisha, God was pleased with her, that the Prophet, peace be upon him, after the last passages of the chapter of Al-Baqarah were published, went to the mosque and forbade people to trade in alcohol.

Ibn Abbas, may God be pleased with him, states:
"The last published passages are those on the prohibition of interest." These are excerpts from the chapter of Al-Baqarah, 275-281. Shortly after the publication of these passages, the Prophet, peace be upon him, moved to the Otherworld. As a result, the comrades did not have enough time to get acquainted with the details of the sharia implications of the interest ban. Omar, God be pleased with him, said that he would have liked the Prophet, peace be upon him, to explain in more detail everything related to the three things: interest, caliphate and kelala.

However, by analyzing all the passages on interest and authentic hadiths that speak of it, we come to enough information. According to one division, there are two types of interest: fish en-nesia, ie. interest on the loan for merchandise and fish el-fedail, i.e. exchange of one type of higher quality goods for a larger quantity of the same type of goods. No matter how many types of interest there were, they were all banned.
Imam Muslim also records hadiths that forbid interest, in volume 3, chapter number 623, hadiths 3,845-3,849.

Objectives of the Islamic economic order
Why does the Holy Qur'an promote an interest-free economy? There are four basic goals of the Islamic economic order:
1) economic stability within Islamic principles;
2) universal brotherhood and justice;
3) equal distribution of goods;
4) individual freedom in the context of social welfare.

Economic stability within Islamic principles
The Holy Qur'an says:
Eat and drink the gifts of God, and do no evil on earth by making a mess! (Qur'an, chapter of Al-Baqara, paragraph 60)

O people, eat from what is on Earth, but only what is allowed and what is pleasant, and do not follow in the footsteps of the devil, because he is your obvious enemy! (Qur'an, chapter of Al-Baqara, paragraph 168)

And when the prayer is done, then scatter on the earth and seek God's grace and remember God a lot, in order to achieve what you want. (Qur'an, Chapter Friday, Paragraph 10)

The Qur’an encourages people to enjoy God’s blessings, in all the beautiful things He has allowed us. Al-Bayhaqi narrates a hadith: "He who earns honestly, for the needs of his family and in order to avoid begging, and who is caring for his neighbor, will meet God with a face as bright as the full moon."

Islam dep raja from begging. The Prophet, peace be upon him, said, "The upper hand is better than the lower hand." (Hadith recorded by Al-Bukhaari)

Also, in the hadith recorded by Ibn Majah, the Prophet, peace be upon him, says: "The best income that a person can make is from his own work."

Thus, Islam encourages people to enjoy God's blessings, to earn their own work and to refrain from begging.

Universal Brotherhood and Justice
The Almighty God says in the Qur'an:
O people, We create you from one man and one woman and divide you into nations and tribes so that you may know each other. The most eminent of God is the one who fears him the most, God, indeed, knows everything and nothing is hidden from Him. (Qur'an, Rooms, Chapter 13)

God does not single out people by gender, tribe, skin color, origin and wealth, but by piety. During a farewell pilgrimage, the Prophet, peace be upon him, said: "An Arab is no better than a non-Arab, nor is a non-Arab better than an Arab, Except for piety."

The Holy Qur'an says of justice:
O believers, always be righteous, witness to God, even to your own detriment or to the detriment of your parents and relatives, whether He is rich or poor, so it is God's will to take care of them! So do not follow passions - so as not to be unjust. And if you testify falsely or avoid witnessing - well, God really knows what you are doing. (Qur'an, chapter of An-Nisa, paragraph 135)

For the sake of justice and truth, if necessary, we must sacrifice our own interests and the interests of our closest, rich and poor.

Equal distribution of goods
Islam opposes the philosophy of accumulating wealth by a small number of people. The gap between rich and poor must be reduced. Otherwise, they will be constant enemies of each other. To this end, Islam has developed a system of zakat / alms. All those who have wealth that exceeds the nisab limit must give 2.5% of their wealth to the poor.

The Holy Qur'an specified all categories of zakat users:
Zakat belongs only to the poor and needy, and those who gather it, and those whose hearts need to be won, and for redemption from slavery, and over-indebted, and for purposes in God's way, and the traveler. God has ordained so! And God knows everything and is wise. (Qur'an, chapter Repentance, paragraph 60)

The category "in God's way" can be divided into several types: those who make a call to the faith (missionaries), those who fight in the name of God on the battlefield, those who study Islamic sciences, and even those Muslims who, in the name of God, study world science.

Paragraph 7 of the Exile chapter states the reason for giving zakat and the precise determination of the categories of its beneficiaries:
... so that it does not pass from the hands of your rich.
Zakat is prescribed to prevent the circulation of money only among the rich. If everyone who is obligated gave zakat, there would be no hungry people in the world. Unfortunately, even Muslims do not give zakat as they should, and some do not give at all. If all wealthy Muslims set aside zakat for the poor, there would be no more Muslims below the poverty line. In addition, Islam orders that the unemployed be found jobs and that their earnings be paid fairly.

With regard to the fair distribution of property, Islam orders the distribution of inheritance to a wide circle of relatives of the deceased, as stated in chapters An-Nisa, paragraphs 11-12 and 176. Inheritance must not belong to one or two persons, as is the practice today.

Individual freedom in the context of social welfare
According to Islamic teaching, every human being is born free. No one, not even the state, can deny him or restrict his freedom. Every human being is free, until he does something that loses that right, that is. until it threatens the freedom of others. According to Islam, the general interest is above the individual. Also, one must not risk entering into a large loss, in order to avoid a smaller one, just as a large profit must not be sacrificed for a small profit.

Vicious circle
The economy with interest brings a large number of evils. That is why it is forbidden by the Qur'an. By taking loans from a bank, in order to start a business, we have to count on the following: in addition to the amount of profit, we must add the amount of interest we have to pay to the bank on the amount of debt to the price of the product we sell.

Thus, due to the interest, the price of the product increases at the beginning. If the price of a product rises, market demand falls. When demand falls, the volume of production decreases. Reduced production leads to a reduction in the required workforce, which ultimately leads to an increase in unemployment - all due to interest rates.

Interest leads to great social injustices. A person who takes an interest-bearing loan from a bank must repay a fixed amount of interest, regardless of whether he made a profit or a loss, even if he loses his house and family in an accident. That is a great injustice.

A job without morals
There are no moral principles in the interest business. For example, a businessman who wants to open an alcoholic beverage cellar will find it easier to get a favorable loan from a bank than a man who wants to build a school. Why? Because the bank is only interested in its profit, and the liquor store has a better chance of making a profit and repaying the loan and interest on time. The bank doesn't care if you open a casino, cafe or school. During the 1980s, banks supported the opening of thousands of casinos around the world because they saw them as an opportunity for easy profit.

From time to time, banks emphasize their participation in some useful social projects. It is just a mask, because the main part of their business is not based on moral principles, but on the highest possible amount of interest.

Concentration of power
Modern banks encourage people to leave money with them. Millions of people keep all their savings in banks. This means that all the money and all the power is in the hands of a small number of people - in the hands of the bankers. Who controls money, controls the world. Since most banks belong to Jews, it is not difficult to conclude in whose hands is all the financial power and who controls the events in the world. That is the "merit" of the modern banking system.

Islamic banking
On the other hand, Islamic banking is useful for a number of reasons.

First,
there is no interest. Business is based on profits and losses. In this way, businessmen can only count on the cost of the product, without charging interest rates. This leads to a reduction in product prices. By reducing the price of the product, the demand increases. Increased demand increases production, which requires more labor. The Islamic system of financing encourages employment and fair earnings.

Social justice
In the event of a business loss, the Islamic Bank shares the damage with its client. In the event of a natural disaster and major accident, the client will not suffer additional losses due to delayed payment of the installment and increased interest rates. At banks in the West, if you are late with the payment of the installment, in addition to the basic interest, you must also pay a penalty for delay. With Islamic banks, you do not suffer any additional levies with justified delays.

Moral work
In an Islamic bank, you cannot take out a loan to engage in any business that is not in accordance with the religious law, that is. which is in any way harmful to society. The bank will not give you a loan for such a job, even if you give it 100% of your profit. Thus, in Islamic business, moral values are taken into account and projects that are socially useful are encouraged, such as the construction of schools and hospitals.

Money circulation
Islamic banking does not encourage you to look at your money as a deity. On the contrary, it encourages you to invest in business, because the Islamic Bank acts as your business partner.

Since in Islamic banking, profit and loss are equally shared between a businessman, a banker and a client, all power is not concentrated in the hands of a few individuals, but is equally distributed among these entities.

The great Greek philosopher Aristotle gave a wonderful definition of interest: "It is an unnatural earnings produced by money, instead of labor."

Point of divergence
Let us now compare the Islamic with the modern theory of profit. There are four basic factors of production: land, labor, capital, and organization. According to modern theory, you pay rent for the land. The same is true in Islamic theory. You pay per diem for the workforce, according to both modern and Islamic theory. For capital, according to modern theory, you pay interest. According to Islamic theory, you share the gains and the loss.

On the question of organization, both modern and Islamic theory agree: the organization is in charge of accepting the consequences of profit and loss. Thus, the basic difference between these two theories arises with the third factor of production - capital. In addition, Islamic theory does not distinguish between capital and organization.

Because the money the bank works with does not belong to it, but to the clients. Clients are thus part of the organization. The money that the client borrows from the bank and the money that he pledges to keep in the bank are part of the organization. Therefore, capital and organization do not differ in Islamic theory, but are part of a whole. Their common basis is the division of profit and loss.

Principles of Islamic Banking
Islamic banking has five principles.
1. Tawhid - belief in God's oneness.
2. The belief that only God provides.
3. Caliphate - man is God's vicegerent on Earth.
4. Tezkijjeh - purification, purity.
5. Responsibility. We will be held accountable for our deeds on Judgment Day.

When you start a business, you need to have two important things. One is capital, and the other is the idea of investing that capital. The best examples of cooperation between these two components of business are the Prophet Muhammad, peace be upon him, and his wife Khadija, may God be pleased with her.

 She had a large amount of capital at her disposal, but she was not able to trade and do business. The Prophet, peace be upon him, did not have much money, but he had great ideas. They have united what they possess, that is. money and ideas so they started trading. They shared all the earnings fairly.

What the client got in an Islamic bank
By opening an account and pledging money in an Islamic bank, the client gets a money storage service. The bank operates with that money, with the client's permission. In case of business loss, the client does not suffer any damage. In the case of positive business of the bank with that money, the client does not receive any percentage.

He only got security in keeping money in the Islamic bank. The client of the Islamic Bank is most interested he has the security of his money, not the profit from depositing money in the bank. The religious law allows giving money to someone in trust, with the possibility that you can return it whenever you want. By pledging money, you get a savings book from an Islamic bank, with which you have an insight into the balance on the account and the possibility of taking the required amount of money from the account.

Another, even more interesting dimension of keeping money in an Islamic bank is the possibility of participating in the profit that the bank achieves. By religion, there is no obstacle for a bank to transfer part of the profits to your account. However, you must not ask for a fixed, accurate amount of money. You accept what the bank gives you. You can use that profit as you wish, because it is your money. In any case, the basic interest is the security of your money.

A special way of keeping money in an Islamic bank is pledging money for the purpose of investing. In other, modern banks, this category of custody does not differ from the first. However, in the Islamic economic system there is mudareba, i.e. profit and loss sharing. Let me give you an example that works in Islamic banking in Malaysia.

Malaysia has the most developed Islamic banking system. There are Islamic banks in other countries as well, but their principles are partly mixed with Western ones. For now, the only banking system that is 100% Islamic is the one in Malaysia. In the mudareba system, you keep money in the bank for a fixed period of time: three, six, nine, twelve months and so on.

The money you deposit in an Islamic bank is, in this case, given to a businessman. Such a client is called sahibu-mal (money owner) and the bank is sahibu-amel (business owner). The entire profit generated by the bank is divided proportionally, in accordance with the previous agreement. At Islamic banks in Malaysia, the ratio is 7: 3. 70% of the profit goes to the investor / client, and 30% is kept by the bank. If, for example, you pledge 1,000 rupees a year and the bank makes a profit of 100 rupees, you get 70 and the bank 30. Of course, the principal remains at 1,000 rupees.

The higher the profit, the more money the client gets into his account. If the bank does not make any profit, only the principal remains. Neither the bank nor the client gets anything. However, in the case of negative business, the costs of loss are borne exclusively by the client / investor. If, for example, a negative business of Rs 100 is realized in one year, your account will be reduced by that amount, in the name of operating losses. Of course, the bank also suffers a loss: due to the costs of administration, paperwork, lease of space, etc. This is how Islamic banking works.

Project financing
A businessman is allowed to come to an Islamic bank, explain his business project and ask the bank for a loan of 50,000 rupees for a period of six months. By the end of that period, the businessman expects a profit of 50,000 rupees. After the bank analyzes his business proposal, profitability and possible risks, it will agree with the businessman on the terms of the loan. For example, it can be agreed that 60% of the profits are taken by a bank and 40% by a businessman. When such a contract is concluded, it cannot be denied or changed. While in modern banks the interest rate is being negotiated, in the Islamic bank the profit rate is being negotiated.

In the event that the said businessman is personally engaged in the execution of his business project, he has the right to include his salary in the cost of the loan. That salary remains his, while the rest of the money is calculated as an administrative expense and the cost of procuring funds for work.

After the expiration of the agreed loan term, and after deducting the amount of his salary from 50,000 rupees, the businessman returns the rest of the base. In addition, the bank takes the agreed 60% of profits. Thus, a businessman receives 40% of the profit and salary for his work during the realization of a business project. The higher the profit the businessman makes, the higher the profit for the bank and for him, and vice versa.

The bank has no right to interfere in business decisions
In case of negative business results, all the burden is borne by the Islamic Bank. Of course, the businessman is also at a loss due to the time spent and the engagement of the workers he hired on his project. The main characteristic of the system's wisdom is that the bank has no right to interfere in the client's business policy.

He can ask for monthly reports on how business is progressing, but he must not interfere in the decisions of businessmen. For example, if a businessman decides to build a ten-story building, the bank has no right to suggest that he build a twelve-story building, or use cheaper materials, in order to make more profit.

Musharika - partnership
Only in this system of business, the Islamic bank has the right to interfere in the business decisions of businessmen. It can suggest to the businessman what kind of goods to produce, how many floors he will build, etc. In the partnership system, the businessman invests a part of his own capital, and the rest is invested by the bank. Depending on the percentage of capital of both parties, the profit is divided accordingly. For example, if a businessman and a bank invest 50% of their capital in the same project, they both take 50% of the profit. However, it is not the same with the costs of negative business. The bank has bigger consequences a. Basically, this is 60% of the cost, while the businessman bears 40% of the loss.

Muraheba - system
In the modern banking system, if you want to trade, for example, machines from Japan, you have to open an account and procure goods through the bank. The bank charges a fixed amount of interest, regardless of profit or loss. It is different in the Islamic banking system. If you procure goods for trade through an Islamic bank, on favorable terms, the profit and loss are shared in accordance with the agreement.

The transaction can be done entirely with your money, but also with bank money if you do not have it. In that case, you return the principal and the agreed amount of profit to the bank. The profit is divided depending on how much money each party has invested in the purchase of merchandise. Thus, the murahaba system can be combined with the mudareba and the musharika system.

Al-Ijara - Leasing
In modern terminology, al-ijara can be translated as leasing or deferred payment. If you need a machine or a car, but you can't buy it in cash, contact an Islamic bank for help. The bank is ready to rent a car for you during the period covered by the manufacturer's warranty. For example, the warranty period for a car is five years. The Islamic Bank is ready to participate in the lease of that car, with the agreed amount of profit. If renting a car will cost $ 3,000, the bank can ask for another $ 500 in profits, so it will cost the client a total of $ 3,000. When divided into 60 months (five years), the monthly installment will be $ 50. Thus, both the client and the bank satisfy their interests.

If you make an agreement for the Islamic Bank to allow you to repay the installments for three years, and then pay the rest in cash, the car becomes yours. If you don't, after three years the car stays with the bank. Not so with modern banks. The modern bank is secured by a mortgage and an interest rate, and it is not interested in a car.

Cardi-hasen
This is the last type of business system in an Islamic bank. Card is a loan, and hasan is beautiful. This is a loan given to a poor person, without any interest or profit. In any modern banking system, there is nothing like card hassen. Today's banks do not give interest-free loans to the poor.

The Islamic Bank of Malaysia allocates 10% of its total profit to the costs of cardi-hasan, a loan to poor people who want to start a business. The loan can be given for an agreed period, for example, two years. After that period, the client returns only the principal of the money to the bank, and from the profit he has made, he gives the bank as much as he wants. He is not obliged to give her anything outside the principal. That is why this type of business of an Islamic bank is called a cardi-hasan / nice loan.

It is mentioned in the Holy Qur'an:
Who is the one who will give a loan to God, so that He will return it to him many times over? And God denies and gives abundantly, and to Him you will return. (Qur'an, chapter of Al-Baqara, paragraph 245)

The best business
The Exalted God says:
Those who spend their possessions in God's way are like the one who sows the grain from which seven ears sprout, and in each ear a hundred grains. And God will give more to whomever He wills; God is immensely good and knows everything. (Qur'an, chapter of Al-Baqara, paragraph 261)

In modern business terminology, God promises a profit of 70,000%. What job promises you so much profit today? The Exalted God not only promises this, but says: ... to whom He wills, He will give even more. To make so much profit, you must be God-fearing, sincere, just, and always aware that God is watching over you. The best business you can invest in is a business with the Exalted God. Recommendations for such a job are the features we mentioned.

Our last request is:
Thank God, Lord of all the worlds.
QUESTIONS AND ANSWERS
Positive zero
Question:
If an Islamic bank lends me money for two years for a job, and after two years I do not make any profit or loss, does the bank have the right to take the money lent to me?

Answer:
It depends on the agreed conditions. If the contract provides for a fixed period of two years, the bank has the right to take the money, regardless of whether a profit was made or a loss was suffered. However, if the bank feels that you could achieve a positive result with that money in the next six months or a year, it can extend the loan repayment period as long as necessary, depending on the nature of the business you are doing. In the mudareba system, if a negative business occurs, the loss is borne by the Islamic bank, not the businessman.

Housing loans
Question:
What is the difference between housing loans offered by modern and Islamic banks? Do Islamic banks offer loans to those who would like to provide a roof over their heads?

Answer:
When you take out a loan with modern banks, you must participate in the purchase in a certain percentage, for example 30 or 50%, in accordance with the rules of the bank. The rest is paid by the bank. Interest is charged on the total amount that the bank pays, and then the total amount is divided by the number of months during which you pay off the loan. The basis of such a system is interest. So, you return the base plus interest to the bank. Therefore, this kind of business is forbidden in Islam. 

In Islam banking, things are different. There are several ways to buy an apartment. First of all, you have to participate in the purchase in a certain percentage, for example 25%. The other 75% is paid by the Islamic Bank. That 75% of the total price of the apartment is divided into monthly installments, which you have to pay. The bank has the right to demand a certain fee for the loan in the form of profit. This amount is included in the monthly installments you have to pay. This is not about interest, but about profit.

Al-Amin Bank in Bahrain has an interesting system of housing loans. Based on the mudareba system, you deposit your money in this bank. She invests that money, and you get a profit. The entire amount of profit, together with the principal, is invested in the apartment. After three years, if the total amount of the apartment has not been paid, you agree on the payment of the rest through monthly installments. This, again, is based on profit, not interest. Anything related to interest is prohibited.

Forbidden for charity
Question:
What should we do if we have money from interest? Some say it should be invested in public bathrooms.

Answer:
First of all, you must not be involved in the interest business at all. If you avoid interest, there is no question of its use. You must not keep money in interest-bearing banks.

Suppose you just found out that interest is forbidden, you repented and decided to get rid of that money. Repentance has three conditions: to understand that a certain act is forbidden, to immediately stop doing that act, and to firmly decide not to do it again. If you realize that interest is forbidden, what will you do with that money? Some say that you need to give that money to build public baths. I really don't know where they got that from.

 Interest is prohibited and all interest money is prohibited. Is it logical that someone who deals in drugs gives all the profits to poor people, hoping to do good? No, because the drug business itself is prohibited. Its production, sale and consumption, and thus all earnings from its sale, are prohibited. On the same basis, you cannot keep money in a modern bank and allocate the amount of interest for public good projects, hoping for a reward.

The damage caused by drugs and interest is incomparably greater than the alleged benefits that someone wants to achieve.

So, don't keep money in interest-bearing banks. If you did it out of ignorance and then repented, you will not be accountable to God. But you must get rid of the interest immediately.

Taking and giving interest are the same
Question:
You have proved, based on the Qur'an and hadith, that taking interest is forbidden. Is it also forbidden to give interest?

Answer:
Just like you asked me: If it is forbidden to drink alcohol, is it forbidden to sell it? Of course it is. In the hadith recorded by Ahmed, the Messenger of God, peace be upon him, he cursed ten categories of people who deal with alcohol. When it is forbidden to use something according to the Qur'an, then putting it into circulation is also forbidden. It's the same with interest.

If you followed me during the lecture, I mentioned a section that forbids any kind of interest-bearing business:
Those who are interested in interest will rise as the one who was maddened by the touch of the devil will rise, because they said: "Interest is the same as trade." And God allowed trade and forbade interest. (Qur'an, chapter of Al-Baqara, paragraph 275)

There is no mention here of giving or taking interest, but generally of any interest transaction. The hadith narrated by al-Bukhaari states that 'Abdullah ibn Mas'ud, may Allah be pleased with him, said that the Messenger of God, peace be upon him, cursed both the one who takes and the one who gives him interest. Immediately in the next hadith transmitted by Jabir, God was pleased with him, it is stated that the Messenger of God, peace be upon him, cursed the one who takes interest, the one who gives interest, the one who records it and the witnesses in such work.

Current accounts
Question:
There are current accounts in modern banks, where the amount of money is not increased by interest, but remains fixed. What is the difference between them and current accounts in Islamic banking?

Answer:
True, modern banks have a system of keeping money, without increasing it by the amount of interest, similarly exists in Islamic banking. However, I will list some advantages of opening current accounts in an Islamic bank.

First, the money you keep in the current account of modern banks can be used to invest in socially harmful projects, such as casinos, alcoholic beverage factories and the like. In this way, you help the banks to corrupt society. If you keep money in a current account in an Islamic bank, you can be sure that not a single dinar will be invested in socially harmful projects. All Islamic Bank projects are regulated by religious law.

That is what Muslims think. As for non-Muslims, they think, "I don't care what my money is invested in. I just want it to be safe." What is the difference for him in keeping money in a modern or Islamic bank? The answer lies in the legal regulations related to the bankruptcy of the bank. If a modern bank goes bankrupt, the needs of the bank and project holders are met first from commodity reserves, and only later from its clients. While meeting their needs in there is mostly no money left for clients.

Therefore, the chances are high that you will never get your money in the event of the collapse of a modern bank. However, according to the regulations of the religious law, the Islamic bank must first return the money to the clients, and use the rest for its own needs. So, even in the event of the bankruptcy of an Islamic bank, your money is safe.

Are "commission" and interest the same?
Question:
Isn't the replacement of the thesis when an Islamic bank takes a "commission" and a profit, instead of the interest taken by a non-Islamic bank, all this a trick to attract Muslim clients?

Answer:
Depending on the project, a modern bank charges you a fixed interest rate of 14-20%. In the Islamic Bank, 8-14% is attributed to administration costs. Are these two items, interest and commission, the same? They are not. If you followed the lecture, you heard that Islamic banking is based on the principles of profit and loss sharing, not interest. The non-Islamic bank is not interested in that - it is asking for a fixed amount of interest.

Administrative costs of sharing profits and losses in an Islamic bank are calculated at the end of the fiscal year. So it all depends on the business. Collection of administrative costs at the end of the year is not fixed. In addition, administrative costs are reduced in proportion to the number of clients. Given that the salary of Islamic Bank staff is paid from administrative costs, the higher the number of clients, the costs of clients will be reduced by up to 9%. Our task is to persuade as many Muslims as possible to invest money in Islamic banks, in order to reduce administrative costs and increase the amount of profit that clients receive from the Musharik system.

A job at a non-Islamic bank
Question:
Can we work in a modern / non-Islamic bank?

Answer:
Any business related to interest is prohibited, regardless of whether you take it, give it or post it. In the lecture, I quoted a hadith recorded by Muslim under number 3881 in which the Messenger of God, peace be upon him, curses those who take, give and record interest, as well as witnesses of such agreements. By working in a non-Islamic bank, you become witnesses and accountants of these agreements. Therefore, it is forbidden to work in a non-Islamic bank.

If you already work in a non-Islamic bank and have another option, a chance to find another job, leave it immediately.

 However, someone who receives a significantly higher salary in a non-Islamic bank than he would receive elsewhere, justifies himself by saying that he has no choice. Of course there are choices! A lower salary is not an excuse. Because of the higher salary, they stay to work in a non-Islamic bank and call for war from God.

As soon as you can, find another job, even if that other job is less paid. God knows what is good, and you do not know. Maybe later you will get an even better paid job than the first one. If you do not receive a better salary in this world, in the Future you will surely be rewarded and you will not be thrown into the Fire for interest, and you will be rewarded up to 700 times more for everything you spent in God's way.

However, if you work in a non-Islamic bank with the intention of learning the system of functioning of banking in the modern economy and later opening an Islamic bank, we hope in God's grace that such a job is not forbidden to you. But if your intention is wrong and you only work for a salary, know that you are doing a forbidden job.

Bribery and interest
Question:
We have various bureaucratic circles, which we have to bribe in order for our business projects to pass. Is that amount of bribery calculated as interest on the amount we borrowed from the Islamic Bank?

Answer:
If I understood the question, it is about counting and posting that money used for bribery, that is. if I make a profit of $ 2,000 but give $ 50 as a bribe, the final profit balance is $ 1,950. First of all, you must know that bribery is strictly forbidden in Islam, regardless of whether you do it with allowed or forbidden money.

The Exalted God says:
Do not eat each other's property in an unfair way and do not sue the judges in order to eat part of someone else's property in a wrong way and knowingly! (Qur'an, chapter of Al-Baqara, paragraph 188)

Bribery is a way of appropriating someone else's property, which is forbidden in Islam. Not only is bribery forbidden, but it is also forbidden to give and mediate in it, according to a hadith narrated by Ahmad ibn Hanbal.

Given the attitude of Islam towards myth, your question is superfluous. An Islamic banker will never knowingly give you money to bribe someone. Even if you deceive a banker, you cannot deceive God.

Life insurance
Question:
Does Islam allow life or any other insurance? If not, what is the alternative?

Answer:
The insurance system is very old. People from a certain community invest money in the same fund, which finances certain needs of some members of society. That is a very good concept.

The scholar El-Azhar from Egypt issued a fatwa, which allows car insurance, but prohibits the modern life insurance system. According to the modern system, you set aside a certain amount of money for the insurance fund monthly or annually. In case something bad happens to you, and you survive, you get an amount that can undoubtedly be characterized as interest. Everything you include interest, regardless of the type of insurance involved, is prohibited.

Our insurance companies operate within the interest rate system. If after a certain period of time you do not have any need for insurance, you can take all the invested amount, plus a certain percentage of profit. Where do insurance companies get their profits from? It comes from their investment in interest-bearing businesses. If there are companies that do not function in such a way, but on the basis of a fair distribution of funds, then insurance is allowed with them.

If you can set up an Islamic bank, can you set up an insurance company based on the principles of Islamic law? Of course you can. The Mufti (the one who issues legal opinions) from Pakistan gave a nice opinion on that, where he says that Muslims even have to have insurance companies based on the principles of Islamic religion. This means that we need to invest in such insurance companies, which would invest our money in some business according to the mudareba system. One part of the profit necessarily goes to a fund called a waqf (endowment), from which medical and other needs that are subject to insurance are financed, and the rest is allocated as a premium to the insured. This leaves the principal of your invested money intact.

In modern insurance companies, if after a few months you stop paying monthly insurance installments, the previously given money no longer belongs to you, it is not yours. In the Islamic system, everything you invest is yours. However, since insurance companies may have problems with refunds, the contract initially states that you can only refund after a fixed period of four or five years, which is how long the insurance cycle should normally be.

The principles and conditions of interaction between the Islamic insurance company and its clients are very broad and allow many ways to define the contract.

Source:
https://islamhouse.com/