MoneyMatters – All About Riba QA 3
Channel: Mansoor Danish
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salaam aleikum wa rahmatullah wa barakato. The question wants to know, how can we implement interest free transaction model to run the business? Well, first and foremost, and the question is asking from India, as I understand that in India, we have very limited options and alternatives, we need to go back to the basic model, which was used by the likes of Abdullah man if they Oh for the Allahu anhu, and the great companions, who did very well in their profession in the business. And that is, you start from the basics, and you grow gradually, instead of trying to you see the system that we have today is where business houses want to acquire more resources, using loan and then completing
them into a finished product and selling it in the market. But rather, the most simple way of avoiding interest is you.
Use whatever means you have and buy those resources which you can afford, use it for finished products, sell it in the market, make some profits, put the profit back into the business, buy more and sell more, and then you make more money, and then you buy even more, and you sell even more. This is how you need to grow. The problem with us is when we stop doing business, our goals and objectives in our businesses to become rich, it is to become the biggest business house it is to afford all the best materialistic things which are in and around us. Our goal and objective is not to achieve all of this without compromising on Sharia principles. We don't talk along those lines,
we say very simply how am I supposed to do business then? So we have already reduced the Sharia into nothing so Tana Lama Allah subhanho wa Taala forgive us for this. So we need to therefore remind ourselves that the business can be conducted, it can be done very well within the guidelines provided we are able to grow gradually and pray to Allah to give Baraka and more Baraka and even more Baraka and that's how you grow your business. And Allah knows best is there really something called our robot free mortgage or is this just a terminology different but still rubber? Look,
I cannot make a general opinion over here again, it has to be looked into from banks to banks, okay. I know that there are certain genuine institutions which are strictly trying to adhere to the Sharia guidelines and come up with verba free alternatives. So there are genuine institutions which are working on it. At the same time, there are certain institutions which is allowing backdoor Riba some of them intentionally some of them because they realize there is no other way out. So it's very difficult for us to make a general opinion All right, I can only sit tell you this, that if you know of any bank with whom you wish to deal with, send the details, etc. And if you wish, I can suggest
to you what should be done.
What about people who work in such places? I think the question I wants to refer to people who are working in Riba based institutions, how should we deal with them? If they are relatives? Should you accept the dinner invitation? And can you accept the gifts etc. I don't see why you should not be accepting the gifts from them. My personal opinion on this is
if you close the dose to them, this is only going to make them more rebellious in nature. No one likes to see people being rebellious and arrogant and refusing the invitation. If you consider that what they are doing is wrong, you must apply or you must approach and do our to them using hikma.
You can't apply the same strokes for all the folks.
for different people, there has to be different approach. In some cases, if you recall, the prophet alayhi salatu was Salam and he used to deal with people he used to use different approaches. When it was the man who was wearing a gold ring. The Prophet alayhi salaatu wa Salaam took the ring out and he threw it.
That was a very active way of telling the person and aggressive way of telling the person that this is not acceptable.
And yet again when the Bedouin enters the masjid, and he urinate and defecate on the wall
and defecates inside the masjid the Prophet alayhi salaatu wa sallam tells the Sahaba not to go and stop him, let him finish what he's doing. And then the Prophet alayhi salatu was Salam explained to him about the sanctity of the place. That was the Tao of the Prophet alayhi salaatu wa Salaam to the Bedouin. And then when he meets Khalid bin Walid or the yellow
Whoa. He writes a letter because Khalid is not there. This is posted the whole day we are treaty. Khalid is not there in Makkah. He left Makkah saying that if Mohammed comes to Makkah and if I am in Makkah, then Mohammed will not go back alive sallallahu alayhi wa sallam.
So he wrote a letter, and he left it with his brother Walid, while he did never lead. And what did the letter say? The letter said that a man as intelligent as Khalid, will he still not understand that there is no deity worthy of worship, but Allah and I am the messenger of Allah. Look at the data of the Prophet alayhi salaatu wa Salaam, with the Sahabi, whom he knew how to deal with he was extremely aggressive and very clear.
Then to the Bedouin, the prophet alayhi salaatu wa Salaam sits down and explains to him with a man like Khalid who's an intelligent man the prophet SAW Selim calls out to his intelligence and he says a man as intelligent as Khalid he's touching upon the on the most sensitive part of Harlan, his intelligence, look, you have to apply different approach. If you know people are dealing in rubber. And if you come out and tell them listen, what you are earning is haram, drinking water in your place is haram, accepting your invitation is haram. What are the people going to do? How will the people react?
The people are going to take it in an offensive manner. So what you need to therefore do is you need to approach this whole issue. With hikma, you can't refuse the invitation outrightly you can't refuse the gifts etc. Except it gives reach out to them in these invitation and call them over to your place as well and have some discussion have healthy discussion on the subject. Don't lose hope and make dua to Allah and Allah knows best. There's a question if I can buy a car or a house or anything else through the lease, look, you can buy a car or a house or anything else provided, whichever product that is being used to finance your need, it complies to the Sharia guidelines.
Okay, you have the murabaha model of financing, you have the ijarah model of financing. So whichever model of financing is being used, the terms and conditions and the functioning of the product must comply to the Sharia guidelines, both in letter and spirit. And Allah knows best. Okay, there's another question is a markup charged in any installment plan halaal. Without rubber, they say it is inflation charges and not proper look.
In any property plan,
if the institution
anything over the principal,
as a markup, because they are the owners of the property, and they are within their rights to sell the property at whatever price they want, whether they want to sell it at 1 million, or they want to sell it at 1 million plus 10% or 20%. They are the owners of the property, they can make it binding upon the buyer to buy it at that rate. It's open for negotiation, provided the institution is got ownership of the property. Okay, if they don't own the property, and they say that our loan is without Weber, we are giving you 100% of what you want. But we are only charging you for the inflation costs. This is nothing but Riba. If the institution does not own the item, or the product,
or the property of the car, and they are selling it back. He will they can't sell it back to you. What they're doing is they're financing your monetary requirement. And they say that, listen, we're not going to charge you any interest. We're only recovering the cost of inflation, what is this? inflation is a price, persistent increase in the levels of the price over a period of time. So it is an increase in price levels due to time and you are charging the people on the basis of that time, which means what it's a rebound nasiha
Okay. So the time value of the money has to be understood in the right perspective. Okay, time value of money does have an Islamic perspective to it. But over here as per the question, what I can understand is, if the markup is based on an installment plan and will there is lack of clarity in the question, but the question says it is without Riba which means there is no interest. So it seems like a gratuitous loan. But in a gratuitous loan, they are charging an additional amount as inflation costs. This is not allowed. If it is in case of property plans. If the ownership is not there. They cannot charge any additional amount.
If you do, it falls on the robot. So it's again a very technical thing. I'm making it clear once again. It comes down eventually
For ownership, let us was stablish, whether the institution has the right to sell you the property, do they own the property, if they own it, and they sell it to you at a price higher than the price at which they bought, they are within their rights to do it.
But if they don't own the property, they only finance your monetary requirement. And in addition for that, they just charge an additional inflation cost not rubber. It's also rubber. Okay. You can call it by any other name you want.
There's a question who wants to know about investing in two mutual funds of Islamic banking, which is Sharia compliant, and they want to get monthly income and the person is a widow. Look, if you're a widow, I understand there is no source of income and this is a very important set of money that you have. Having said that, if you put this money into mutual funds, mutual funds are subject to market risks, they fluctuate. Even if it is an Islamic banking Sharia compliant, it is bound to fluctuate and therefore, you will not be certain that every month it will give you a certain percentage of return. Further, mutual funds on an average can give you 12 to 15% return in a very
good market in a decent pocket on an average 10%. That's pretty good for a mutual fund. But that 10% return is only possible if you stay invested for two to three years. Further, if you are going to look at regular income, it means that you will be looking at withdrawing the money on an ongoing basis.
If that is going to be the case, you have to understand that in the short run the mutual funds market may fluctuate. In the long run, everything looks evened out, I started investing today, three years from now the prices have changed. But within this three years, if I start analyzing the performance, I will keep seeing the ups and downs, which has led to the share price reach its position today. So in the short run, you will see ups and downs.
And therefore it is never safe to
to invest in mutual funds hoping to get a monthly income. Mutual funds are always good for long term savings. That's what I believe in. for regular income I would recommend to you, you do some kind of business if you can, if you are a person who has age on your hand, and you feel that you can utilize that money to start some small venture, use that money, buy something, sell it back to someone else at a higher price. Maybe you have certain skills, maybe you're good with stitching, maybe you're good with training people you're good with workshops, could be anything, identify what your skills are, and utilize your skill, sell your skills to earn money, use some of that money to invest into
your business as a capital.
Okay, that is what you should be doing. I'm putting your trust in Allah subhanho wa Taala. All right. Now, you've also said that many finance and banking people say that that particular fund is not Islamic, etc. See, it's very difficult for me to say about anything about it, you will have to send me details. And we'll have to study that. All right, unless I study I won't be able to come in. But broadly, please don't invest in mutual funds for monthly income, it's not the most intelligent thing to do. question that is Islamic financing the right thing to do they say that there is profit sharing whenever there is a finance, what's the difference? I am not sure if I've understood your
question. Yeah, you need to explain to me
when there is a finance, they can be sharing of profits. So the company will take the ownership of the property and will sell it back to you with a profit. There is no question of profit sharing. Right? The one party gets the profit, there is no sharing of profit. The sharing of profit comes in in case of investments. But you're talking about financing. So there isn't clarity with regards to your question. So whoever is asked this question, if you receive this audio note, and if you're hearing this note, please, you can send me another personal message. And I'll clarify it in Sharla. There's a question regarding guidance residential. This is a company that provides Islamic housing
houses are bought on loans, but a fixed rate like profit is charged. Is this a form of rubber? Again, there was a question which came yesterday about meezan Bank as well. And I clarified and I'm gonna make the same clarification here. If the company which is providing the housing, finances your monetary requirement, and against that monetary requirement, they charge an additional money which could be profit or interest or anything they give it it is rubber. However, if they own the property, which means they buy from the promoter, they buy it from the seller, and then they resell the property to you. This is permissible. And in this case, if they charge an additional profit This
is allowed because the property ownership has shifted from the seller to guidance residential
And as an owner of the property guidance, residential is free to sell the profit property to you at whatever margin they want to sell it at. It's up to you now whether you want to buy or you don't want to buy. Okay, so this is a very important aspect which I'm talking of which is ownership. It's a very important aspects. I'm not saying this is the only aspect there has to be other terms as well. But I'm telling you one of the most basic aspects as a person wants to know if I have a mortgage property perhaps taken on a conventional loan, and after several years, I sell the property and I made profit on it is the profit on this property Haram. No, the profit on the property is not
haram because that is the property belongs to you, you are the owner of the property. And as an owner of the property, you have sold it at a profit, so the profit belongs to you. However, if you had mortgage if you're taking conventional loan, the transaction of paying interest was not halaal it was Haram. You must repent to Allah you must seek forgiveness from Allah and make sure that in the future, you don't find yourself entangled in such kind of rubber. Having said that, to the listeners who are listening to this, please
don't think that you're going to buy a property on loan and then maybe one year down the line do an immediate Toba and continue paying the EMI is and hope that Allah is going to rectify and forgive. It's all about intentions. Remember, the prophet alayhi salaatu wa Salaam said the actions
are based upon intention. Please be very sure in your intention that you will not deal in interest any further. All of those who who are listening to this if you are not in any interest based loan, please make a firm intention of not taking up any property on interest. And Allah knows best as far as the profit is concerned. Once you have the property, you sell it you make money that's your money. That's your profit
and Allah knows best