Mansoor Danish – MoneyMatters – All About Riba QA 4

			Salam Alaikum, warahmatullahi wabarakatuh there's a question who wants to know, what about the 0%
markup to buy a mobile phone, there are companies where which are nowadays offering 0%. Finance,
there are two questions, and I'm going to combine them. There are 0% finance, but they have a
penalty on delayed payments. What is the ruling on that you see, most of these 0% finance scheme are
actually Riba based transactions. What happens is, if you actually go through the loan agreement,
the finance company eventually pays to the mobile company, whatever the price of the product is less
a small amount, if you would have bought it from the mobile company, let me give you an example. So
		

			this becomes clear to you. If you would have bought the mobile directory from the mobile company,
they would have charged you, let's say 50,000 rupees for the mobile.
		

			However, you don't have 50,000 rupees you go to the finance companies, these finance companies
receive special discount from the companies. So the companies tell them that Listen, this guy wants
a mobile, he doesn't have money, are you ready to finance them, the finance company comes to your
aid, and says we'll pay on your behalf. So what they do basically is they ask you to pay the finance
company back 50,000. As EMI and in case you make a delay in payment, there is an interest, we're
going to come to that later.
		

			Between the finance company and the company's selling the mobile what happens is, if you see the
actual loan
		

			statement, which will come in the very first month, you will notice that a small amount is being
shown as interest.
		

			Effectively, you're paying 50,000 only what was the price of the mobile when you came to the mobile
company directly to buy. So effectively, you're paying back 50,000 to the finance company also. But
what has happened is the finance company is probably charging 1000 rupees interest. And they're
effectively paying 48,000 rupees to the mobile company, and the balance 2000 they are showing it as
interest. So what's happened is and the back end, you can make out from this transaction from this
accounting transaction, that effectively the mobile company received 48,000, they have a tie up with
finance companies. Because imagine how many customers are getting financed by these finance
		

			companies, you are just one buyer, you go if you don't have the money you come out, but the finance
companies actually hold on to these customers. So that's why they have a good tie up with these
mobile companies and mobile companies give them some discount. These discounts are now taken out
from you in the form of an interest and interest. Is this allowed? This is not allowed. Because what
the finance company did was it didn't own the mobile. It was doing 50,000 financing for you. If it
was graduate, yes, no problem. But when you see the loan agreement, you figure out that actually,
these guys have only paid to the mobile company 48,500 rupees, the balance 1500 they're showing it
		

			as interest effectively on my bill 50,000 Mobile, I received it at 50,000. No problem. But there is
an interest embedded in it. So they call it 0% finance because effectively it works out as 0% for
you. I hope this is clear to you. They can't be anything called 0%. Finance, okay. When people say
0% it means that there is something involved in it. All right, otherwise, it should be interest
free. Why don't they call it interest refinance? Why do this is 0% Finance? Okay, what they're
trying to tell you is the financing you and effectively it works out a 0% for you.
		

			I hope this is clear to you. And hence this becomes ribeye and you should avoid all of these
schemes. As far as a case or a scenario where you know that everything is perfect. It's interest
free finance, but there is a penalty on delayed payments. This will now come back to the difference
in opinion amongst the scholars, where most of the Saudi scholars and the humbly scholars are of the
view that any contract where you're assigning to pay any delete payment is haram. Whereas people
from the Hanafi jurisprudence are of the opinion that if you are going to be sure that you will make
the payment and the due date and you have enough money to pay off your dues, then it doesn't
		

			tantamount to a haram contract the difference in opinion, but what I have explained to you early on
is far more serious to be considered and that is why you must try and avoid these 0% scheme and
Allah knows best. There was a questioner who wanted to know if the property that I own can be given
to rebab his bank for rent, you're letting it out on tenancy etc. Now this is interesting. The rule
according to most of the humbly scholars
		

			As far as giving any place out to a financial institution or any rubbish institution is concerned is
that it is not allowable. And the ruling is following the simple concept that if you promote that
which is haram, then you are party to that which is haram. So, for example, if you own a plant land
or if you own a building and a bank approaches, and you let that place out, you become a party to
the sin. Remember, we are reminded repeatedly that not only should we stay away from the Shaitaan,
but we should also away stay away from the foot want to shake down the footsteps. So these are the
footsteps which we need to stay away from rubber. This is a door which opens up to Muharram Okay,
		

			from one justification we move to another justification. And that is why, according to the views of
shape been bars, or shakes Alia, Mona Jade and other scholars, this is considered that this is
participation in sin and Mr. Mulleavy and I'll send the they will all have the view that those who
participate in a sin they should also the curses upon them as well. Okay. And remember, Allah says
in the Quran in surah tomada that we must help one another in albear and Aqua, but do not help one
another in sin and transgression. So if they run a bank, and they engage in a robot based
transaction, they're engaging in sin, they're engaging in transgression, they're transgressing the
		

			laws of Allah. So we should not make our platform our property, our wealth which Allah has bestowed
upon us to be used for promotion of that sin and transgression. Now, the view of Imam Abu hanifa in
this regard is he considered it permissible to let out a place for two Riba based institution of
course, in his time, there wasn't any kind of institution per se, but there were these moneylenders,
etc. Imam Muhammad and Mount Abu Yusuf, who were the students of abominable hanifa, they were of the
opposing views. Now, it's important to keep this in mind that much of the Hanafi school of thought
that we have is not imaginable hanifa it is Mr. Mohammed and invulnerable use of mela be pleased
		

			with them. So may Allah have mercy upon them. So the Hanafi scholars therefore are of the view that
it is macro, it is disliked that you give it however, if you fall upon a situation where there is no
other buyer, or no other taker, and you need the money, because it's a means for you to survive,
then it is permissible to give it only as a means of emergency. So even then, probably you are
expected to give it for a brief period, maybe a short rent agreement for six months, or nine months
or 11 months, and then try to wrap it up, get the money, finish, you know, pay off your dues
wherever it is to start a business. Get rid of that bank. But it's considered macro, according to
		

			the law, the overall Hanafi school of thought I've given you the breakup. According to me, it's best
to avoid it.
		

			Question is, is buying online and reselling it aloud if you don't own it, what I believe the
questioner means to say here is that I don't own something, but I'm already marketing it as though I
own it, I pick up the orders from the market, once I have the order, I go to the market, I pick it
up and then I sell it, if that is what you mean, then I am afraid you cannot own sell something
which you're not in possession of all right, either you make it absolutely clear that you are not in
ownership of any of these commodity and that you are only acting as an agent on behalf of the seller
and the buyer. So, once the order is received, you will only facilitate the process and in doing
		

			this facilitation of the process, you may charge a commission
		

			which could be included in the price of the good, you have to make it very clear. But if you try to
position yourself as a seller of certain goods, which you are not owning in the first place, which
you don't have a possession of then you are lying. And that is not allowed. So what is suggested is
most of these people who do these sales on Amazon, they have
		

			agency form signed, they become agent, sales agents, so they don't own the product. But they become
authorized agents to sell on behalf of the company. So you can become an authorized agent, which
means you are getting a license to sell on their behalf. And so you can sell something, earn the
pick up the money handed back to the company and in return you earn your commission and the Lord
knows best but yes, you cannot sell something which you don't own. Okay, there's a question from
Sherry Armando about the concept of ownership and how does it relate to buying and selling. He
speaks about real estate where you acquire ownership.
		

			Have the land and then you can sell it at an increased price. So he says that the same concept of
par applies to stocks as well. You buy, you buy stocks, you own it, and then you sell it. So what is
the problem in it? When you buy stocks, you take ownership of a company, so technically you're
selling it. Look, I know where you're coming from your question is probably from the point of view
of intraday trading and speculation. intraday trading is a system where you purchase a stock in the
morning, and you sell it in the afternoon, or in the evening, as soon as you get even a slight 10
price or 50% 80% gain, because the amount of quantity of stocks that you deal in is huge. So
		

			what's wrong in that? That's the argument. So the reason why intraday trading has been prohibited is
not just one reason, but two reasons. What are the first what's the first reason number one is, you
can't sell that which you don't own. Generally, what used to happen in the past was that whenever
you used to buy a stock, it would take at least two to three working days for it to reflect in your
account. So technically, you could not sell that which was not reflecting in your name. And that is
why intraday trading was not permitted. But today, and we know how technology is improving every
day, today, the moment you buy, you are probably going to get the entire stock reflecting in your
		

			account in a span of two to three hours. In that case, am I still prohibited from trading? Yes, not
tell you the reason why I know some scholars allow it very few scholars allow it. But the reason why
the larger group of scholars don't allow it is because when you are buying and selling shares, when
you buy shares of a company, the company gets that money. The company is supposed to use that money
in an economic activity. But when you keep buying and selling and benefiting from the differences in
price caused by the demand and supply, which is because of continuous buying and selling you pushing
the price up, you are creating new economic activity. Speculation doesn't produce a productive
		

			economic activity because the money is hardly with the company you're buying in the morning selling
in the afternoon. What What is the company going to do with that kind of money. So you may become an
owner of a company for a couple of hours. And then you say I'm going to sell it is not the same as
selling a land. When you buy a land and you want to sell it. Firstly, no one buys land in the
morning and sells it in the afternoon. They will only do it if there is a distress sale. What is a
distressed sale? Where do you need the money and you bought it and now you want to sell it and in a
distressed sale The price is not a factor. The factor is to get a buyer who's ready to pay a
		

			negotiated price. So let us not compare the two they can't be compared the two different segments
altogether. Properties land real estate is different. I've given you the basis for which stocks have
been prohibited. There's the question of who wants to know the ruling on foreign currency trading,
the ruling on foreign currency trading is similar to the six or webapi commodities that we spoke of,
considering the fact that the currencies that we are talking of is similar to the dubawi commodities
because all of these rebel commodities, if you understand at some point or the other in human
history was used as currencies, gold and silver was used as currencies even at the time the Prophet
		

			alayhi salaatu wa Salaam. So, the ruling as far as foreign currency trading is concerned is that if
they are different currencies, for example, US dollar and Indian National rupee, if it is Libyan
currency, with say the Egyptian currency different currencies, if there are different currencies,
you can exchange them in whatever values you want, provided the transaction is completed in one
sitting on the spot, I give you $10 and I take the equivalent rupees, I give you 50 dinars and I
take back the equivalent dollars for it, it should be completed in one sitting it cannot be that I
give you some money and then I collect it later on a future date that cannot be done. The buying and
		

			selling of currencies can take place in different currencies in any value if you want provided
they're completed in one setting. However, if you're converting or exchanging currencies, which are
of the same denomination dollar with dollar dinar with dinar, Durham when we talk about dinner with
dinner, we're talking of course about the dinar of one country with the dinar of the same country
All right, because I understand that the the nomenclature of dinar and Dirham may be used in
different currencies for
		

			identifying their respective currency. So what we mean here is when we talk about their home, let's
say UAE their home. So we are talking about the UAE there have been exchange with the UAE they have
the Libyan dinar being exchanged with the Libyan dinar, not the Kuwaiti dinar
		

			Okay. So, as low if you're changing exchanging currencies of the same denomination, then it must
fulfill two condition. First it should be like for like, if I give you 10 Kuwaiti dinar I take back
10 Kuwaiti dinar and second condition on the spot All right. Now, hope this is clear. So,
		

			the question where the question wants to know the ruling on the dividends which are paid. So, you
invest in the shares of a company, there are two ways of earning it one is the increase in the
valuation of the share and then sometimes towards the end of the year, the shareholders may be paid
a dividend by the board of directors if the company has performed exceptionally well, what is the
ruling on the dividend? As we mentioned during the session Also, if you would recall that investing
into the share market per se is halaal using the delivery model not to integrate trading, but rather
the delivery model. Having said that, we also gave a lot of conditions that the company must be into
		

			halaal business and there are a lot of other parameters which are checked on to establish whether
you are permitted to invest in that company or not. Let us assume that in all of those aspects that
company is sherea permissible, if you invest in them, if you earn dividend from those companies once
in a year when a dividend is announced, it is permissible there is nothing wrong in that. We know
that dividends which are normally announced are announced as a percentage, but this percentage is
not a fixed percentage. It doesn't have a fixed time this year it could be 5% next year, it could be
10% they could probably not give you any dividend in the third year. So, there is nothing which is
		

			following a fixed model or right. Sometimes the company is doing well they may keep paying you 10%
every year but that is never a condition dividend is never conditioned that it has to be paid every
year. So per se dividend is allowed. You can certainly earn money through dividend nothing wrong
with that and Allah knows best