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Session Details
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| Guest Name |
Dr. Monzer Kahf
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| Profession |
Scholar in Islamic Economics & Financial Expert
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| Subject |
Financial and Economic Issues
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| Date |
Sunday,Sep 7 ,2003
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Time |
Makkah
From...
16:30...To...
18:00
GMT
From... 13:30...To...15:00
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| Name |
Host
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| Question |
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| Answer |
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
Brothers and sisters, the session has already started. You can submit your questions. Please, make your questions short and clear so as to help us answer all your questions.
Yours,
Islam Online Fatwa Editing Desk.
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| Name |
Muslim
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| Question |
My question is regarding the Islamic financing. I have read that HSBC bank has recently launched some financing schemes for Muslims in the UK. Are Muslims allowed to accept financing from a riba-based establishment even though the nature of the transaction doesn't infringe upon Islamic teachings? Thank you.
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| Answer |
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
Yes brother, Muslims are allowed to enter into contractual financing relation with any entity including conventional bank and financial institution regardless of their religions, ethnicity, or national or geographical affiliation as long as the contractual financing is compatible with the Shari'ah.
Here, you aught to notice that we Muslims who live in the Western countries deal always with conventional bank without any regard to the bank activities with other person as long as the relations we have with them does not violate the Islamic law.
Allah Almighty knows best.
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| Name |
Arshad Mohamed
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| Question |
I would like to know the Islamic rulings on taking Life Insurance Policies. Is it allowed in Islam to insure one’s life against natural death, accidental death, diseases or any unknown future situations.
Is it allowed to insure the businesses and other assets we own from fire, theft, natural calamities etc. Please advise in detail.
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| Answer |
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
Insurance is a new contract relative to our classical fiqh that was developed between the second and the fourth century of Hijrah.
An insurance contract does not protect or ensure against death, accidents, fire, theft, etc. An insurance contract provides for financial compensation/payment to relieve the affected person as a result of such incidents. Therefore, it is not accurate to think that life insurance is "against natural or accidental death".
Contemporary Muslim scholars have divided opinions on insurance. There is a group that thought that insurance is a gambling on the Will of Allah. I disregard this opinion because it is based on lack of understanding of what insurance is.
There is a group of respected scholars that argues that insurance contains an element of interest and ambiguity or gharar. Certainly, if interest is essential to an insurance contract, it must be then in violation of the Islamic principles. The same applies to ambiguity in relation to the basic obligation of the two parties of the contract.
There is another group of scholars led by the late Sheikh Moustafa Al Zarka who argues that insurance, life and others, is a very beneficial and useful contract that should be considered on the basis of the objectives of the Shari'ah that call for the permissibility of anything that is useful and the prohibition of anything that is bad. Insurance has certain similarities with contract and legal institutions known in the Islamic law, namely the institution of aaqilah that requires the sharing of all extended family male members in the payment of blood money of killing by mistake; and the contract of guaranteeing road safety.
Furthermore, insurance contract is essentially based on the concept of redistribution of risk that is: pooling resources from a large number of people to compensate those who are hurt as a result of insured incidents. This concept is essentially a cooperative concept where whether it is administered by a cooperative organization such as mutual insurance company or buy a profit-making organization such as a commercial insurance company.
Most insurance contracts do not have any interest clause. Some forms of life insurance policies are interest based, mainly what is called whole life insurance that provides for a lump sum payment after certain number of years (this lump sum is a result of part of the premium that is called investment premium placed on compound interest for a given number of year).
The amount of ambiguity in the contract is small and gives room to be removed through the process of the contract. Ambiguity results from the fact that the time of fulfilling the obligation of the insurance company (the date of death or accidents) is not known in advance.
Also, the amount required for payment depends, in other than life insurance, on the size of the damage which is not known in advance. This ambiguity is in fact tolerable because the detailed and sophisticated insurance rules regulations make both ambiguities removable by the time a payment by the company becomes due.
According to this view insurance, in all its kinds including life, is permissible provided that we avoid the contract that includes interest and obviously the subject of the insurance is also permissible (for instance, insuring a shipment of liquor) because it is prohibited to transport liquor as the prophet stated.
You can also read:
Life Insurance
How Does Shari`ah View Insurance?
Allah Almighty knows best.
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| Name |
Ahmad
- Morocco
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| Question |
My question is: A person requests a bank credit in a Western bank to do a business with the following agreement: a credit with 6 per cent to paying in 5 or 7 years with a lack of 1 or 2 years. This means that for 1 or 2 years the person who requests the credit does not pay any bank letter. But if before finishing the lack he decides to return the quantity given by the bank will have to return the quantity given more 3 per cent as penalty. Is this type of credit considered riba?
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In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
This 3 % penalty is in fact interest; it is not a fine that is caused by any reason other than paying an increment on the borrowed funds.
Signing an interest-based loan contract especially what is called line of credit that provides for a grace period for period without any interest maybe permissible under 2 conditions:
1. If the person is keen on avoiding interest and paying within the grace period.
2. If the person is actually able to make such payment, especially when we use nowadays the automatic withdrawal by the lender from the account of the borrower. If a borrower is not certain about these two conditions taking an interest based loan with a grace period becomes not permissible.
Allah Almighty knows best.
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| Name |
Heba2
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| Question |
Is life insurance allowed or not according to Islam? My friend is working in Govt. of Bahrain. To save his salary he started a scheme in Life Insurance Corporation of India. If he did not do so his one month salary would be cut by the government. So what can he do?
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| Answer |
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
Please read the questions and answers given to ‘Islam’ and ‘Arshad Mohamed’ in this session.
Allah Almighty knows best.
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| Name |
Ahmed
- United Kingdom
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| Profession |
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My question concerns an aspect of share buying. Normally, when shares are sold on the stock market the seller has to wait for up to 3 weeks for his money (settlement period). Some people require the money more urgently. In some cases, a third party is willing to pay the money immediately at a small discount (1 or 2 %).
On the original settlement date the third party then receives the full amount of the transaction. In some countries this is known as spot buying. Is this practice halal according to Islam?
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In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
I don't know those countries that call discounted payment a stock sale; to my knowledge stock sale is compared to future sale and it applies to commodities, currencies, and stocks.
The discount of 1 or 2% by a third party who extends a loan for the period of three weeks settlement as you mentioned is interest. It is a prohibited notice as it equals an interest rate of 12 to 20 % annually.
By the way, stock transactions, buying and selling both, are settled within 3 days in the USA, and once you have an account with a broker/bank you can use proceeds of unsettled sale as base to make purchases that will also take 3 days for settlement. This is the first time I hear of 3 weeks time for settlement in the stock market. Are you sure about it?
Allah Almighty knows best.
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| Name |
Mariam
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I got some stocks’ option from my ex-wife's job that we agreed about while we were filing the divorce papers. I haven't cash them yet and I didn't know it's haram or not. I was speaking to a brother from the Mosque about haram things and he mentioned to me that people’s possession of stocks is considered riba. He does not know about my situation. Would you please tell me what am I supposed to do? Jazakum Allah khayran.
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| Answer |
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
If these options are given by the employer as part of the employment package, then the option may be exercised by buying the company's stocks which is permissible. I would not suggest selling the option for cash because such a transaction carries similarity to options traded in the market that is resolved to be prohibited the OIC Fiqh Academy in its famous 1412 H resolution on options. It is not anyway riba.
Allah Almighty knows best.
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| Name |
Sherif
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| Question |
Recently, I have convinced my mother that putting her money in saving accounts with interest is haram. However, she has asked me for an alternative. I want to recommend for her to move it to an Islamic bank. My question is "Is the return from Islamic banks really "Islamic" meaning you get a percentage of the profit or is it just a randomly varying interest rate as some have claimed?
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In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
The return on investment deposits in Islamic banks is really Islamic. Normally, Islamic banks have respected the Shari'ah scholars who review their contract and transactions and certify at the end of the year these transactions are within the limits of the Shari'ah.
The fact that the profit distributed by Islamic banks is close to the rate of interest in the country is caused by the reality that these Islamic banks actually compete with their conventional counterpart in their country.
Allah Almighty knows best.
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| Name |
Arkin
- China
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| Profession |
Office worker
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| Question |
What the Islamic rule on Zakah?
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| Answer |
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
Zakah is the third pillar of Islam. It is obligatory on every Muslim. Its details are known in the Fiqh references.
You can also read:
Purifying Wealth
Allah Almighty knows best.
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| Name |
noordeen
- Luxembourg
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| Profession |
landscaper
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| Question |
Do you know any financial institutions in the EU that have non riba mortgages? Do you know any websites?
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In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
No, sorry I do not know any financial institution in Europe that provides Islamcially permissible contract for housing or business.
Allah Almighty knows best.
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| Name |
yahya
- Germany
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| Profession |
student
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| Question |
Have you ever heard of a fatwa saying that a Muslim who does not purchase a house because of the riba and instead rents, that every dollar(pound riyal) he spends on that cause is counted as a good deed for him. I heard this fatwa before but I cannot remember its origin.
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In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
No, I did not hear about this fatwa, and I doubt it ever exit. It does not seem rational.
Allah Almighty knows best.
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| Name |
KHALID
- United States
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| Profession |
Engineer
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| Question |
What is your opinion about student loans that students have to take to afford paying for college and particularly medical school tuitions and expenses?
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In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
You can read my detailed fatwa on the issue raised in your question by clicking:
Student Loans with an Interest Rate Linked to Inflation
Allah Almighty knows best.
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| Name |
Saleem
- Canada
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| Profession |
writer
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| Question |
Can you tell me how a dead persons property is to be divided amongst his heirs. Please answer with special reference to land, residential property, non-residential property, and Cash. It would be helpful to me if you could use an arbitrary number for the cash, say 100,000. How should I split this between my mother, my brother, my sister and I?
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In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
Your question requires more details. The kind of property does not affect the distribution of the estate of the deceased. The main heirs are children, parents, and spouse. If all these exist, other relatives do not inherit anything.
For details, please look at the schedule of mawareeth that is attached to the Last Will on www.isna.net or www.kahf.net.
Allah Almighty knows best.
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Editor
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| Question |
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In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
Brothers and sisters, we are so sorry for not answering all your questions because the time is over. We apologize for any inconvenience. Do keep in touch. Join us in coming sessions.
Yours,
Islam Online Fatwa Editing Desk.
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| All Fatwas published on this website (Islamonline.net) represent the juristic views and opinions of eminent scholars and Muftis. They do not necessarily form a juristic approach upheld by this website. Click here to read Full Disclaimer. |
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