Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh.  (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

Assalam Alaikkum brother burhan.

Since long time this issue is bothering me hence I am seeking your advice on this.

I have taken an auto loan to buy the car from HSBC bank under Alamana (islamic banking) scheme to be within the islamic laws and regulations. But still I am worried that is it really the right thing I did or we are fooling ourselves by changing the definitions and norms very similiar to what the Bani israelis did

1) when they were told not to work on the day of sabt

2)The women shaved their head and wore wig when allah commanded them not to display their hair.

And if we are fooling then it is literally impossible for a practising muslim to buy a new car or a new house.

I hope you understood the crux of the question. Awaiting your reply,

I remain,

(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)

Answer:

Islamic banking

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is no one (no idol, no person, no grave, no prophet, no imam, no dai, nobody!) worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

Allah says in the Holy Quran Chapter 2 Surah Baqarah verse 274-276:

But those who devour ‘riba’ become like the one whom Shaitaan has bewitched and maddened by his touch. They have been condemned to this condition because they say, “Trade is just like ‘riba”, whereas Allah has made trade halaal and ‘riba’ haraam. Henceforth, if one abstains from taking ‘riba’ after receiving this admonition from his Lord, no legal action shall be taken against him regarding the ‘riba’ he had devoured before: his case shall ultimately go to Allah. But if one repeats the same crime even after this, he shall go to Hell, where he shall abide for ever! Allah deprives ‘riba’ of all blessing and develops charity, and Allah does not like an ungrateful, sinful person.

Beloved Brother in Islam, all the good Islamic banks and financial institutions have a Shariah Board of eminent scholars who are proficient in the laws of Islamic Economics and approve the principles behind every transaction or dealing of these banks. If an Islamic Bank or Islamic Financial Institution which is approved by the Central Bank of a Muslim Nation is offering a service, it would be safe for the believers to assume that their products would be halaal and permissible in its essence.

Most people are so used to the conventional interest-based banking system, that in their ignorance of the laws of Islamic Economics they may at times accuse the Islamic Financial Institutions of dealing in interest or ‘riba’ with just a different name.

A simple example can be cited to make the concept of ‘haraam’ and ‘halaal’ clearer. If one marries a woman and satisfies his pleasure, it is considered ‘halaal’ and is a virtue in Islam. But if one does not marry a woman and satisfies his pleasure with her, it is considered ‘haraam’ and a huge sin in Islam! Both associations inherently satisfy the carnal pleasures of man, but the difference between them is a one-page or a simple verbal legal contract of marriage!! I have heard some people say, what is the difference? But you and I both know, there is a huge difference in the reward and sin between the two acts, although both can be termed similar in some qualities. But Allah has made marriage ‘halaal’ and fornication and adultery ‘haraam’.

Similarly, although it may seem to some who are ignorant of the laws of Islamic Economics that because the Islamic Bank charges a ‘fee’ or ‘profit’ instead of ‘interest’, there is no difference in the permissibility of the transaction! But the truth is that because of the nature of the contract made by the Islamic Bank their transaction would be interest-free, and thus halaal in the sight of Shariah and Allah Subhanah, and the interest-based transaction of a conventional bank would be considered absolutely illegal and haraam.

Dear Brother in Islam, there are several good Islamic banks and Islamic Financial Institutions, that adhere to the Shariah in their financial transactions. If these Islamic financial institutions are not 100% Islamic in some people’s view, brother, you will at least agree that they are trying to work towards the right way as ordained by Shariah. Islamic banking is still in its infancy, and if believers and brothers like you and us do not help and support them; we cannot expect the pagans and the disbelievers to come and help them! The thing is brother, the world is so used to the forms of conventional interest-based banking, that it is almost impossible to not draw a comparison between the two forms of banking or financing.

Besides, all Islamic Banks have Shariah boards, with eminent scholars who approve each and every transaction or deals done by these Islamic institutions. There is absolutely no doubt that conventional banking is interest-based, and therefore haraam. And even if in some people’s view, the Islamic banks are not 100% interest-free; one will at least agree that they are at least trying to conform with the laws of Shariah. If one genuinely believes that the current Islamic Banks are no better or different than interest-based conventional banks in their dealings, and one has the ability to abstain from seeking a loan from either, then without an iota of a doubt, that would be safest and purest. But if one does not have an option and genuinely requires to take out a loan; he should obviously opt to take it from sources which claim they are lawful…..at least that way he will be able to present an excuse in the Court of Allah Subhanah that he strove and tried to do what was lawful as opposed to what was clearly unlawful.

Brother, please do not misunderstand us. We am not trying to protect or say that all of the current Islamic financial institutions are all a 100% in conformity with Shariah; what we are trying to say is that if the only choice for a person is transacting with a conventional bank or an Islamic bank; we just think that it would be purer for him to take his transaction to the Islamic financial institutions. Insha Allah, Allah will help them and maybe in 30 or 50 or 100 years they will actually be recognized as a halaal alternate source of banking.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and well wisher in Islam,

Burhan