Previously Asked Questions
Trade and Finance Questions:

-Most of your questions about this topic will be answered by reviewing the Explantory Notes for the latter part of Song 41.


> What is the ruling on Credit Cards in Islam ?"

In the Guiding Helper texts we have on-purpose not delved deeply
into subjects that are currently hard to practice.

We have an intention of producing people that are conscious of
what is right and wrong in our din but can also live in the
present non-Islamic situations without extreme difficulty.


a) Our general ruling about the current credit-loan industry
   is that it goes against the principles of lawful business
   transactions in our din due to the guaranteed interest
   percentage rates associated with such loans.
b) However, individuals may carry credit cards from companies
   that are involved in interest transactions with the following
   qualifications:
      (i) The company has some lawful means of income (e.g.,
          advertising income).   Most credit card companies
          do have some lawful income.
      (ii) The company allows individual to pay the credit
           card bill in full each term within a grace period
           such that no interest is ever paid or accrued.
     (iii) The individual has an intention to *never* pay any
           interest to the credit card company but intends to
           always pay the credit card bill in full before its
           due date.
      (iv) The individual does not engage in transactions with
           the company that force him to pay interest without
           any other option (e.g., he may not take a cash
           advance since he will have to pay interest as there
           is no grace period for cash advances offered by most
           credit card companies.)

References:
  For more information on this topic, please refer to footnotes
  2579 to 2591 of the Explanatory Notes of the Guiding Helper
  and associated entries in the Notes of Sources

> I am a young muslim living in America. In my pursuit
> of Rizq Halal, I have qualified myself to become a license
> painting contractor in the State of Florida. This involves applying
> a wide variety of coatings and preparations to the interior and exterior
> of residential, commercial, and industrial structures.
>
> I am interested in two questions: 1) The state requires me to purchase a
> certain amount of liability, property damage, and workman's compensation
> insurance. As I now understand it, if I buy the minimum amount required by
> law, then the sin will be the responsibility of the state and not my own.
> Is this correct?

Yes.  This is correct as at that point, it becomes more like a mandatory tax
according to the fuqaha'

> And if I were to buy any coverage or level of coverage beyond the state's minimum
> required amount, I would be in this case the sinner.

It would depend upon your best estimation of the likelihood of your incurring a
liability which you could not possibly afford.  If acquiring a liability which you could
not possibly afford is probable or very likely, then it is permissible to acquire the
insurance policy (e.g., like for a wife who is likely to have children and
will probably need expensive hospital care, which is beyond one's means to
afford).

References:
  Footnote 2588 of the Guiding Helper Explanatory Notes and associated
  entries in the notes of sources.

> Now the other question is regarding riba'. The amount of money
> required up-front to acquire these state-mandated insurances is
> enormous (in my estimation). It is so large that most of the contractors
> I have spoken with prefer to flagrantly violate the law than pay roughly
> $6,000 per employee per year in Workman's Compensation Insurance
> ALONE. But since I am just starting out, and since I am a muslim and
> as an example to my employees and other contractors, I would rather obey
> the law. This would require me to spend around $15,000 on insurance
> alone just to be qualified to START this business. I do not have this
> kind of money myself.
> I have heard conflicting reports about the halal and the haram regarding
> riba' in the Kafir countries. I have heard that since we (the American-born
> converts) are living under native kafir rule in social, economic, and political
> terms, we cannot be expected to conform to the Islamic shari'a completely,
> as this would be impracticable. Most business transactions in this country
> are tainted by riba'a somewhere alone the way - even down to the food we
> eat.
> I am a hater of riba' because Al'lah and His messenger have declared war on
> it. I do not want to undertake it if it isn't necessary. But I do want to be able
> to support myself and (someday, inshal'lah) a family. There are a few Islamic
> Banks functioning in the U.S., but my business does not appear to fit their usual
> funding parameters (gas stations, franchises of different types, items with real
> (fixded asset-based) value). So I see myself faced with the prospect of having
> to take out a modest loan in order to start up this business, inshal'lah.
> Can you give me any guidance as to what my thoughts should be on the matter?
> Any specific input will be appreciated.

Our advice to you would be to make Istikharah and then do whatever
Allah makes easy for you.

As for the ruling of such, multiple rulings of varying difficulty would
be available, and your level of trust in Allah will determine which one
you choose.


> Can you give us details about Islamic Banking?

As for your question about Islamic Banking, you can refer to
the International Research Institute about this topic:

   http://www.islamic-banking.com/

Basically, what it comes down to is that we as serious students/promoters
of the din have a long-range detailed plan and a
short-range list of "quick-fixes".  Islamic Banking is nothing
more than a quick fix that is relatively easy to set up and
relatively compatible with the current dominant economic system.

However, Islamic Banking will not solve our weak financial backbone
problem in the long run.  The reason for this is that the islamic bank will
in the end be dependent on and replicate many practices of the system
set up by the "John Adams" club, the inheritors of the European
Feudal System.

For example, the Islamic Bank will:

    a) trade in baseless paper and electronic currencies, which
       are set for hyper-inflation or total collapse sometime in
       the future (perhaps far in the future or the near future)
       like it happened in Argentina in 2002.
    b) the bank will most probably still pursue policies that
       put the  poor at a disadvantage (e.g., the "new-wave" rent-
       to-buy without interest plan being offered in the end does
       not cause property values to fall and does not significantly
       reduce the amount of over payment for the already inflated
       price piece of property).
    c) the bank will be a target to have its assets easily frozen
       since it is dependent on the system set up by the "controllers".
       This happened to the Pakistani-owned BCC bank over a decade
       ago on "suspicions" of funding illegal operations.  What this
       really means is that the Islamic Bank owners cannot make
       any moves that anger the "controllers", else they are prone
       to be easily shutdown.
    d) etc.

....

As for your questions about being involved indirectly in this system,
we would say that it is permissible as long as one is not *directly*
involved in one of the ten unlawful ways of earning money.

You might want to review the footnotes for Song 41 to learn the
easy opinions we are narrating concerning the Muslim's financial
life in the current non-Muslim economy.

References.
   Song 41 of the of the Guiding Helper and associated
    entries in the Notes of Sources.

> Also, are stocks in corporations haraam? In the US
> we have to set aside our own money for retirement,
> and the usual plans consist of either stocks or of
> interest-bearing funds. I knew interest was haraam -
> but are stocks also haraam?

This is our standard reply to this question:

The current stock market has a detailed ruling and
an easier general ruling.  The detailed ruling is
for times when an Islamic Economic infrastructure
is in place.  The general ruling is for times
like ours where we lack a strong Islamic Economic
infrastructure (what we mean by strong is that it is
the *dominant* way of conducting commerce in the world).

The general ruling for the stock market states that
a Muslim may engage in stock transactions given
he follows the following restrictions:

   a) He does not borrow money on interest in
      order to buy stocks (this is called
      "on-margin" buying).
   b) He does not engage in stock options which fall
      under a type of bay` al-gharar.  One reason is
      that the price of the option is a sort of insurance
      policy that guarantees the buyer a specific price.
      Another reason is that an option is simply a "bet"
      that the stock market will go up or down.
   c) He does not invest in a company whose major
      line of work is unlawful (i.e. one of the
      ten major unlawful ways of earning money
      listed in Song 41 of the Guiding Helper.)
   d) He does not invest in interest-based stocks
      (e.g., bonds and mutual funds).

This above ruling is easier than the detailed ruling,
which delves into the nature of stock price increases and
decreases that are seen.  And this above ruling is the one
we would recommend to the current Muslim population.

The detailed ruling adds one more restriction to the
above four:

  e) That the price of the stock is always calculated
     from the net worth of the company and not from the
     supply-demand curve of the paper/electronic shares
     that are in circulation.  Thus, in an Islamic government,
     the Financial center must make sure that the current
     trading price of the shares accurately reflects the
     net worth of the company divided by the number of shares
     outstanding:

       Stock Price = (Company Net Worth) / (Number of Issued Shares)

     Additionally, when the company issues more shares
     to raise capital, they must give the new shares fixed prices exactly
     identical to the price of the other outstanding shares (of the same type)
     that have been issued.

     The company must have a regular financial period (e.g., three months)
     in which it re-calculates its net worth (which will have fluctuated from
     business operations) and then from this calculated net worth, determine
     the new adjusted share price.

      The company must allow stockholders to trade their shares for
      cash currency  (e.g., gold and silver) at any particular point
      in time.

  [As a side note, if restriction E were followed, then we would not
   see the roller-coaster drastic rise-fall behavior that the stock
   market of capitalistic countries experience. Rather, we would see
   gradual honest profitability and honest slow loss (giving investors
   time to get out before losing all their capital).]

The general ruling of the stock market states (about restriction E)
that one may consider the stock one holds to represent a tangible
asset of the company (without delving further).  And as such, may
sell or buy this tangible asset to/from someone for a price greater
than or less than the price for which it was previously bought/sold.
Thus, the general ruling allows the common man to engage in stock
transactions that may result in a net profit or loss (as it is comparable
on the top-level, without delving too deep) to selling any other tangible
good (e.g., ice cream) for either a profit or a loss, which is
allowed in our din.

References:
   Footnotes 2579-2591  of Song 41 of the Guiding Helper and associated
   entries in the Notes of Sources.

> I recently heard from a Shaykh that restaurants and bakery bread
> were both haraam because they failed the test for a sale -
> that the exact weight of all the components was not revealed
> to the customer before sale.

This in reality is a sheikh who is working overtime on law principles
but neglecting the context and bigger picture.

Please note that the two examples you use:  (1) restaurants and (2)
bakery bread have been present in one form or another ever since
the Prophet's (May Allah bless him and give him peace) time.
For example, there were bread merchants in the Makkan and Madinan
Suq (markets) additionally there were people who sold prepared food
(like restaurants do today).

And these two things were accepted mubah acts during the time of
the Prophet (May Allah bless him and give him peace) and the early
generation of Muslims as is evident from the writings from that
period and the continuous practice of food-sale which has continued
to this day.

As for the essentials of trade, they are five in the Maliki School:
(1) The buyer, (2) the seller, (3) the price, (4) the article/service
being sold/bought, and (5) the words/actions which complete the
sale.

It is a precondition for the article that it be known in its characteristics;
but, it is not a precondition that it be known in its exact weight. It is just necessary
that the buyer accept it for the price he paid after examining it.  This is
also because small discrepancies are not considered bay` al-gharar (uncertain
transactions mentioned in Explanatory Notes footnote 2583).

One proof for this is that many sellers 1400 years ago did not
have accurate (to the gram) measuring instruments; but, they
just sold their food articles based upon number and rough
size.

References:
   [QF: volume 1: page(s) 211: line(s) 23-24: {}]


> first, how can interest be haram, when one factors in inflation? for
> instance, let's assume brother x lends brother y $100 in 2003. when
> brother y pays the money back in 2010, the $100 will not be worth the same
> amount. as a result, isn't brother x permitted to charge interest? also,
> according to statistics, there is an average of 5% inflation every year;
> thus, if one's money is left in a non-interest checking account, isn't one
> losing money? keeping this in mind, is it permissible to put one's money
> in an interest bearing savings account?

We do not consider ourselves an Islamic Fatwa site.  We simply teach the
basic precepts of the din to people in an endeavor to make these people
qualified themselves and able to understand the specific issues such as
the one you raise.

Now as for the prohibition of interest in non-Islamic circumstances, know
that there is a difference of opinion about it (in consideration of issues
such as the one you raise).  The relied-upon opinion in the Hanafi (not
Maliki) school is that it is permissible to take interest in lands governed by
non-Islamic laws (such as Britian, France, U.S., etc.) but unlawful to
give interest (except in cases of moderate to extreme need (not just impulse
credit buying)). (Ref:  You can check the appendices of the book "Reliance
of the Traveller for verification of a source for this Hanafi opinion or
you can check somewhere else).

The opinion we are narrating is that it is unlawful to take or give interest
on loans except that giving interest is allowed in cases of moderate to
extreme need (not just impulse credit buying)).

This prohibition is taken from the literal strict interpretation of the
prohibition of all loans which return more than is actually loaned:

Proof(s) from Secondary Text(s):

As for interest due to a delayed payment [back on a loan], it is unlawful according
to all major scholars.

[QF: volume 1: page 214: line(s) 27: {book 13; chapter 3; very beginning}]

As for what is known as "give me time and I will give you more", it is unlawful with
total agreement in the Maliki school. This means that a man has a debtor whom he gives
more time to pay back his loan so that he may give him more [than the original loan
amount]. This was exactly the type of interest practiced in Arabia before the advent of
Islam, regardless of whether the loan involves food or currency and regardless of
whether it resulted due to loaning currency or due to buying merchandise, or other
than that.

[QF: volume 1: page 217: line(s) 17-20: {book 13; chapter 3; end ten derivative rulings; derivative
ruling 9}]

Proof(s) from Primary Text(s):

The Prophet (May Allah bless him and give him peace) prohibited
loans that are repaid on interest.

[AM: volume 2: page 35: line(s) 2: {Bayhaqi, kubra, volume 5, page 573, hadith #10933}]

Now the literal words in the hadith are "loans that receive
profit" "al-qardu al-jaarru li n-naf`i".

Now as for your statement that interest is paid to make up for inflation,
then we would state that people who have done detailed studies of economics
have figured out that there is a direct relationship between the
interest-based economy and inflation.  In other words, interest payments
when practiced by the whole society *cause* inflation.

Also, there is an interesting work put together by the *malevolent* financial
planners that states this (along with many other current practices) very
plainly.  This work is called the Twenty-four Protocols of Z I on.

We understand this on a level that goes above the poor layman who is
stuck in the unfair system and faces the issues that you mention (such
as sky-rocketing costs for basic needs and services) and we understand
his concerns and for such we give him the easy opinion (ref: footnote 2588
of the Explanatory Notes) to try his best but if he is unable to avoid
it, then he may engage in them but know that the base ruling for it is
wrong.

And we also understand that the way to counter this system is to encourage
trade in gold and silver (these do not experience inflation in reality and
the price fluctuations today are only artificially brought about by increasing
and decreasing supplies/demands) as a replacement for baseless paper and
electronic currencies and to form fair credit unions and similar institutions to
help alleviate and eventually solve the unfair financial problems that the
layman is faced with.




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