"Islamic Banking" is DOUBLE Haraam - Sheikh Umer Vadillo

[imran1976]

@imran1976:

You dodged the question - are you referring to personal or corporate banking? I will agree with you that the emphasis on Murabahah is more in personal banking (for example, buying of car, property etc). But that is JUST NOT the case in corporate banking! Have you tried investing in an Islamic bank? Moreover, do you even know how business is conducted from the pool of money by Islamic banks to businesses? And how the profit is shared with investors? It's all done on Musharakah, Mudarabah and Sukuk as I have told you. No Murabahah there whatsoever!

I stated very clearly, Prof.Imran Ahsan Khan Nyazee states it 90%, Dr Imran Ashraf Usmani (s/o of Mufti Taqi Usmani) states it 66% and obviously they referring to overall Islamic banking operation -- So when 90% banking operation is based on Murahabah, the profit generated will be 90% murabahah based; this is also obvious.

I have been asking very simple questions, if you could provide an answer:

a) is there any Islamic bank which could lend me Qarz'e Hasanah?
b) i want finance on Mudarbah basis, which bank?

 

[punjabi_tha]

I stated very clearly, Prof.Imran Ahsan Khan Nyazee states it 90%, Dr Imran Ashraf Usmani (s/o of Mufti Taqi Usmani) states it 66% and obviously they referring to overall Islamic banking operation -- So when 90% banking operation is based on Murahabah, the profit generated will be 90% murabahah based; this is also obvious.

I have been asking very simple questions, if you could provide an answer:

a) is there any Islamic bank which could lend me Qarz'e Hasanah?


b) i want finance on Mudarbah basis, which bank?

a) May be you should start contacting Islamic Banks and see what response you get. Getting loan is not a right it's a privilege. Just because there is some Islamic Bank, you cannot go there and say I need Qarz e Hasna. And it is given when the person taking loan fulfills some criteria.
Download following annual report (2009) from Meezan Bank, check page number 18 and you will see they have given Qarz e Hansa to needy students for higher education. I am sure there must latest report available.
http://www.meezanbank.com/docs/annualreport2009.pdf

b) I gave you two links from Meezan Bank that deals with Mudarbah but for details or your specific requirements, you should contact banks.

 

[AsifAmeer]

Asif Shirazi from Austin started http://egold.pk

There's a seminar/conf and I think Mufti Taqi Usmani is gonna speak there.

I agree with him 100 percent including when he says that it is not the solution of all the problems and I see major problems. I think some one in Pakistan should start minting Dinars and Durhams privately just like in Malaysia and see where it goes. It would make the government and the banks irrelevant for the most part if people start to buy and trade with it. Let people deal with money transfers privately.

 

[AsifAmeer]

If there is anything I understand in this world, its money. I have a grasp on Banking and Central banking. I m one of those lifeless souls who checks for Z1 reports for the Federal Reserve and the M2 Broad Money Statement from the State Bank of Pakistan.

If Mufti Taqi Usmani says Fractional Lending is halal, he can call it that but its WRONG. Its stealing. Its debasing the currency. Its transfer of wealth from the real economy to the financial economy.

Did you know there are "Islamic Bonds" too? Watch the video, its not too technical but he is 100% correct in his observation. I am speaking from a Monetarist point of view.

I can't see the video at the moment so I cannot comment on what he says but normally the opponents of Islamic Banking say the same thing that it is exactly like conventional banking system where you lend money on interest but named differently. But I don't agree with this point because if you see a goat being slaughtered by non Muslim and a Muslim, both will look the same there is no difference but still one is haram and other is halal because the later take's Allah's name on it. So this slight difference makes it halal but physically they may look the same. In the same way Islamic Banking has slight differences as compared to conventional banking which may not be visible to naked eye immediately.

Secondly a common person has to rely on judgement of Muslim scholars and he can't personally check each and everything. I mean when Islamic Banks have sharia advisory board employing knowledgeable persons like Mufti Taqi Usmani and they say that this is halal then who are we to say otherwise? A common man has to rely on religious scholars in this matter just like you rely on doctor in medical matters and accountant in financial matters. Or you start your own investigation and prove yourself that you are right!?

How many of you have personally checked each and every food item that is sold that it is halal? I mean for e.g. what if the innocent Rooh Afza we drink is haram? How can you be so sure that it is halal? Have you personally tested it? I know you will say that there must be some government body that oversees this and since it is in market and sold so widely hence it must be halal. So this is not your responsibility to check each and everything because you simply cannot.

In the same way don't you have to rely on knowledgeable religious scholars who also knows financial matters in this regard? If you say no we do not have to rely and personally check it then I must say you start checking each and every item you eat and drink like Nestle mineral water, Haleeb milk, Daal maash, KFC e.t.c and don't just rely labels on their product which says "Halal"

 

[AsifAmeer]

You can have fractional lending even in Gold and silver. Its "Banking" not just paper currency.

The objective is not gold or silver but a controlled money-supply. Vadillo absolutely gets it. I just wanna applause this man to say it!

Pakistan should adopt Malaysian style of Islamic banking which is infact totally halal and the best form of it as few of Malaysian states are using gold and coin currencies instead of napkins :)

 

[Aleph]

You want Qard Al-Hasanah? Walk to any branch of Dubai Islamic Bank! They give it very readily and I am sure you will have objections to it because your understanding of Qard Hasanah is not correct. Note: Qard Al-Hasanah is given with a "monthly fee". So, if you are looking to take a loan of PKR 120,000 over 12 months then the bank could charge you PKR 10,000 + PKR 100 (that would depend on their policy). So you end up paying back PKR 120,000 + PKR 1200 over the period of 12 months.

I am sure you are going to be jumping "HARAM... THIS IS RIBA..." but that is only your unfamiliarity with the system. Like I said, I am not an expert so you can meet with the experts and let me know how it goes.

Secondly, you want Mudarabah? Dude, even CONVENTIONAL BANKS give Mudarabah now!!! I have only recently invested in Abu Dhabi Commercial Banks Dana Gas bond on Mudarabah! The return rate is anywhere from 16-22% (Yes, Dana Gas is THAT profitable :)). Although this year it seems I will only get 15%.

Just because you can't find it doesn't mean it doesn't exist! You aren't looking hard enough :) BTW, try to invest some money into DIB. They are giving a great rate of return of 9-11%. My mother has been doing it for the past 5-6 years.

Now, can you answer my questions please? Do you have a bank account (yes/no)? What bank are you banking with?

I stated very clearly, Prof.Imran Ahsan Khan Nyazee states it 90%, Dr Imran Ashraf Usmani (s/o of Mufti Taqi Usmani) states it 66% and obviously they referring to overall Islamic banking operation -- So when 90% banking operation is based on Murahabah, the profit generated will be 90% murabahah based; this is also obvious.

I have been asking very simple questions, if you could provide an answer:

a) is there any Islamic bank which could lend me Qarz'e Hasanah?
b) i want finance on Mudarbah basis, which bank?

 

[Aleph]

Thanks for your ignorance, Temojin. Shaykh Taha Karaan sits on the advisory board of ABSA (one of South Africa's LARGEST banks) Islamic Banking. Do you know what his monthly 'salary' is for the services he is rendering? ZAR (South African Rands) 4,000 only!

To anyone who has been anywhere NEAR South Africa will tell you how that is PEANUTS. Do you know what advisory board members make in such positions? In South African Rands, they mint rands in the 100,000+ per month!

So, no, money doesnt make the mare go, mate. Some people do it only for the Rida of Allah (SWT) and to move the Ummah towards the laws of Allah slowly and steadily. Take your simplistic superstitions some place else. There is a WORLD of difference between Rida and Riba. :)

And while you are at it, can you kindly tell us what bank your money is safely sitting in?

I don't know why has it even being discussed in such a detail. I mean the possibility of Islamic Banking being halaal. Banking can't ever be halaal but as pork can be eaten when life is endangered and the person intends no sin or to treat his taste buds.

For Taqi Usmani heading shariat boards of banks, money makes the mare go mates, money makes the mare go. What can you expect from people who supported CIA-designed afghan jihad and proved that it was a war of Islam and of Pakistan.

 

[Aleph]

Dude, you are WAY too technical for me in this field. I just wish I could understand half the things you are saying, sigh. Why can't you speak in easy lingo for us Financial Dummies? :)

In the interim, can you kindly clarify what you mean by the below? Do you mean to say that you believe in a monetary system where the money-supply is not controlled? Is that even possible?

Thanks!

You can have fractional lending even in Gold and silver. Its "Banking" not just paper currency.

The objective is not gold or silver but a controlled money-supply. Vadillo absolutely gets it. I just wanna applause this man to say it!

 

[imran1976]

@imran1976:
So please note that Murbahah is very much allowed and also note that Murabahah does not form "85%" of the backbone of Islamic Banking. Also are you referring to corporate banking or personal banking? Where did you get that figure from? All in all, there are about 7-8 mechanisms of financing and Murabahah is only one of them. Islamic Investments, for example, are almost entirely based on Musharakah, Mudarabah and Sukuk.

lets first acknowledge the fact as stated by Mufti Taqi Usmani and other Scholars that Murabahah in it's origin is a type of sale and not a form of financing. So if it's a form of Bai' than naturally the Islamic laws governing sales will apply here- There is nothing wrong and Murabahah Sales are allowed , in such sales markup can't be stated separately in the contract and a single price has to be stated.

Imam Sarakhsi ih his famous Al-Mabsut says:

(He (Imam Muh.ammad) said If a person buys something on the condition that the seller will grant him a qard. , make him a gift, grant him charity, or that he sell it to him such a price or such a price, then the sale in all these cases stands vitiated. This is due to the prohibition expressed by the Prophet (pbuh) about “sale with a loan” and “two sales in one.”

It is related from ‘Abd Allah ibn ‘Umar (God be pleased with both) that the Messenger of Allah (pbuh) sent ‘Atab ibn Asıd to Makkah and said, “Forbid them from indulging in ‘two conditions in bay‘,’ ‘bay‘ with a loan,’ ‘sale of something not taken into possession,’ and ‘profit that is not supported by daman.’ ” This is what we adopt. The description of two conditions in one is that for immediate payment so much and for delay so much. This is not valid.
(He (Imam Muh.ammad) said If a person buys something for two delayed periods (ajalayn) and separate (after the session) on this condition, it is not valid. This is due to the prohibition expressed by the Prophet (pbuh) about “two conditions in one.” If he negotiates with him and makes him agree on one, concluding the sale on that, it will be valid

 

[imran1976]

Now, can you answer my questions please? Do you have a bank account (yes/no)? What bank are you banking with?

I am looking forward to a good discussion without involving any personal information, for the first & last time :

i have spent 11 years of my childhood in Dubai ( i was born there) but i am not the one from HSBC

i have current account in a local bank (pak) and that also with the sole purpose of safe custody -- b4 you say Why, let me say that this system doesn't give be any alternative.

Prophet Muhammad (SAW) Said:

"There will come a time," he said, "when you will not be able to find a single person in all of mankind who
will not be consuming riba. And if anyone claims that he is not consuming riba then surely the vapor of riba
will reach him.

 

[AsifAmeer]

I am against leverage. Leverage is Banking. I speak from an Economist POV, Austrian to be specific.

Banking inherently is unstable and rent-seeking by nature. Its morally wrong. Financialization of assets doesn't make things affordable but restrains future growth. The incentives go haywire.

I'll be frank. Islamic Banking is like trying to be hygienic while making Chinese soup in a toilet bowl.

You cant have "Islamic Banking" on the foundations of promissory notes!

Honestly, if Reserve lending/Banking is halal, then let me be UnIslamic.

Lets just say what it really is.

@AsifAmeer:

I advocate Islamic Banking - even with its shortcomings. My knowledge on Islamic Banking is miniscule and I resign myself to the authorities in this matter (The Mufti Taqi Usmanis, Shaykh Taha Karaans of the Islamic world). They have done extensive research on the matter and come about with guidelines and an industry that is purely in the hands of Muslims that must have crossed a trillion dollar USD mark by now (you can correct me on the figure if I am wrong).

Admittedly, there are flaws, but this is still work in progress and not a finished system. True Islamic Banking will remain impossible unless the entire financial and political structure of the Muslim World (or a country at best) doesn't change dramatically. At the moment, everyone who bashes Islamic Banking (amongst self-styled scholars) are mostly those who have very weak grounding in faith (let alone Jursiprudence and that too specialized in Economics and Finance).

The problem with folks like Umer Vadillo is that they construct their arguments around a strawman which they then go on to destroy and claim victory. Mufti Taqi Uthmani and Shaykh Taha Karaan are NOWHERE NEAR 'modernists' much less post-modernists. In fact, both these shuyukh are experts of anti-post-modernism and as orthodox in creed as it gets. Vadillo saheb needs to first learn Jurisprudence before he can even start talking on this topic. Just because a lot of Islamic and Conventional banking coincides in principle and in terms of modalities doesn't mean it becomes haram.

It would be like saying that because Jews believe in One God and Prophets and Angels etc, then we Muslims shouldn't believe in these things because Jews are kuffaar! Trust me when I say this much: Everyone who bashes Islamic Banking has absolutely ZERO grounding in Jurisprudence. Moreover these bashers live in a dichotomous world where they think it is as simple as just uprooting the current financial system in the world and replacing it with a 100% Islamic financial system overnight. This is not only not plausible, but wishful thinking. The change towards a best case Islamic financial scenario will have to be gradual as will its polity.

 

[Aleph]

Thanks [MENTION=22694]imran1976[/MENTION]:

At least you are now admitting that Murabahah is a LEGAL option for financing (in the form of selling) as per the Shari'ah. I am not aware of the nitty gritty and I should perhaps contact Shaykh Taha regarding this, but the murabahah financing I did for my car was done as ONE SUM. It was clearly mentioned that the bank bought the car for X price from the dealer and was selling it to me for X + Y over 5 years.

Contractually that is as per the shari'ah and as halal as it gets. There were some penalty clauses as well for defaulted payments. I am not aware of the full details (I can ask) but penalty clauses are NOT covered in the above hadith that you have mentioned. If this discussion develops further then I think I should send your questions across to Shaykh Taha for clarifications.

 

[imran1976]

You want Qard Al-Hasanah? Walk to any branch of Dubai Islamic Bank! They give it very readily and I am sure you will have objections to it because your understanding of Qard Hasanah is not correct. Note: Qard Al-Hasanah is given with a "monthly fee". So, if you are looking to take a loan of PKR 120,000 over 12 months then the bank could charge you PKR 10,000 + PKR 100 (that would depend on their policy). So you end up paying back PKR 120,000 + PKR 1200 over the period of 12 months.

Just because you can't find it doesn't mean it doesn't exist! You aren't looking hard enough :) BTW, try to invest some money into DIB. They are giving a great rate of return of 9-11%. My mother has been doing it for the past 5-6 years.

Qarz'e Hasanah is the gifting of the “use of the loan amount” for consideration other than business or personal gain on the part of the lender . The borrower may use it for anything he likes, even for business. This form of loan is treated as ṣadaqah by the sharī‘ah and is not examined through commercial rules.

The foremost among these is that no period of repayment can be fixed—the lender can take it back the nextday or postpone it indefinitely.

(Imran Ahsan Khan Nyazee an expert in Islamic finance)
.........................

if a new definition of Qarz Hasan has emerged, plz share.

 

[AsifAmeer]

VERY Well said!

Just like brothels can't be Islamic, Riba can't be ISlamic ; same way banks can't be Islamic- The problem with the Maulanas of our time is that they have been putting in all their energies to provide solutions from within the system which is in itself haraam- They should try to come out of the boundaries of the status quo and give genuine solutions and not cosmetic surgery.

 

[Aleph]

Which is why I have said that we are only in a PROCESS and not in an END-PRODUCT.

I agree with you that promissory notes as we have it today (not that promissory notes inherently are haram -- in fact they are halal and were regularized in the era of Sayyiduna Umar Ibn Al Khattab no less) are worth toilet paper. Even a financial dunce like me knows this much! However, this IS the current system and we have to find a way to operate as close to the Shari'ah as we can.

I am with you and hopeful that we revert back to gold/silver or some other form of basic currency that is REAL and not manipulative. But until then, yaara, we have to work with what we have. Apnay jo itni shaandar topi pehni huwi hai (baseball cap) aapnay isi 'toilet paper' say khareedi hogi na? Ya phir e-toilet paper (credit/debit card).

We are DRENCHED in a poisonous system that has the entire world by the balls. It will take time to change this and I am in agreement with you and [MENTION=22694]imran1976[/MENTION] that things are not hunky-dory. Not just yet at least.

I am against leverage. Leverage is Banking. I speak from an Economist POV, Austrian to be specific.

Banking inherently is unstable and rent-seeking by nature. Its morally wrong. Financialization of assets doesn't make things affordable but restrains future growth. The incentives go haywire.

I'll be frank. Islamic Banking is like trying to be hygienic while making Chinese soup in a toilet bowl.

You cant have "Islamic Banking" on the foundations of promissory notes!

Honestly, if Reserve lending/Banking is halal, then let me be UnIslamic.

Lets just say what it really is.

 

[imran1976]

Thanks @imran1976:

At least you are now admitting that Murabahah is a LEGAL option for financing (in the form of selling) as per the Shari'ah. I am not aware of the nitty gritty and I should perhaps contact Shaykh Taha regarding this, but the murabahah financing I did for my car was done as ONE SUM. It was clearly mentioned that the bank bought the car for X price from the dealer and was selling it to me for X + Y over 5 years.

Contractually that is as per the shari'ah and as halal as it gets. There were some penalty clauses as well for defaulted payments. I am not aware of the full details (I can ask) but penalty clauses are NOT covered in the above hadith that you have mentioned. If this discussion develops further then I think I should send your questions across to Shaykh Taha for clarifications.

Imran never denied Murabahah as a type of sale, what i said is that this form of financing wasn't practiced in the olden times ; it's just in our times this has been introduced in order to provide a base to the banking by the name Islamic.

You read & understood the Hadiths i posted above?

So the bank bought the car for, say X= PKR1,000,000 and sold it to you X=1,000,000+ Y=20,000 over 5 years-- may i ask you what's this Y=20,000 over a period of 5 years?

 

[Aleph]

The definition you have given of Qard Al-Hasanah is NOT a true depiction of the loans that are given and are fully shari'ah compliant. The correct definition would be that it is an INTEREST FREE loan that does not come with a time limit.

Now, just because something is "interest free" doesnt mean there cannot be a "fee" on it. I only mentioned the 12-month period for illustrative purposes otherwise Qard Hasanah does not come with time limits. So if there is a FEE attached to it (which is normally the rate of servicing the loan, not exceeding the actual administrative cost) and you take 20 years to pay off PKR 100K then you end up paying much more.

"Qard Al-Hasanah" ka yeh matlab nahin hai kay PKR 100,000 ka loan le liya aur aap 25 saal baad sirf PKR 100,000 he repay karengay! That would be possible ONLY if we had a monetary system based on gold/silver. That is NOT the case unfortunately and we have this 'toilet paper' currency that is constantly losing its value etc.

Qarz'e Hasanah is the gifting of the “use of the loan amount” for consideration other than business or personal gain on the part of the lender . The borrower may use it for anything he likes, even for business. This form of loan is treated as ṣadaqah by the sharī‘ah and is not examined through commercial rules.

The foremost among these is that no period of repayment can be fixed—the lender can take it back the nextday or postpone it indefinitely.

(Imran Ahsan Khan Nyazee an expert in Islamic finance)
.........................

if a new definition of Qarz Hasan has emerged, plz share.

 

[imran1976]

@imran1976 that things are not hunky-dory. Not just yet at least.

This is what i say that our Scholars should try to find out ways to get out of this system and not give us solutions from within the system.

People like Umar Ibrahim Vadillo, Imran Nazar Hosein; at least these people have recognized and trying while our Muftis are not even ready to recognize this.

 

[Aleph]

Yes, you may ask and you already did :P

That 20,000 extra is PROFIT MARGIN. It works on the simple principle that if I have something you want to buy I can sell it to you for any price I want and if it is mutually acceptable then the sale is closed.

There is only a very fine line between PROFIT MARGIN and INTEREST as has been mentioned by Mufti Taqi Uthmani in the paste that you provided. However, it REMAINS halal. And such sales DID take place in the times of the Prophet (SAW). For example, when Imam Ali (RA) was getting married to Fatima (RA) he didnt have any money to give as Mahr. So Uthman (RA) bought Imam Ali's weapons so that he could use that money as dowry. Ali could later buy his weapons back from Uthman when he was financially able.

The men were so pious that Hazrat Uthman (RA) gave back Ali's (RA) weapons to him right after he gave his dowry to Fatima! Agar aisa nizaam chahye toh aisay afraad toh paida karlo meray bhai.

Imran never denied Murabahah as a type of sale, what i said is that this form of financing wasn't practiced in the olden times ; it's just in our times this has been introduced in order to provide a base to the banking by the name Islamic.

You read & understood the Hadiths i posted above?

So the bank bought the car for, say X= PKR1,000,000 and sold it to you X=1,000,000+ Y=20,000 over 5 years-- may i ask you what's this Y=20,000 over a period of 5 years?

 

[Aleph]

Sir, they have recognized yet they are using paper currency and bank accounts themselves... WHY?

Like I said, they are nay-sayers with a tinge of hypocrisy (and, please, I really respect both Vadillo and Shaykh Hosein). To followers and listeners they often get mesmerized by speakers and they go into a bubble thinking that Shaykh saheb is calling for a complete uprooting of the system!! When in fact they are only pointing out the OBVIOUS that the current system stinks.

Now, those 'ulama who dont waste time in pointless lectures that serves NOTHING sit and DO something about it. They develop a parallel system to bring about the eventual islamization of our day-to-day affairs. That is why in history it is people like Taqi Uthmani who are remembered and not Shaykh Hosein and Vadillo. Everyone can talk (like me) but few can DO.

This is what i say that our Scholars should try to find out ways to get out of this system and not give us solutions from within the system.

People like Umar Ibrahim Vadillo, Imran Nazar Hosein; at least these people have recognized and trying while our Muftis are not even ready to recognize this.