punjabi_tha
Councller (250+ posts)
Just tell me one thing. Why should a common man follow what you say instead of Mufti Taqi Usmani who is more knowledgeable and has command over Islamic Finance and Banking?
"Islamic Banking" is DOUBLE Haraam - Sheikh Umer Vadillo
- Thread starter AsifAmeer
- Start date
Just tell me one thing. Why should a common man follow what you say instead of Mufti Taqi Usmani who is more knowledgeable and has command over Islamic Finance and Banking?
This view of yours prove that you don't even read books of the Scholars you follow, this is what Mufti TAqi Usmani says in his book An introduction to Islamic finance:
Murabahah is, in fact, a term of Islamic Fiqh and it refers to a particular kind of sale having nothing to do with financing in it's original sense"
"Originally, murabahah is a particular type of sale and not a mode of financing"
does it make sense now?
Imam ibn Rushd says in his Bidayatul Mujtahid:
If, however, he says, I will buy you this dress for cash for so much on the condition that you buy from me (on credit) with a period, it is not permitted unanimously (by ijma), according to them (the jurists), as it is one category of ina, which is the sale by a person of what he does not have and it also involves the prohibiting case of jahl about the price.
In the genuine Murabahah sale, the seller is in the possession of goods before he makes an offer whereas in this case your Islamic banker has no possession
Yahya related to me from Malik that he had heard that the Messenger of Allah, may Allah bless him and grant him peace, forbade two sales in one sale.
Yahya related to me from Malik that he had heard that a man said to another, Buy this camel for me immediately so that I can buy him from you on credit. Abdullah ibn Umar was asked about that and he disapproved of it and forbade it.
You are beating about the bush. You really are now clutching at straws in a desperate attempt to stop yourself from drowning. The quote has made perfect sense to me from the get-go. It is you who is still confused about that quote and I don't know WHAT you are trying to prove out of it?
Dude, ORIGINALLY, Riba is ALSO not a form of financing! Like I said, you have a serious comprehension issue with reading. What is there in the quote that you provide that is confusing you that much? You should note 2 things:
1- Mufti saheb is only explaining the etymological roots of the word "Murabahah". It comes from "Rabah" (Raa-Baa-7aa) which means "profit/excess".
2- Post-Industrialization, the fuqaha took the principle of "murabahah" from Islamic fiqh as an alternate to riba-based financing.
3- Before industrialization, the concept of "murabahah" was primarily being done in transactions of sales between 2 parties.
So, again, what is the point that you are making besides pasting the same thing ad hominem? You actually keep proving the point that Murabahah is very much HALAL and that Islamic banks are not doing anything wrong by financing with the mechanism of "murabahah".
Also, did you check the fiqhi books on the matter that murabahah mu'ajjal = bay' al-mu'ajjal? Interestingly, I have come across so many other instances where 3 terms have been used interchangeably in this matter:
murabahah al-mu'ajjal = bay' al-mu'ajjal = bay' al-murabahah!
Had you had the decency to paste the verse of Surah Baqarah in question in a little bit more perspective your confusion will end. Here it is:
Qaalu inna ma Al-Bay' Mithl Ar-Riba; Wa Ahlu Allahu Al-Bay' Wa Harrama Ar-Riba
[They say "Trade is just like interest"; But Allah has permitted Trade and prohibited interest]
So clearly, Al-Bay' (Profit on Trade/Selling) and Riba are both money-making enterprises. The verse also clearly mentions how both are very similar as people have argued (as Mufti saheb also mentions "with very thin lines") that they both are the same. However, Allah (SWT) settles the matter by explicitly stating that He has made money-making out of trading/selling halal and money-making out of usury haram.
I think it is you who is not putting the entire thing in context simply because you have already made up your mind that Murabahah (which is based completely on trading/selling) is dodgy because it is very similar to interest/usury. The answer is given above by Allah (SWT). If His Words can't convince you then what can I or Mufti Taqi Uthmani do to change that?
Dude, ORIGINALLY, Riba is ALSO not a form of financing! Like I said, you have a serious comprehension issue with reading. What is there in the quote that you provide that is confusing you that much? You should note 2 things:
1- Mufti saheb is only explaining the etymological roots of the word "Murabahah". It comes from "Rabah" (Raa-Baa-7aa) which means "profit/excess".
2- Post-Industrialization, the fuqaha took the principle of "murabahah" from Islamic fiqh as an alternate to riba-based financing.
3- Before industrialization, the concept of "murabahah" was primarily being done in transactions of sales between 2 parties.
So, again, what is the point that you are making besides pasting the same thing ad hominem? You actually keep proving the point that Murabahah is very much HALAL and that Islamic banks are not doing anything wrong by financing with the mechanism of "murabahah".
Also, did you check the fiqhi books on the matter that murabahah mu'ajjal = bay' al-mu'ajjal? Interestingly, I have come across so many other instances where 3 terms have been used interchangeably in this matter:
murabahah al-mu'ajjal = bay' al-mu'ajjal = bay' al-murabahah!
Had you had the decency to paste the verse of Surah Baqarah in question in a little bit more perspective your confusion will end. Here it is:
Qaalu inna ma Al-Bay' Mithl Ar-Riba; Wa Ahlu Allahu Al-Bay' Wa Harrama Ar-Riba
[They say "Trade is just like interest"; But Allah has permitted Trade and prohibited interest]
So clearly, Al-Bay' (Profit on Trade/Selling) and Riba are both money-making enterprises. The verse also clearly mentions how both are very similar as people have argued (as Mufti saheb also mentions "with very thin lines") that they both are the same. However, Allah (SWT) settles the matter by explicitly stating that He has made money-making out of trading/selling halal and money-making out of usury haram.
I think it is you who is not putting the entire thing in context simply because you have already made up your mind that Murabahah (which is based completely on trading/selling) is dodgy because it is very similar to interest/usury. The answer is given above by Allah (SWT). If His Words can't convince you then what can I or Mufti Taqi Uthmani do to change that?
Thanks for quoting this!
Now go READ how Murabahah works! In Murabahah, the bank FIRST buys the commodity and THEN sells it to you on differed payments! This is what makes it halal yaar.
It would be unlawful if the bank itself hasn't bought the car and is then financing it to you (as is the case in conventional financing). So you are now FINALLY admitting that Murabahah is a legal mode of financing :)
Now go READ how Murabahah works! In Murabahah, the bank FIRST buys the commodity and THEN sells it to you on differed payments! This is what makes it halal yaar.
It would be unlawful if the bank itself hasn't bought the car and is then financing it to you (as is the case in conventional financing). So you are now FINALLY admitting that Murabahah is a legal mode of financing :)
I have quoted the HAdith clearly stating "Buy this camel for me immediately so that I can buy him from you on credit."-----"Abdullah ibn Umar was asked about that and he disapproved of it and forbade it"
What else???
Janab, when a customer approaches the bank, the bank is not in the possession of goods at that moment. Now read the Hadith again.
Merey Bhai, Bai Muajjal meyn Aap profit disclose nahi kartay jab keh Murabahah meyn Aap disclose kartay hain -- it's different, you can read Mufti Taqi Usmani book and it will explain to you the difference.
[MENTION=28031]Aleph[/MENTION]
Please read the following -- this is Halal and i have no problems with this:
Laptop Finance is based on the concept of Musawamah which is a general and regular kind of sale in which price of the commodity to be traded is bargained between seller and the buyer without any reference to the price paid or cost incurred by the former. Thus, it is different from Murabaha in respect of pricing formula. Unlike Murabaha, seller in Musawamah is not obliged to reveal his cost. Both the parties negotiate on the price. All other conditions relevant to Murabaha are valid for Musawamah as well.
http://www.meezanbank.com/LaptopFinancing.aspx
Please read the following -- this is Halal and i have no problems with this:
Laptop Finance is based on the concept of Musawamah which is a general and regular kind of sale in which price of the commodity to be traded is bargained between seller and the buyer without any reference to the price paid or cost incurred by the former. Thus, it is different from Murabaha in respect of pricing formula. Unlike Murabaha, seller in Musawamah is not obliged to reveal his cost. Both the parties negotiate on the price. All other conditions relevant to Murabaha are valid for Musawamah as well.
http://www.meezanbank.com/LaptopFinancing.aspx
Hazrat:
I have read the hadith that you have provided and it is the translation of the actual Arabic text that is confusing you. If you read the Arabic then you will note that "buying of camel immediately" is being done without ownership. The shawarih (such as Imam Nawawi) have spoken at length about these ahadith. Moreover, the "...so that I can buy him from you on credit" is also further explained as riba and not rabah. Meaning to say that the deferred payments are on the interest amount and not the principal.
So for example, if the camel cost 100 Rupees and the middle-man 'buys' (remember he is not possessing, which is unlawful) it on his behalf and sells it to actual buyer for 120 rupees over 2 months (1st month: 50 + 10; 2nd month 50 + 10) then the middle-man allows the actual buyer to default on the principal and continue paying the credit/interest amount. So the payment could be done liek the following:
1st month: 50 (principal) + 10 (interest)
2nd month: 10 (interest only)
3rd month: 10 (interest only)
4th month: 50 (principal) + 10 (interest)
This is what is UNLAWFUL. And this is what is meant by the hadith in the actual Arabic. So the transaction disapproved has 2 haram components to it:
1- The middle man never becomes the owner of what he is selling;
2- He allows for a credit facility based on Riba.
In Murabahah, not only is the bank buying the commodity and becoming the owner, they are also allowing deferred payments but its done on PROFIT basis. Therefore, the actual buyer is not paying 2 components in monthly payments; he is paying only ONE component. So he has to pay 60 + 60. There is more to this but for now I will just keep it brief.
Pure and simple. And Surah Baqarah makes it very clear that is HALAL.
I have read the hadith that you have provided and it is the translation of the actual Arabic text that is confusing you. If you read the Arabic then you will note that "buying of camel immediately" is being done without ownership. The shawarih (such as Imam Nawawi) have spoken at length about these ahadith. Moreover, the "...so that I can buy him from you on credit" is also further explained as riba and not rabah. Meaning to say that the deferred payments are on the interest amount and not the principal.
So for example, if the camel cost 100 Rupees and the middle-man 'buys' (remember he is not possessing, which is unlawful) it on his behalf and sells it to actual buyer for 120 rupees over 2 months (1st month: 50 + 10; 2nd month 50 + 10) then the middle-man allows the actual buyer to default on the principal and continue paying the credit/interest amount. So the payment could be done liek the following:
1st month: 50 (principal) + 10 (interest)
2nd month: 10 (interest only)
3rd month: 10 (interest only)
4th month: 50 (principal) + 10 (interest)
This is what is UNLAWFUL. And this is what is meant by the hadith in the actual Arabic. So the transaction disapproved has 2 haram components to it:
1- The middle man never becomes the owner of what he is selling;
2- He allows for a credit facility based on Riba.
In Murabahah, not only is the bank buying the commodity and becoming the owner, they are also allowing deferred payments but its done on PROFIT basis. Therefore, the actual buyer is not paying 2 components in monthly payments; he is paying only ONE component. So he has to pay 60 + 60. There is more to this but for now I will just keep it brief.
Pure and simple. And Surah Baqarah makes it very clear that is HALAL.
[MENTION=22694]imran1976[/MENTION]:
Note that Mudarabah and Musharakah CANNOT be applied for all kinds of transactions.
Your confusion is stemming from the fact that you think principal amount + profit margin are 2 components and therefore a violation of the hadith. This is where you are going wrong.
Please note that in Murabahah the bank simply is OBLIGED to mutually agree with the buyer on the profit margin and it is only in that part where the bank in its agreement shows its actual cost + profit margin. However, on monthly payments, there is only ONE component (PKR 60 as in the case of the camel).
In the interest-based system, monthly payments have TWO components - principal + interest. This is what the hadith is talking about.
I hope you understand now.
Note that Mudarabah and Musharakah CANNOT be applied for all kinds of transactions.
Your confusion is stemming from the fact that you think principal amount + profit margin are 2 components and therefore a violation of the hadith. This is where you are going wrong.
Please note that in Murabahah the bank simply is OBLIGED to mutually agree with the buyer on the profit margin and it is only in that part where the bank in its agreement shows its actual cost + profit margin. However, on monthly payments, there is only ONE component (PKR 60 as in the case of the camel).
In the interest-based system, monthly payments have TWO components - principal + interest. This is what the hadith is talking about.
I hope you understand now.
[MENTION=22694]imran1976[/MENTION]:
I have found the book that you are reading and getting the above information from: "Fatwa on Banking" By Umar Ibrahim Vadillo. Everything you have said here is basically being quoted verbatim from this book (http://www.scribd.com/doc/77741581/14/Murabaha-what-it-is-and-what-it-is-not)
Like I have said, Umar Ibrahim Vadillo is raising some objections that are purely a play on semantics with respect to the words of Mufti Taqi Uthmani. many rejoinders have been written to this (some by Mufti saheb's students) that you can read up and see how they expose the shortcomings in Vadillo's reasoning.
The fact of the matter is that even in this book, Vadillo is sheepishly submitting that Murabahah is ALLOWED and he is only nit-picking on the semantics. This is what most people fail to see!
I have found the book that you are reading and getting the above information from: "Fatwa on Banking" By Umar Ibrahim Vadillo. Everything you have said here is basically being quoted verbatim from this book (http://www.scribd.com/doc/77741581/14/Murabaha-what-it-is-and-what-it-is-not)
Like I have said, Umar Ibrahim Vadillo is raising some objections that are purely a play on semantics with respect to the words of Mufti Taqi Uthmani. many rejoinders have been written to this (some by Mufti saheb's students) that you can read up and see how they expose the shortcomings in Vadillo's reasoning.
The fact of the matter is that even in this book, Vadillo is sheepishly submitting that Murabahah is ALLOWED and he is only nit-picking on the semantics. This is what most people fail to see!
this is just one book.
This is another misconception. USSR was never defeated. It could go on for decades. They were actually using Afghanistan as proving grounds due to issues within military (the way some wrestler gets too powerful and wants to practice and demonstrate his power).
USSR's retreat was due to perestroyka which caused the disintegration from within. When we read all the clauses of it along with underlying factors, we see that they had designed it long long ago this way. Russia still can go on war with any country for years without exhausting its military reserves. There was no war before that. Only tribal wars going on as they had been for hundreds of years. Russia's intrusion was not merely some years ago but planning had started long before that and CIA having insiders everywhere had prepared the counter also. Now coming to the real matter. We know that world is not ruled by governments but corporate interests since the beginning of new era so all in all, it served the military industrial complex as well as other trades which flourished in return. I assure you when we meet those who were part of the game, we have eyes widened till ears and after some time, we get used to it as we know that beneath every move, there is a totally different game going on.
My father wrote an article in 90s where he had told about the situation today. The exact situation my mate so knowing those who are power brokers means some thing.
Apni zuban theek ker lo phir hee kabhi baat ho saktay gi, mein tumhari tarbiyyat pe baat nahi keroonga magar aisi baatein yahi reflect kerti hain, Afosoasnaak! Allah tum pe rehmat kere aur jin logon ke ird gird tum apni badzubani ki vajeh se aziyyat aur sharmindagi ka bayis ho unko sukoon ataa farmaye.
atensari
(50k+ posts) بابائے فورم
Nice fiction keep your hopes high and alive for America as well.
[MENTION=24375]AsifAmeer[/MENTION]:
Dude, I have a question for you regarding Fractional Reserve lending. I have been reading up a bit about it and it seems its the prevalent style of banking around the world! With what I have read, it seems that this 'money multiplier' system was pretty occult in the sense that its inherent problem could only be exposed if people started withdrawing their money in banks in large numbers. Although even then these banks are covered by central banks of countries who lend out more to banks that might face problems with its reserve ratio due to large withdrawals (wow, I kind of sound like you :P)
My question is: If such large withdrawals is a precursor to the unearthing of this fraudulent prevalent system of lending, then where and when exactly did the withdrawal start happening? Or did withdrawals never happen and it was exposed some other way? How does the mortgage crises relate to this as well?
Looking forward to your response!
Dude, I have a question for you regarding Fractional Reserve lending. I have been reading up a bit about it and it seems its the prevalent style of banking around the world! With what I have read, it seems that this 'money multiplier' system was pretty occult in the sense that its inherent problem could only be exposed if people started withdrawing their money in banks in large numbers. Although even then these banks are covered by central banks of countries who lend out more to banks that might face problems with its reserve ratio due to large withdrawals (wow, I kind of sound like you :P)
My question is: If such large withdrawals is a precursor to the unearthing of this fraudulent prevalent system of lending, then where and when exactly did the withdrawal start happening? Or did withdrawals never happen and it was exposed some other way? How does the mortgage crises relate to this as well?
Looking forward to your response!
The debate over 'mark-up'
By Dr Aqdas Ali Kazmi
To what extent can the Islamic Shariah be considered competent to pass judgements on matters of a fiscal and monetary nature that belong entirely to the realm of economic management? This question assumes urgency in the context of contemporary controversies centred around the Islamization of the economy.
Religious jurists suggest that all economic issues, whether fiscal, monetary, trade-related or exchange-based, lie within the purview of Islamic jurisprudence because Islam is a complete code of conduct and the Islamic Shariah is comprehensive and all-embracing.
The opposite school of thought suggests that modern fiscal and economic issues are too complex and intricate to be handled by scholars who have exclusive learning and training in Shariah and little exposure to the technicalities of economic systems.
However, a middle-of-the-road position between these two extremes sees the Shariah as capable of interpreting fiscal and economic matters to the extent that it does not contradict itself.
A related question emerges: Does the Islamic Shariah regard mark-up, or a similar system, consistent with its basic precepts and principles? Mark-up is defined as the amount added to the cash price of goods to cover overhead charges/profit, etc.
The importance of mark-up in recent years has re-emerged because some of the most popular modes of Islamic finance such as Bai-Muajjal and Murabaha are based on the mark-up system.
In its operations, structure and use, mark-up resembles interest. This has led to the conclusion that if the Shariah accepts mark-up as valid, it is left with no basis to reject interest.
The stance of Islamic jurists on mark-up has gone through various stages in the last two to three decades. This now needs to be reassessed in order to determine the relevance of the Islamic Shariah to the economic issues and problems of today.
During the first stage, the Council of Islamic Ideology (CII) in 1980, during the time of General Ziaul-Haq, allowed Bai Muajjal as a mode of financing trade transactions which involved the pricing of commodities on a mark-up basis (i.e. cost plus a margin of profit).
The use of this mode was conditional: it was stressed that it should not be used as a backdoor for allowing interest into the banking and financial system. It was specifically stated: "However, although this mode of financing is understood to be permissible under the Shariah, it would not be advisable to use it widely or indiscriminately in view of the danger attached to it of opening a backdoor for dealing on the basis of interest."
While referring to the use of mark-up as a mode of financing, the CII had clearly laid down: "Safeguards would, therefore, need to be devised as to restrict its use only to inescapable cases.
In addition, the range of mark-up on purchase prices would also need to be regulated strictly so as to avoid arbitrariness and the possibility of recrudescence of interest in a different garb.
The State Bank may, therefore, specify, and from time to time, review and vary the sub-sectors/items for which banks may provide the needed finance under 'Bai Muajjal' arrangements.
It may also lay down the range of profit margin in general or separately for each sub-sector or item, and may impose such other restrictions as may be deemed necessary with a view to avoiding the emergence of unhealthy practices."
The consequences of permitting the use of mark-up were quite obvious as the State Bank of Pakistan in its BCD. Circular No.13 dated June 20, 1984, on Elimination of Riba from the Banking System allowed mark-up for seven different modes of transactions out of a total of 12 identified in the circular.
Thus, the apprehension that mark-up would serve as a gateway for interest proved quite true because mark-up in all practical matters is another name for interest.
Therefore, an interest-based banking system remained fully entrenched and protected. However, the use of the substitute word "mark-up" was enough to beguile the sensitivities of the Muslims.
This brings us to the second stage. The use of mark-up as a mode of Islamic finance was reviewed by the CII in 1984. Its use was subsequently disallowed in banking transactions.
The decision was worded as following: "There is a genuine fear among Islamic circles that if interest is largely substituted by 'mark-up' under the PLS operations, it would represent a change just in name rather than in substance.
PLS under the mark-up system was in fact the perpetuation of the old system of interest under a new name.... though not prohibited according to the Hanafi and Hanbali Schools of Fiqh, and that too in exceptional circumstances, its widespread use [of this technique] is not permissible as the mark-up does not differ in essence from the interest system."
The rejection of mark-up as an Islamic norm was also confirmed by the Federal Shariah Court in November 1991. This reconfirmed the revised decision of the CII in 1984.
The court concluded: "The mark-up system, as in vogue, is held to be repugnant to the injunctions of Islam and the word 'mark-up' be deleted from the provisions of section 79 and 80 of the Negotiable Instruments Act, 1981."
The next stage came with the reversal of the decisions of the CII and the court. The Commission on Islamization of Economy gave its report in 1992 showing a major departure from the earlier decisions of the CII and the Shariah court.
It concluded: "A contract of sale, whereby the deferred price of a commodity is different from the spot price, is not riba for the purpose of this act in so far as the contract entails all the necessary rights and obligations of 'a sale'."
The fifth stage relates to the famous judgement of the Supreme Court on riba delivered in December 2000. In the judgement there was a detailed discussion on "mark-up". But finally, the Supreme Court put its stamp of sanctity on mark-up as a norm of Islamic transactions.
The Supreme Court judgement states: "Murabaha mode of finance or the "mark-up" system with the conditions attached thereto is a permissible mode of Islamic finance and this mode cannot, therefore, be held to be repugnant to the injunctions of Islam if the conditions prescribed are not being practiced by some of the parties.
It is to be noted that such violations occurred, as there was no monitoring system in existence to check such errors of omission and commission and violations.
In the system proposed to be adopted with Shariah Board in existence in the State Bank of Pakistan as well as in the financial situations themselves, such violations as and when noticed shall be pointed out and eradicated... The adoption of the mark-up system within the limits prescribed appears to be the need of the economic system in the transitional period and till the time more and adequate number of Shariah-compliant financing modes are developed."
The above discussion leads to an important conclusion: Shariah jurists cannot reject interest if they accept "mark-up". It is imperative that the position of these jurists is redefined and made clear so that the present ambivalence is removed. This is essential if the credibility of Islamic jurists to interpret fiscal and economic laws is to be restored.
http://archives.dawn.com/2004/05/29/op.htm
By Dr Aqdas Ali Kazmi
To what extent can the Islamic Shariah be considered competent to pass judgements on matters of a fiscal and monetary nature that belong entirely to the realm of economic management? This question assumes urgency in the context of contemporary controversies centred around the Islamization of the economy.
Religious jurists suggest that all economic issues, whether fiscal, monetary, trade-related or exchange-based, lie within the purview of Islamic jurisprudence because Islam is a complete code of conduct and the Islamic Shariah is comprehensive and all-embracing.
The opposite school of thought suggests that modern fiscal and economic issues are too complex and intricate to be handled by scholars who have exclusive learning and training in Shariah and little exposure to the technicalities of economic systems.
However, a middle-of-the-road position between these two extremes sees the Shariah as capable of interpreting fiscal and economic matters to the extent that it does not contradict itself.
A related question emerges: Does the Islamic Shariah regard mark-up, or a similar system, consistent with its basic precepts and principles? Mark-up is defined as the amount added to the cash price of goods to cover overhead charges/profit, etc.
The importance of mark-up in recent years has re-emerged because some of the most popular modes of Islamic finance such as Bai-Muajjal and Murabaha are based on the mark-up system.
In its operations, structure and use, mark-up resembles interest. This has led to the conclusion that if the Shariah accepts mark-up as valid, it is left with no basis to reject interest.
The stance of Islamic jurists on mark-up has gone through various stages in the last two to three decades. This now needs to be reassessed in order to determine the relevance of the Islamic Shariah to the economic issues and problems of today.
During the first stage, the Council of Islamic Ideology (CII) in 1980, during the time of General Ziaul-Haq, allowed Bai Muajjal as a mode of financing trade transactions which involved the pricing of commodities on a mark-up basis (i.e. cost plus a margin of profit).
The use of this mode was conditional: it was stressed that it should not be used as a backdoor for allowing interest into the banking and financial system. It was specifically stated: "However, although this mode of financing is understood to be permissible under the Shariah, it would not be advisable to use it widely or indiscriminately in view of the danger attached to it of opening a backdoor for dealing on the basis of interest."
While referring to the use of mark-up as a mode of financing, the CII had clearly laid down: "Safeguards would, therefore, need to be devised as to restrict its use only to inescapable cases.
In addition, the range of mark-up on purchase prices would also need to be regulated strictly so as to avoid arbitrariness and the possibility of recrudescence of interest in a different garb.
The State Bank may, therefore, specify, and from time to time, review and vary the sub-sectors/items for which banks may provide the needed finance under 'Bai Muajjal' arrangements.
It may also lay down the range of profit margin in general or separately for each sub-sector or item, and may impose such other restrictions as may be deemed necessary with a view to avoiding the emergence of unhealthy practices."
The consequences of permitting the use of mark-up were quite obvious as the State Bank of Pakistan in its BCD. Circular No.13 dated June 20, 1984, on Elimination of Riba from the Banking System allowed mark-up for seven different modes of transactions out of a total of 12 identified in the circular.
Thus, the apprehension that mark-up would serve as a gateway for interest proved quite true because mark-up in all practical matters is another name for interest.
Therefore, an interest-based banking system remained fully entrenched and protected. However, the use of the substitute word "mark-up" was enough to beguile the sensitivities of the Muslims.
This brings us to the second stage. The use of mark-up as a mode of Islamic finance was reviewed by the CII in 1984. Its use was subsequently disallowed in banking transactions.
The decision was worded as following: "There is a genuine fear among Islamic circles that if interest is largely substituted by 'mark-up' under the PLS operations, it would represent a change just in name rather than in substance.
PLS under the mark-up system was in fact the perpetuation of the old system of interest under a new name.... though not prohibited according to the Hanafi and Hanbali Schools of Fiqh, and that too in exceptional circumstances, its widespread use [of this technique] is not permissible as the mark-up does not differ in essence from the interest system."
The rejection of mark-up as an Islamic norm was also confirmed by the Federal Shariah Court in November 1991. This reconfirmed the revised decision of the CII in 1984.
The court concluded: "The mark-up system, as in vogue, is held to be repugnant to the injunctions of Islam and the word 'mark-up' be deleted from the provisions of section 79 and 80 of the Negotiable Instruments Act, 1981."
The next stage came with the reversal of the decisions of the CII and the court. The Commission on Islamization of Economy gave its report in 1992 showing a major departure from the earlier decisions of the CII and the Shariah court.
It concluded: "A contract of sale, whereby the deferred price of a commodity is different from the spot price, is not riba for the purpose of this act in so far as the contract entails all the necessary rights and obligations of 'a sale'."
The fifth stage relates to the famous judgement of the Supreme Court on riba delivered in December 2000. In the judgement there was a detailed discussion on "mark-up". But finally, the Supreme Court put its stamp of sanctity on mark-up as a norm of Islamic transactions.
The Supreme Court judgement states: "Murabaha mode of finance or the "mark-up" system with the conditions attached thereto is a permissible mode of Islamic finance and this mode cannot, therefore, be held to be repugnant to the injunctions of Islam if the conditions prescribed are not being practiced by some of the parties.
It is to be noted that such violations occurred, as there was no monitoring system in existence to check such errors of omission and commission and violations.
In the system proposed to be adopted with Shariah Board in existence in the State Bank of Pakistan as well as in the financial situations themselves, such violations as and when noticed shall be pointed out and eradicated... The adoption of the mark-up system within the limits prescribed appears to be the need of the economic system in the transitional period and till the time more and adequate number of Shariah-compliant financing modes are developed."
The above discussion leads to an important conclusion: Shariah jurists cannot reject interest if they accept "mark-up". It is imperative that the position of these jurists is redefined and made clear so that the present ambivalence is removed. This is essential if the credibility of Islamic jurists to interpret fiscal and economic laws is to be restored.
http://archives.dawn.com/2004/05/29/op.htm
Lets move a bit further with our discussion on banks with Islamic labels --
http://www.hsbc.com.qa/1/2/ALL_SITE_PAGES/corporate-banking/hsbc-amanah-commercial-banking/amanah-commodity-murabaha
Product structure
Based on the amount of financing you need, the Bank will purchase commodities at a specified cost price from the international market and will sell it to you on deferred payment at a Sale Price (cost plus profit). The cost , profit amount and deferred payment date have to be determined at outset.
You then sell the commodities to Broker on immediate payment and delivery basis through your Agent (a subsidiary of the Bank)
.......................................................
isn't this a brazen violation of Islamic law where Bai' al inah (buy back agreement)is prohibited:
Ibn Umar said: "I heard the Prophet of Allah (S.A.W) say when you enter into the 'inah transaction,
hold the tails of oxen, are pleased with agriculture, and give up conducting jihad, Allah will make disgrace prevail over you, and will not withdraw it until you return to your original religion.
(Sunan Abu Dawood)
http://www.hsbc.com.qa/1/2/ALL_SITE_PAGES/corporate-banking/hsbc-amanah-commercial-banking/amanah-commodity-murabaha
Product structure
Based on the amount of financing you need, the Bank will purchase commodities at a specified cost price from the international market and will sell it to you on deferred payment at a Sale Price (cost plus profit). The cost , profit amount and deferred payment date have to be determined at outset.
You then sell the commodities to Broker on immediate payment and delivery basis through your Agent (a subsidiary of the Bank)
.......................................................
isn't this a brazen violation of Islamic law where Bai' al inah (buy back agreement)is prohibited:
Ibn Umar said: "I heard the Prophet of Allah (S.A.W) say when you enter into the 'inah transaction,
hold the tails of oxen, are pleased with agriculture, and give up conducting jihad, Allah will make disgrace prevail over you, and will not withdraw it until you return to your original religion.
(Sunan Abu Dawood)
Exactly like I had expected. Because you wouldn't have time to actually get a copy of the documents containing what perestroyka meant and how had it been implemented.
If you still don't know how corporate interests run governments and their lobbies in the world, then you don't research but blindly believe (no offence intended).
If you still don't know how CIA started all this drama of jihad, I would urge you to take those goggles out and see things how they are.
If you still believe that Russia military might was only worth this much, please spend some time watching how massive it still is.
And about the article, it was published in jang in the 90s so its not fiction but a reality. Anyway, no use discussing as my mate, (no offence intended again) when you only want to deny what is open out there, what can a person do.
Will not even care watching your reply now as its of no use. I too held the same attitude back when I was 8 and at that time, when I was handed material to read, I too started skeptically but then started to understand issues. Anyway, leave it. ta ta.
