Wednesday, 26 March 2008

An Introduction

Because man is a social being he interacts with society to satisfy his demands and to dispose of his surplus products. In so doing he may acquire wealth which can be defined as:
· money in the bank
· cash in hand
· short term securities
· treasury bills
· long term bonds
· real capital: farms, houses and family business
· Equities.

In micro economics the focus is on the individual in the society. It looks at how he is acquiring wealth and how he spends it. There may be very limited restrictions on how it is acquired or how it is spent. As a result the individual is free to indulge in things which may not be morally or ethically right in the process of dealing with wealth.

From the Islamic point of view wealth is a gift from Allah (God). He says in the Holy Qur'an the following:

Give to the needy from the wealth Allah has given to you. (24:33)

The earning of wealth is a social enterprise. When earned, it should be used to improve the social conditions of the individuals, their families and society at large.

In the Holy Qur'an Allah commands the Believers that every one of them should make every effort to earn wealth. He says:

Do not neglect your portion of this world. (28:77)

And when the congregational prayer is ended, then, disperse in the land and seek of the Bounty of Allah. (62:10)

One important way of acquiring wealth is through commerce. About it Allah says:

Allah has permitted trade (commerce) (2:275)

Let there be traffic and trade among you by mutual good will (4:29)

In the process of the acquisition of wealth, Allah has placed certain restrictions. Some of these are:
· avoid devious means: And you shall see many of them hastening toward sin and transgression and their devouring of ill-gotten wealth. (5:62)
· avoid hoarding: And there are those who bury gold and silver, and spend it not in the way of Allah: announce unto them a most grievous penalty (9:34)
· avoid taking interest: Those who devour riba (usury and interest) will not stand except as one who the Satan has confounded with his touch. (2:275)
· avoid creating monopolies: Wealth should not only circulate amongst the wealthy among you. (59:7)
· avoid gambling: O you who believe, intoxicants, games of chance, (dedication of) stones and divination by arrows are an abomination of Satan's handiwork; avoid them in order that you may prosper. (5:90)
· avoid unfair trade practices: So establish weight with justice, and do not give short weight. (55:9)
· avoid all types of fraud: Woe to those who deal in fraud (83:1)

In the process of transacting business a person may find himself with surplus wealth. He may not have the time, expertise or avenues to invest it in order to get further benefits.

Many Muslims put their surplus wealth in the Western commercial banks for safe keeping, without taking any interest from it. In such cases, the banks benefit and the depositor loses, as the purchasing power of the deposits may diminish over a period of time.

Besides, as long as it stays in the bank for a year, the depositor will have to pay the annual Zakaat on it, i.e. 2.5% from it. This will cause the amount to become less. As these issues became a matter of concern to the believers, the Muslim Scholars began to look for alternatives, in order to be able to address the situation. The conclusion was to start Islamic Banking. That was a little more than thirty years ago.

When the onlookers heard that "Islamic banks do not take or give interest, the first question that was always asked was: "How can you run a bank without taking or giving interest? Most industry professionals thought that they would either disappear as quickly as they had come along, or that they would continue to plod along in a marginalized manner, catering to a tiny clientele of religious purists and doing precious little else.

To the contrary, Islamic banks have mushroomed over the last three decades so that today there are more than 200 Islamic banks in more than fifty countries, with tens of thousands of branches and hundreds of thousands of employees offering products and services to millions of Muslims world wide. More importantly, is the fact that these banks have been successful without getting involved in interest.

In fact, Islamic banks have been responsible for major innovations in the banking sector. For one thing, Islamic banks have changed the nature of the relationship between bank and investor. The conventional relationship based on a lending contract has given way to partnership and cooperation in which the element of commitment is clearly present. Such a relationship, essentially a sharing approach, creates a performance incentive: a matter that requires more careful planning than quick overnight changes in interest rates offered to depositors.

The second innovation brought about by Islamic banking is the integration of financial and real markets. Again, using the sharing principle in the modes of financing they offer to their clients, Islamic banks share returns. If a client loses money, the bank loses money. In this manner financing is liked to the processes of the production and exchange of real goods.

The third innovation is the incorporation of ethics and moral values in the investment decisions taken by banks. Obviously, the observance or moral values is a clear Shariah imperative.

The present system of finance is based on a potentially disruptive element, and that element is riba interest. The modern Islamic financial sector represents a serious initiative to offer alternatives to finance and business based on interest. The success of this new sector to date represents an ample demonstration of the hypothesis that business can indeed be conducted effectively in the modern market place without interest. As a result, a number of initiatives have been launched with the purpose of offering Muslims a variety of alternatives to conventional financial products and services.

Some of these include Islamic mutual fund, Islamic home acquisition alternatives, Islamic venture capital, Islamic real estate funds, Islamic money market fund and Islamic insurance. More products will be added as the scholars are able to tailor a product to conform to the requirements of theology, as the future of Islamic finance is inextricably bound to its theological and moral foundations. At the same time, however the course it is to take in the coming decades is clearly linked to the efforts of scholars and the technical staff of the banks, to make it accessible to the Muslim public in ways that satisfy both their spiritual and temporal needs.

How does an Islamic Bank function?

· Fund Manager: he collects keeps and invests funds.
· Shariah Supervisory Board: Islamic Scholars supervising the fund manager's activities regarding the ways the funds are invested.
· The investor (not depositor), who makes surplus available to the fund manager for investment.
· An Escrow contract: A printed document which is an agreement made between the Fund Manager and the investor. This document contains the terms and conditions under which the investments are accepted, and terms of payment of dividends, etc.
· Investments: people may want to access the facilities available at the bank, not to borrow money. If they borrow they shall be required to back only what was borrowed, any excess will be considered as riba.
· Products: The bank may transact business in any one of the categories of products it may offer. These are:
Musharakah: joint enterprise, in which all partners share the profit or loss.
Mudarabah: a special kind of relationship in which one partner gives money and the other gives management and work. The profits are shared as agreed upon at the time.
Murabahah: A type of financing in which a commodity is purchased for a client and resold to him at a mark up price, and he is given time to pay it in installments.
Ijarah: To employ a person and pay for his services, or to lease something to another person for a fee.
Salam and Istisna: The validity of a sale of a commodity according to Islamic Shariah involves the following.
1. The commodity must be in existence.
2. The seller must have acquired the ownership of it.
3. He should have possession of it.
Istisna: it is the sale of a commodity before it comes into existence. For example a purchaser can order a specific commodity from a manufacturer, under specific terms and conditions.

In the process of transacting business Islamic Banks are guided by the basic Theological principle of "mutual goodwill", i.e. one party should not have an undue advantage over the other.

Greed or the desire to amass wealth at the expense of another is not allowed in Islam. As a result the Islamic Banks try to facilitate their clients in every way possible in order to enable them "to earn the best of both worlds".

Allah says in the Holy Qur'an:

(The Companions of the right hand will question the sinners) What led you into Hell Fire? They will say: We were not of those who prayed; nor were we of those who fed the indigent; but we used to talk vanities and vain talks; and we used to deny the Day of Judgment. (74:40-46)

According to what the Companions of the Fire said, there are four points, when neglected, will lead one to Hell. These are:

Salaat: This is a universal institution, and was prescribed to mankind through all the Messengers that came on earth. We have examples where Moses used to "fall on his face and worship"; Jesus, when he was about to leave this world, spent a lot of time in the Garden of Gethsemane worshipping, and in Islam it is made a Fundamental Principle of Faith. So important is this act of worship, that it must be observed even in the most difficult situation. The Prophet (pboh) is reported to have said that: Salaat distinguishes a believer from a non-believer.
Feeding the hungry: We see in Qur'an and in Traditions that feeding the hungry is one way of atoning for sins. In a Hadith e Qudsi, Allah indicated that to feed the hungry is like feeding Him; this will bring immense reward to the person who does so.
Managing ones time properly: Time management is extremely important in Islam. Every believer knows that he has a duty onto his body and one for his soul, so that he has to give due attention to both. There are those who just waste away their time with vain and idle talk; or they frequent places of entertainment and spend hours, but they do not have time to read the Qur'an or worship Allah, etc. Such people are doomed.
The day of Accountability: We came from Allah, and our goal is to go back to Him. He does not like impurities, and because sin is impurity, the sinner will not get close to Him unless he repents and make amends. When Adam sinned he was expelled from the Garden. Those who do not believe in the Day of Accountability will be careless about their deeds and actions and may violate every moral and ethical principle, so that on that Day, they will have nothing of Good that may be of assistance to them.

Islam enjoins upon believers to associate with good and avoid evil in order to be successful.

Our voice, though not part of our physical body, originates deep down inside of us, and through it we can say words. The Holy Qur'an originated in the Personality of Allah, as He says that it is His words. He says:

If one from amongst the Pagans asks you (O Muhammad) for asylum, grant it to him, so that he may hear the Word of Allah. (9:6)

Imam Ghazaali writes that the Prophet (pboh) said that Allah recited Surahs Taaha and Yaaseen one thousand years before creation. This was possible because the Qur'an is the Word of Allah. Because it is the Word of the Lord of the Worlds, some Muslim Scholars argue whether the Qur'an was created or not.

Allah took all the care to preserve that great Book. At the appropriate time He placed it in a divine vault called Lauhi Mahfuuz. He record about it in the following verse:

This is the Glorious Qur'an in the Tablet preserved. (85:21-22)

When Prophet Muhammad (pboh) was commissioned as the Final Messenger of Allah on earth, Allah caused the entire Book to be impressed on his heart. He says:

Verily, this is a Revelation from the Lord of the Worlds, with it came down the Spirit of Truth, in you heart and mind, that you may admonish in the clear Arabic tongue. (26:192-194)

Just as how the Qur'an was placed in Lauhi Mahfuuz in the heavens for safe keeping, so too, it was placed in the heart of the Trusted and Truthful person here on earth, to be released during the passage of time, in the form of revelations.

Even though the Book was in the heart of the Prophet (pboh) he was not authorised to read it before it was brought down by Angel Jibraeel in the form of Wahy over a period of twenty three years. This one reason why he was told:

High above all is Allah, the King, the Truth. Be not in haste with the Qur'an before its revelation to thee is completed; but say: O my Lord, advance me in knowledge. (20:114)

The Qur'an is the only revelation from Allah that was given such importance regarding its preservation. Allah gave Moses a book, and look what He said about it:

It was We Who revealed the Law unto Moses, therein was guidance and light ……… for to them was entrusted the protection of Allah's Book and they were witnesses thereto. (5:44)

A party of them heard the Word of Allah and perverted it knowingly after they understood it. (2:75)

So Allah gave the Israelites Books, which today they call the Bible—the Word of God. The Question is: Is the Bible really the Word of God? The following points make us reject such a claim:

· There is no record that the words of the Bibles found today are the exact revealed words.
· The Biblical text is full of contradictions, absurdities, inconsistencies, unfulfilled prophecies, broken promises, immoralities, etc. This is clear evidence that it is not from God.
· Even Christian scholars admit that the entire Book is not from God. According to them part of it is Divine and part human. No one has yet been able to identify what is Divine and what is human.
· The Apocryphal books are considered by some Churches to be the word of God and others reject such a claim. The question is: who is to decide which book is the word of God and which book should not be.
· "Word of God" means word that actually came from God. This is not the case with the Bible as both the Old and New Testament is reported speech.
· The versions of the Bible found in each sect in Christianity differ from each other; the question is: which one is acceptable.

See what the Encyclopaedia Biblica says about the New Testament:

The view hitherto current that the four Gospels were compiled by Matthew, Mark, Luke and John and appeared thirty or forty years after the death of Jesus, can no longer be maintained.
The four Gospels were compiled from earlier materials which have perished. Even if we accept more conservative opinions which place the earliest Gospel about 65 A.D., that would not of course, make any material difference, nor affect the conclusions of criticism as to their contents. Some of their statements of facts are quite erroneous. (Islam and Christianity in the Modern World. F.R.Ansari, pp.39-40)

We have no evidence to prove that the New Testament in its present form was ever spoken by Jesus, far less to be a revealed text.

Even if it were the spoken word, for more than sixty years no one made any attempt to record them

The four Gospels were chosen in a mysterious way.

It is the Church comprising ordinary human that decided which book was to be considered to be the word of God and which had to be rejected.

The rejected manuscripts were destroyed.

The other Sacred Scriptures of the different religions are not original revealed texts, but were compiled by the scholars over a period of time. For example, the Vedas were compiled about 1500 B.C. While each Sacred Scripture contains guidance, none of them can claim to be the original unadulterated text revealed to the messenger of the time.

The Holy Qur'an:

The Holy Qur'an was revealed to Prophet Muhammad (pboh) in a unique way called Wahy. Each revelation came down to the Prophet (pboh) as follows:

· Allah selected from the Book the verses that were to be revealed at any particular time.
· Angel Jibraeel was ordered to take it down to the Prophet (pboh).
· The Angel recited and the Prophet (pboh) repeated after him.
· The Prophet (pboh) then recited and the Angel listened.
· The Prophet (pboh) dictated to the available Scribes who copied what was dictated.
· The Scribes read and the Prophet (pboh) verified that what they wrote was correct.
· The Scribes and other Companions memorised and made their own copies.
· Daily recitation in Salaat made regular rehearsal of the revealed texts stay in the minds and hearts of the Companions.

No one was authorised to change any word of the Great Book; not even a dot that was revealed. About this Allah says:

This is a Message sent down from the Lord of the Worlds. And if the Messenger were to invent any sayings in Our name, We should certainly seize him by his right hand and We should certainly then cut off the artery of his heart. (69:43-46)

From this we can understand that the words of the Holy Book remain unadulterated.

The Qur'an is unique and special in many ways. Some of these are:

There is and can be no book like it. Allah says:

If the whole of mankind and Jinns were to gather together to produce the like of the Qur'an, they could not have produced something like it, even if they were to back up each other with help and support. (17:88)
It is free from doubts: Allah begins the Message of the Qur'an by stating that this Book is free from doubts. (2:2). Even the Prophet's (pboh) life was very straight forward, and on no occasion was there any instance where he could have been accused of being deceitful. He was recognised by all as the Trusted one and the Truthful one.

· A Perfect Code of life: The Qur'an does not have any defect in grammar, expressions, or any form of contradictions, etc. Allah says:

Praise be to Allah Who sent down the Book and hath allowed therein no crookedness. (18:1)
It is an Arabic Qur'an without any defects, in order that they may guard against evil. (39:28)
· It is a Book of complete guidance. Allah says:

And We have sent down unto the (O Muhammad) a Book explaining all things, a Guide, a Mercy and Glad Tidings to the Muslims. (16:89)
· The Challenge. Allah has issued a challenge to the world at large; i.e.
If you have doubts concerning that which We have sent down to Our slave (Muhammad), then produce a Chapter like it. (2:23)

The Qur'an is a special gift to mankind from the Lord of the Worlds and can take people out of ignorance and cause them to be enlightened. It has the capacity to enable believers to lead a successful life in this world and to gain a lofty place in Paradise in the Hereafter.