Is the non-usury laws in Islam actually practiced in modern banks in Islamic countries

[REhorror]

Well, we all know the no-usury laws in Islamic teaching.

But is this still practiced in modern Islamic countries? Do your local banks have interest rates?

 

[kingQamaR]

Everything you write is correct.
Now try getting finance from an Islamic bank.

I don’t understand. Are you saying Islamic banks will not give you money ?

 

[nahtanbob]

Now apply inflation to your statement. Is your statement correct?
Example.

I lend you $10 for 1 year today.
Today you can buy 10 apples.

You return $10 in 1 year and I can only buy 9 apples.
Did u return my money?

Also if I will always lose money lending to others why would I lend.

Molvis and Islamic finance shouldn't be mixed

There is a time value for money. I can't believe there are dimwits who cannot understand this

Quranic prohibitions relate to the fact that interest rates were extremely high in the 6th century. That is not the case in most of the world now.

 

[REhorror]

Interesting discussion.
Thanks for your input guise.

Obviously the western bank system cannot be the end-all be-all for all cultures.

 

[Indos]

Bank is intermediary, they get money from some one else, lend it to businesses, consumers, and has to make profit to pay for the workers working in the process and also to build and maintain its infrastructure facility like office HQ building, branch offices, ATM machine, security system, technology infrastructure etc

Islamic Bank system is making the interest rate fluctuation based on the Bank profitability. In Indonesia, Shariah Bank finance is very healty and they are the most profitable bank during down turn period like Covid time because they can decrease the interest rate freely and the lenders to the Bank is not sensitive on the interest fluctuation so they keep lend the money to the bank despite getting less return.

Quran verses in my opinion stresses on Individual lending where you dont act as intermediary like for example it is Haram for me to lend money to my relatives who are in difficult situation by applying interest on it.

There is verses in Quran about the forbiden to give high interest, so it means normal interest is allowed, and this verse IMO shows the legality to use interest for Banking system. But it is Haram for out side of Banking System like personal lending. That particular verse also shows that Banking system should be controlled by the state that can punish any bank who apply high interest to their lenders, thus the verse can be seen as the religious basis for the formation of Central Bank owned by the state to control and regulate the banking sector, not allowing them to do their business freely.

More explanation from me :

The interest in Islamic bank of course fluctuate. If it is fixed, it is not Islamic bank. The interest based on the business performance. What we see now if I put my money to Islamic bank, I will get interest based on bank performance. This is why Islamic bank is the most profitable during recent recession since they dont need to pay interest as much as commercial bank when their financial performance going down due to crisis. Financial system will be more healthy and less fragile if we use Islamic banks (Islamic system).

Actually if I am as a person want to lend some money to another person, making an interest on it is Haram (forbidden). People do ask money during difficulty right ? So it is Haram to make an interest when we lend some one money. But it is an institution that is beneficial for the economy and mostly lend money for businesses and the rest to some one who has already had good and stable income for consumption, not some one who get financial difficulty. There will be less money circulation as well if there is no bank. Banks grow the economy.

There is actually a verse in Quran that say God forbids compound interest and the other verse forbid some one who make an interest to another person. If I am about to interpret it, bank as institution can get away from being regarded as Haram as long as the interest is low and it is beneficial for the economy ( make money keep being circulated from some one who cannot grow it into some one that can grow it ).

“O believers, take not doubled and redoubled interest, and fear God so that you may prosper.” (Surah Al ‘Imran, verses 130-1)


What happen when the Banking system is dominated by State Owned Bank ?

And when the bank is even state owned so I would say it is difficult to regard it as forbidden activity, it is because government has right to tax their citizen if they have good income and profitable businesses. Islam also doesnt forbid government to tax their citizen, rather Islam shows that people should pay zakat and even do more than just zakat that benefit other people and society.

State owned banks dominate Indonesian banking system whether Islamic or not Islamic banks

Here is 10 major banks in Indonesia by assets

Bank Rakyat Indonesia (first biggest-state owned), Bank Mandiri (second biggest-state owned), BCA (third biggest-private/public owned- 50 % owned by public), Bank Negara Indonesia (forth biggest-state owned), Bank Tabungan Negara (fifth biggest-state owned), Bank Shariah Indonesia ( 7 biggest-state owned ) Bank Tabungan Pensiunan Nasional (ten biggest-state owned). The rest banks that are not mentioned are foreign owned

Top 10 banks are really dominating the national economy.

 

[313ghazi]

How do you guys rationalize this with Islamic teachings?

If you borrow a certain money and then pay more than the borrowed amount, that should be usury.

They are hypocrites - they don't rationalise, they just get on with it. When I say they, i refer to the govt of Pakistan and the banking industry.

Everything you write is correct.
Now try getting finance from an Islamic bank.

The unavailability of a halal alternative doesn't mean that we should not seek one, or stop considering the haram one as haram.

 

[Azadkashmir]

dum bastrd muslim so call nation goddamn slaves of usury. read about Hitlers Germany they printed their own currency backed by labour treasury certificates and out maneuvered the banks by bartering with other countries . thats wat the war was really about destroying Germany economic rise because the elites were scared it spread to other countries.
This made germany more advance than other countries.

pakistani ppl should protest against usury imf and should not pay tax as a result of borrowing on interest. it not like the ppl went to the imf and signed in their name plus they dont get the money so why should they pay up for.

 

[REhorror]

But one question was still unanswered: how did banking work in ancient/medieval Islamic countries like the Ottoman Empire?

 

[Indos]

But one question was still unanswered: how did banking work in ancient/medieval Islamic countries like the Ottoman Empire?

Islam is Islam. We are not confining the Quran interpretation by specific group of people, it can evolve base on current dinamics.

The industry revolution that speed up economic growth in the Europe is financed by banks by the way. When the economic disparity between Europe and the rest of the world widen, their technology and industry are getting ahead. This then lead to colonization by Western people to the rest of the world.

Killing people is forbiden in Islam, but during war it is allowed to kill combatan enemy troops. Eating pig is allowed for Muslim to save lives when no food left in jungle kind of situation. Islam is flexible.

Banking system and economy is related to defense strenght as well. It can define life and death of nation.

 

[REhorror]

Islam is Islam. We are not confining the Quran interpretation by specific group of people, it can evolve base on current dinamics.

The industry revolution that speed up economic growth in the Europe is financed by banks by the way. When the economic disparity between Europe and the rest of the world widen, their technology and industry are getting ahead. This then lead to colonization by Western people to the rest of the world.

Killing people is forbiden in Islam, but during war it is allowed to kill combatan enemy troops. Eating pig is allowed for Muslim to save lives when no food left in jungle kind of situation. Islam is flexible.

Banking system and economy is related to defense strenght as well. It can define life and death of nation.

It's cool but I want a genuine answer how Islamic banking used to work.

Anyway, gonna do some DuckDuckGo-ing.

 

[Trango Towers]

If you keep your money in a current account then you are safe from participating in interest based system as far as your person is concerned but you are obligated to do Dawah for Islam so that the people are converted to Islam and Islamic Social, Economic and Political System is established.


It is not gold gaining value by itself, it is because of shiploads of dollars being printed.

Loooool ok mate.

I don’t understand. Are you saying Islamic banks will not give you money ?

Yes bro...they tie u up in knots and you end up being worse off than you are with non Islamic banks.
Nothing in Islamic finance is 100% halal.

There is a time value for money. I can't believe there are dimwits who cannot understand this

Quranic prohibitions relate to the fact that interest rates were extremely high in the 6th century. That is not the case in most of the world now.

Ahhh so your post now has credibility using words like dimwit. Well as you are so smart show us how we can lend money and not lose money at the same time.

 

[R2D2]

Loooool ok mate.


Yes bro...they tie u up in knots and you end up being worse off than you are with non Islamic banks.
Nothing in Islamic finance is 100% halal.


Ahhh so your post now has credibility using words like dimwit. Well as you are so smart show us how we can lend money and not lose money at the same time.

If the bank becomes a profit and loss partner in the business, by checking the accounts and operations periodically.

 

[Trango Towers]

If the bank becomes a profit and loss partner in the business, by checking the accounts and operations periodically.

"If"

This is the critical word and they Don't

 

[OldenWisdom...قول بزرگ]

There is a time value for money. I can't believe there are dimwits who cannot understand this

Quranic prohibitions relate to the fact that interest rates were extremely high in the 6th century. That is not the case in most of the world now.

Indentured is the word you're looking for...
Pegged with time!

 

[R2D2]

"If"

This is the critical word and they Don't

They will have to otherwise pack their bags in the islamic government.

 

[Trango Towers]

They will have to otherwise pack their bags in the islamic government.

What Islamic govenment? There isn't one