INTRODUCTION
Islamic finance is an old concept but a very young discipline in the academic sense. It lacks the required extent and level of theories and models needed for expansion and implementation of the framework provided by Islam. In these circumstances, unawareness and confusion exist as to the form of the Islamic financial system and instruments.The main difference between the present economic system and the Islamic economic system is that the later is based on keeping in view certain social objectives for the benefit of human beings and society.
Those who swallow down usury cannot arise except as one whom Shaitan has prostrated by (his) touch does rise. That is because they say, trading is only like usury; and Allah has allowed trading and forbidden usury. To whomsoever then the admonition has come from his Lord, then he desists, he shall have what has already passed, and his affair is in the hands of Allah; and whoever returns (to it) - these are the inmates of the fire; they shall abide in it [Sura 2:275].
ISLAM’S VIEW OF TRADE
Interest is not a subject without trade and commerce. Islam recognizes trade and commerce not only as a lawful profession but also as a moral duty. Islam has laid down a complete set of rules for trade. The reason for these rules is to specify what halal earning is. There are many traditions (Ahadith) concerning halal provision that can also be found in the books containing the traditions of the prophet (peace be upon him).
RULES CONCERNING FINANCIAL DEALINGS
There are many examples of financial dealings among Muslims leading to disagreements, strain in relationships and even fights, instead of leading, as they normally should, to strengthening the bond of Muslim brotherhood and to mutual benefit. Almost everyone in our community must know cases, in which two or more Muslims become partners in a business or one gives a loan to another brother and the result is mutual pain instead of mutual benefit.
Fulfilling Agreements
All dealings between human beings, financial and otherwise, are based on some expressed or implicit agreements. Honouring these agreements is the key to happy and smooth relationships among members of a community or society. The Holy Qur'an therefore stresses this principle again and again. In several places the Holy Qur'an lists fulfillment of one's commitments among the most important characteristics of a believer.
Writing and Witnessing the Deal
To avoid failure of memory and to reduce the chances of misunderstanding and bad faith, the Qur'an commands the writing of financial deals and/or having the deal confirmed by witnesses
For financial transactions involving credit, the Qur'an commands the writing of the terms of the transaction and having the deal confirmed by two male witnesses or one male and two female witnesses.
Honesty (Avoiding Bad Faith)
Writing a clear, detailed agreement, duly signed and/or witnessed, can avoid two causes of problems in financial dealings: failure of memory and misunderstanding about the terms of the agreement.
Prophet Mohammad (PBUH) has stressed the importance of honesty in most of his sermons, saying:
Enforcing Agreements:
There will always be some people who do not give too much importance to taqwa (respect for moral values which comes through fear and consciousness of God and belief in the hereafter.)
They will not hesitate to break an agreement whenever it suits them. For such people there is also need for a legal apparatus to enforce the deals they willingly sign.
According to Quran:
Interest is not a subject without trade and commerce. Islam recognizes trade and commerce not only as a lawful profession but also as a moral duty. Islam has laid down a complete set of rules for trade. The reason for these rules is to specify what halal earning is. There are many traditions (Ahadith) concerning halal provision that can also be found in the books containing the traditions of the prophet (peace be upon him).
RULES CONCERNING FINANCIAL DEALINGS
There are many examples of financial dealings among Muslims leading to disagreements, strain in relationships and even fights, instead of leading, as they normally should, to strengthening the bond of Muslim brotherhood and to mutual benefit. Almost everyone in our community must know cases, in which two or more Muslims become partners in a business or one gives a loan to another brother and the result is mutual pain instead of mutual benefit.
Fulfilling Agreements
All dealings between human beings, financial and otherwise, are based on some expressed or implicit agreements. Honouring these agreements is the key to happy and smooth relationships among members of a community or society. The Holy Qur'an therefore stresses this principle again and again. In several places the Holy Qur'an lists fulfillment of one's commitments among the most important characteristics of a believer.
"O Believers: Honour your contracts" [Qur'an 5:1]
Writing and Witnessing the Deal
To avoid failure of memory and to reduce the chances of misunderstanding and bad faith, the Qur'an commands the writing of financial deals and/or having the deal confirmed by witnesses
For financial transactions involving credit, the Qur'an commands the writing of the terms of the transaction and having the deal confirmed by two male witnesses or one male and two female witnesses.
Honesty (Avoiding Bad Faith)
Writing a clear, detailed agreement, duly signed and/or witnessed, can avoid two causes of problems in financial dealings: failure of memory and misunderstanding about the terms of the agreement.
"Oh you who believe! Eat not up each other's property by unfair and dishonest means." Qur'an (4:29)
Prophet Mohammad (PBUH) has stressed the importance of honesty in most of his sermons, saying:
"Remember, there isno faith in him who is not trustworthy; there is no place for him in religion who cares not for his pledged word or promise."
He (PBUH) also said:
"The signs of a hypocrite are three: when he speaks, he is false, when he promises, he fails; and when he is trusted, he plays false."
He (PBUH) also said:
"The signs of a hypocrite are three: when he speaks, he is false, when he promises, he fails; and when he is trusted, he plays false."
Enforcing Agreements:
There will always be some people who do not give too much importance to taqwa (respect for moral values which comes through fear and consciousness of God and belief in the hereafter.)
They will not hesitate to break an agreement whenever it suits them. For such people there is also need for a legal apparatus to enforce the deals they willingly sign.
According to Quran:
"Fear Allah as witness for fair dealing, in hatred of others do not depart from justice. Being just is next to piety" Qur'an (5:9)
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