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Fiqh of Islamic Finance Fall 2010

Fiqh of Islamic Finance

  • Prerequisite: NONE (all topics are independent of previous sessions)
  • Required Text: Understanding Islamic Finance by Muhammad Ayub (for the bulk of the first session, this text will not be very relevant).
  • Time: Tuesdays 7:15 - 8:15 pm PDT until October 12, then from 7:00 to 8:00 pm from October 19 through November 30 2010.
  • Grading: 100% Final Exam; Scheduled for November 23.

Basic Outline of the Class

Topic 1: Introductory questions and points
Topic 2: The Place of Wealth in Islam (Text, pp. 32-41)
Topic 3: The Importance and Virtues of Earning a Legal Livelihood
Topic 4: The Business Ethics of Muslim (Text, pp. 64-70)
Topic 5: Rights and Obligations in Islamic Law
Topic 6: Contract Theory in Islamic Law (Text, Chapter 5)

2010-09-28 Class Notes

Review of basic economics

Choice between $20 now and $20 year from now, are they equivalent?
They are not the same, because of the loss of earning potential for a year. (opportunity cost)
What would make it equivalent?
Money has time value for it. Is there such a thing as time value of money from a sharia point of view?
Allah’s reward is the only time value of money “equivalent”?

Suppose I want to sell you something, and you are interested in buying it, but you want to pay it in installments, and I have two different prices, one price for full payment and another price for payment in installments, is that okay?

Three independent topics in fiqh and it will not be the case that the same principles will not be applied:
1. Buying/selling
2. Exchanging money
3. Loans or lending money

In the sharia, a loan is considered a brotherly act - a person is giving up the opportunity cost and time value of money when giving a loan.

Concept of money from Sharia perspective and western perspective, most of the concepts are the same.

Does money have to be backed by gold necessarily? We will discuss this topic if we have time later in the course.

Is money a factor of production? (ie, just as a laborer produces some product, can money be considered an output of labor?)

Definition of money from sharia perspective:
1. Money is a medium of exchange in both perspectives.
2, It is a store of value
3. Money is not a factor of production

From a sharia point of view, money is not considered deserving of return. In western society it is a factor of production and it produces interest.
Money in of itself does not produce anything. It is only when converted to something else that it becomes useful. Money is only a store of value.

Money was made as a source of ease; better than the barter system - can easily exchange goods and services via money. The thing that makes money work is peoples’ confidence in it. For example hyperinflation in Germany after first world war. [Edit: See Lords of Finance for more information about economics between World War 1 and World War 2]

Also note, that cigarettes were equivalent to currency in prisons. So money does not have to be in the form of a bill or a note.

We will discuss the concept of interest and define it properly, which will be a big part of this course.

Discussion about contracts
Moral and legal obligation of contracts
Is a promise equal to a contract? A promise is almost a contract - morally binding.
A promise is not legally binding. Therefore, a person cannot go in front of a sharia judge and ask to have a promise enforced. He will require a contract because a promise is non-enforceable.

What is a promise? A voluntary commitment to do something good for someone else.
(side note: the promise in Arabic is وعد and the threat of punishment is وعيد ; the words are very close to each other. This is an important issue in aqeedah)
When you loan an amount, it is now an act and not a promise.

Islamic finance is now a $300 billion market, and you will be surprised to know that it is based on the premise that a promise is morally binding but not legally binding. This is the way by which many of them get around the prohibition of interest. One of the principles of Islamic finance is that you cannot sell something that you do not own. (And then we got sidetracked by questions...)

Define riba in one word - increase, interest
It is unacceptable to translate riba as usury. Why is it unacceptable? Usury means excessive interest. Originally in the western societies, interest was prohibited, and at that time, interest and usury were equivalent terms. And when interest was allowed, then the meaning of usury changed, and it now has a connotation of excessive interest. (ie, there is a fixed ceiling on acceptable interest, after which it is called usury. This ceiling is set by the state)

It is also incorrect to translate riba as interest

If I lend you $100 and you return the money after one year, do you have to return the exactly same $100 note that I lent you? Can it be equivalent in gold? Can I lend you money in one form and you can return it in another form?

Fungible goods and non-fungible goods
Fungible are equivalent goods. (no one would care if one of those goods is exchanged with another one)
Non-fungible goods have unique value to them.
Goods might be fungible at one time, but over time they might not be fungible any more, for example two five-year old Prius cars may not have the same value because of their maintenance and the care taken by their previous owners.

If your car’s bumper gets damaged, and you get a check for that bumper, you have the right not to replace that bumper. However, morally you would have to replace that bumper since you have the right to have the bumper replaced, and do not have the right to get the value of a new bumper.since it is fungible. You get the value of non fungible goods.

2010-10-05 Class Notes

This topic requires in depth understanding of finance and fiqh. Unfortunately most of the people in Islamic financing are learning the Islamic Fiqh are learning the issues. And most of the people issuing fatwas are not well grounded in the understanding of economics and finance.

For example, someone was giving a lecture on Islamic finance. One of the main goals of banks is to act as financial intermediary. People deposit their money in banks and they in turn lend it to investors. Alternatively to banks are Venture Capitalists who raise their own capital.  This person was saying that we can pool our money together and we can end us just as much pool of money as banks. Is this correct?

Most basic definition of money
Money M1 = Currency C (notes in circulation as printed by the treasury) + Demand Deposits DD

People would keep their savings with goldsmiths or blacksmiths, and they noticed that the people actually needed only a fraction of the amount deposited with the goldsmiths or blacksmiths. So what did they do with the extra reserves? They lent the deposits. Banks do something similar.

Reserve Ratio: Banks determine a reserve ratio of how much reserves need to set for the needs of their customers. It is typically 20% of the deposits.

A bank may have $100k in actual deposits. It has to keep 20k in reserves. So it loans out 80k, which is redeposited as someone else’s credit (called a demand deposit). The system as a whole has 180k now, with $20k in actual cash.

Money multiplier of 20% reserves = 1 / Reserves = 5
Actual Deposits $100,000 X Money Multiplier 5 = $500,000.00
So Money Multiplier says that if you have $100K in cash reserves, you can lend $500K. So the banking institution has created $400K of money.
They can keep multiplying this amount to the actual deposits to create financial value of $500,000.00
This is one of the reasons why a run on the bank results in insolvency of the banks, they don’t have enough deposits. That is one of the reasons why the banks frown on people stuffing money into mattresses or safety deposit box or underground economy, because they want the money to go back into the system. If a house is searched and if they find cash, they assume it is drug money and it is confiscated.

So this explains the naive question where we can pool money but we cannot use the multiplier effect to create money.

The question is should Islamic banks have a reserve ratio of 100% and money multiplier of 1? This implies that we cannot create money from money multiplier effect?

Islamic finance cannot exist in vacuum and we have to wait for it to be implemented correctly and fully to understand their implications. Are leases halaal?

This is how the bank creates money. [Look up How Banks Create Money]. For the same reason, they frown on taking money out of the system (by putting it under a mattress or safety deposit box for example. Also can be due to the black market trading).

1944- US set up Bretton Woods and setup the gold reserves for the world currency. We also discussed the prohibitions on US citizens from buying gold bullions. On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. This action, referred to as the Nixon shock, created the situation in which the United States dollar became the sole backing of currencies and a reserve currency for the member states.

Paper money is not completely an ethical system, however it will cause immense hardship if you were to resort to gold coins for currency. This was in response to a question whether paper notes are halaal.

If you want to study Islamic banking - knowledge of western economics is not too hard to get; plenty of good colleges. What we really need is scholars with knowledge is Islamic legal theories, Islamic finance theory, strong in fiqh, combined with economics knowledge.

Is Islamic transaction knowledge fard ain?  Should we all know and learn about the Islamic regulations on transactions. For example when you buy an item unseen on Amazon.com is it a legal transaction?

2010-10-12 Class Notes

As students, we are responsible for the material covered in class as well as the assigned readings from the text. So far, we have not yet reached the areas in the text with assigned readings.

Why are we studying the background material?
We need to continue discussing the background topics regarding the fiqh of finance since the challenges involved with the topics we will be getting into later go beyond the concept of fiqh but also involve the concept of wealth, attitude towards wealth, ethics of a Muslim, particularly business ethics.  These two things go above and beyond the fiqh.  Someone can give you a fatwa that something is halal but that doesn’t mean you take advantage of that something being halal via fatwa in all circumstances.  Especially those things that we sustain ourselves from, it is very important that we understand what to look out for.  

The Prophet ﷺ warned us of a time where someone will not care what he takes, whatever it is halaal or haram.  We need to make sure that us as individuals don’t fall under this description.  We need to do our best to follow what is halaal to the best of our ability.

Is Islamic transaction knowledge fardh ‘ein?
Knowledge of fiqh of financial transactions is fardh ‘ein.  Many times nowadays we get involved in many different kinds of transactions and we need to know before hand whether these things are halaal.  Many of these things are complicated and even many ulimah don’t know much about these things due to their complexity; if these scholars don’t know if these things are halaal and haram then how would the layman know.

Why is this knowledge fardh ‘ein?
A muslim is expected to support himself.  Muhammad ash Shaibani, the famous student of Abu Hanifa, said that according to the majority of the fuqaha from the ahl sunnah jamaa’a is that supporting one’s self to the level of need is fardh.  

Evidences for a muslim to support himself
There are a number of evidences quoted.  One of them is the verse in Surah Juma’ah, where Allah swt says “when you finish the salaah, disperse in the land and seek the bounty of Allah and remember Allah often so that you may be successful.”  This is in the form of the imperative, go out and seek the bounty of Allah.  The basic rule of the imperative is that it is an obligation.  


Pickthall

And when the prayer is ended, then disperse in the land and seek of Allah's bounty, and remember Allah much, that ye may be successful.


Allah swt also says, in surah Baqarah ayah 267, oh you who believe, give from what you have honorably earned and from what We have produced for you from the earth.  This verse is indicating that you are supposed to earn something and that we should give from what we earn.  Preserving one’s own life is one of the goals of the shariah and since that cannot be achieved by supporting yourself in general then it is obligatory to support yourself.  There are also those that you are financially and legally responsible for.

Sahih International

O you who have believed, spend from the good things which you have earned and from that which We have produced for you from the earth. And do not aim toward the defective therefrom, spending [from that] while you would not take it [yourself] except with closed eyes. And know that Allah is Free of need and Praiseworthy.


We also see as the Prophet ﷺ has shown us that it was the sunnah of all the Prophets to earn a living.  Zakariah was a carpenter.  The Prophet ﷺ said no one eats or consumes anything better than that what he has earned by his own hand and Da’wud used to eat from his own hand.  

Concept of begging in Islam
At the same time, begging is prohibited in Islam in general.  In one hadith, the Prophet ﷺ said that begging is not permissible except in one of three cases,
1) one who has incurred a heavy debt may ask for money until he is able to pay off his debt,
2) a man whose livelihood has been destroyed in a disaster may ask for money to help him rebuild until he is able to be self-sufficient, and
3) a person who has been smitten by poverty for who three members of the community can testify that he is able to support himself after receiving such aid at some point.

Chapter# 34, Book 5, Number 2271:

Qabisa b. Mukhariq al-Hilali said: I was under debt and I came to the Messenger of Allah (may peace be upon him) and begged from him regarding it. He said: Wait till we receive Sadaqa, so that we order that to be given to you. He again said: Qabisa, begging is not permissible but for one of the three (classes) of persons: one who has incurred debt, for him begging is permissible till he pays that off, after which he must stop it; a man whose property has been destroyed by a calamity which has smitten him, for him begging is permissible till he gets what will support life, or will provide him reasonable subsistence; and a person who has been smitten by poverty. the genuineness of which is confirmed by three intelligent members of this peoples for him begging is permissible till he gets what will support him, or will provide him subsistence. Qabisa, besides these three (every other reason) for begging is forbidden, and one who engages in such consumes that what is forbidden. (Muslim)


What is the Arabic word for begging?
Masala مسألة which means the same thing as asking. Going and asking for money.

If a person is not able to support himself or doesn’t have the money to support himself but he has the capability to support himself, it is an obligation to try and support himself, even if all he can do is get firewood and sell it to people.

If someone has the ability to support himself then he must support himself.  If one has to beg from others, the heart starts turning towards them as the source of your sustenance and become a proxy for how you look at Allah swt.  If one does not put himself in a situation where one can be independent from others, you might become dependent on others in your tawheed rather than solely relying on Allah swt.

Reliance on Welfare Society by Muslims in Europe
Europe has a history of being a very racist society. Of course there are exceptions but we are talking about in general. Muslims were hated long before the modern day “terrorism” issue came up.  Many of the brothers there, especially those who called themselves “Salafi” were happy to live off of welfare despite being more than capable of working.  Even if they do work, they hide it from the government and therefore falling into lies and other fasaq.  They got this reputation among the Europeans: “look, these are what the muslims are and this must represent what Islam is all about.”  This is one of the things that developed hatred between the Muslims and Non-muslims in Europe.  

We should not be surprised about the negative consequences of our actions when we do these kinds of things.  Now this issue is big in Germany and France, and is now commonly manifested as racism in the work place.  Muslims often give others reasons not to like them.  When we fail to practice Islam properly, we present others with this opportunity. Here some of the Muslims choose to not support themselves and rely on the welfare society, they were capable of supporting themselves but choose not to do so.

Issue of financial support for Muslim Women
Muslim women are not obliged to support themselves.  Her financial support would be the responsibility of her father or husband. However, if she is wealthy, her father might not be financially responsible for her but the husband is always financially obligated to support her even if she is rich.  If the husband is poor, then she should help out but there is a difference on opinion amongst the ulemah as to the extent and terms of this help.  

Halaal Sources of Income
An individual is supposed to support himself, especially his family and do so in halaal ways.  The Prophet ﷺ said that if someone supports himself or sustains his flesh from ill-gotten money, then the hellfire will be his.
 من نبت لحمه من سحت ، النار أولى به
(Darimi, Al-Hakim, Ibn Hibban, Baihaqi)  
و من نبت لحمه من سحت فالنار أولى به
(Al-Khatib)

Effects of Haraam Sources of Income
The prophet ﷺ  said in a hadith: Verily Allah is pure and only accepts what is pure.  Allah swt has said oh messengers eat from what is right.  The meaning of tayyib has its own shariah meaning; that it is halaal and obtained in the proper way.


The individual who performs a long journey and raises his hands to the sky and makes dua’a to Allah.  The Prophet ﷺ describes him by saying his food, drink, clothing, nourishment are all unlawful; how is it he would be answered in this state.  The individual is within the conditions for which Allah swt would accept one’s dua’a; traveling, raising one’s hands, saying Rab.  The individual will get no response from Allah swt because what he is living off of is haram.  If that is his way of life, then when he turns to Allah swt then he cannot expect anything, despite the weight dua’a has with Allah swt.  This shows us some of the importance, especially with the relationship to Allah swt.
 

عن أبي هريرة رضي الله عنه قال قال رسول الله صلى الله عليه وسلم إن الله طيب لا يقبل إلا طيبا وإن الله أمر المؤمنين بما أمر به المرسلين فقال يا أيها الرسل كلوا من الطيبات واعملوا صالحا إني بما تعملون عليم

وقال يا أيها الذين آمنوا كلوا من طيبات ما رزقناكم ثم ذكر الرجل يطيل السفر أشعث أغبر يمد يديه إلى السماء يا رب يا رب ومطعمه حرام ومشربه حرام وملبسه حرام وغذي بالحرام فأنى يستجاب لذلك

[Muslim and Tirmidhi]



We can only live off of halaal by asking before we do; if we do before we ask, we will not know whether it is halaal or not.  The Prophet ﷺ has told us that on the Day of Judgement, the two feet of an individual will not move on the Day of Judgement until he is asked for things.  With respect to his wealth, he will be asked two things even before his feet moving, he will be asked about his wealth from where did he get it, and where did he spend it.  Input and output.  Then he will be asked about how he used it.  We must also be sure that we are spending it in the proper way.

لا تزول قدما عبد يوم القيامة حتى يسأل عن عمره فيم أفناه وعن علمه فيم فعل فيه وعن ماله من أين اكتسبه وفيم أنفقه وعن جسمه فيم أبلاه
[Tirmidhi]

Wealth from a Shariah Perspective
From a shariah point of view, is wealth evil?  No.

Before the Protestant revolution, the Christians say things in this world are necessarily evil. (Ed: Protestants claim that if you have money it means that God is pleased with you, so wealth became a sign of their status in front of God)  

In Islam, we don’t have this problem although this line of thinking has crept into some groups of Muslims due to outside influences. We should not strive to be poor. The class agrees that wealth is not evil.

Wealth is a trial (fitnah) for Muslims
Allah swt says in the Qur’an, verily you must know that your wealth and children are a fitnah or trial.  [Taghabun 15] Your wealth is nothing but fitnah, according to the Prophet ﷺ.  He said that every ummah has a fitnah, every nation has a trial, and the trial of my nation is wealth.

 إن لكل أمة فتنة و فتنة أمتي المال
[Tirmidhi]

The Prophet ﷺ said by Allah, it is not poverty that I fear for you, but it is that the dunya would be made easy for you and you will compete with each other in it and it will destroy you like it did the people before you.

 فوالله ما الفقر أخشى عليكم ولكن أخشى أن تبسط الدنيا عليكم كما بسطت على من كان قبلكم فتنافسوها كما تنافسوها فتهلككم كما أهلكتهم

[Bukhari and Muslim]

In another hadith, the Prophet ﷺ made the same statement stronger; dinar and dirham destroyed the people before you and they are going to destroy you as well. إنما أهلك من كان قبلكم الدينار والدرهم وهما مهلكاكم [Al-Bazzar]

The Prophet ﷺ also said that the people who are going to have the heaviest reckoning are those people to whom this wealth goes to since they will be asked about all of this.  Sheikh said, that’s why maybe the masakeen will enter jannah before the wealthy people.

It is a fitnah for many reasons.  Especially when it comes to wealth and financial manners, we have to have a lot of taqwa.  it is easy for us to be swayed by our desires and without that taqwa we will have no way to check ourselves.  This has to be very clear in one’s mind; only then can he make the right decision.  If he is drunk from the pursuit of wealth, he won’t be able to make a proper decision. He will compare the benefits that he can get from haraam means and halaal means; and it might lead him to choose haraam over halaal.

Wealth is a fitnah primarily because it is a love of human beings.  Allah swt has said that beautified for man is women and children and heaps of gold and silver. (Surah Imran:14)  The people love wealth.

The Prophet ﷺ said that if a human has one valley of gold he would wish for another valley of gold.

لو أن ابن آدم أعطي واديا من ذهب أحب إليه ثانيا [Bukhari]

How to approach accumulation of wealth?
People have natural inclination for things in this world.  The important thing to recognize is that this natural inclination always has to be guided by or overruled by the principles of the Shariah.  It is kind of a trial as Allah swt says you can only have wealth in these ways.  One has to control their urges or love.  People may think of zina or alcohol as something big but downplay the importance of controlling the desire of wealth.  Wealth can become a priority that damages one’s deen.  It can literally make one forget about Allah swt.  

Allah swt tells us in the Qur’an, oh you who believe, do not let your wealth or children divert you away from the remembrance of Allah.  If anyone does that then the loss is theirs.[Munafiqun:9]

Money makes one forget about one’s obligations to Allah swt.  Often times, people may be busy at work and decide that they don’t want to lose that time or opportunity that is in front of them and would prefer to delay the salaah to pursue that opportunity.  This is a damaging fitnah.

Wealth is not a source of happiness
Many times human beings think that their source of happiness comes from the accumulation of wealth.  Some people say that are not happy or content; if they only had a few more million dollars, it would bring them happiness.  Having things of this dunya, even if they are things that one has desired for their whole life, it won’t bring happiness.  

Happiness is a non-material feeling in the soul; simply having material things won’t fill the void in the heart and soul.  There are many millionaires and billionaires whose lives are in chaos despite them possessing such wealth.  There is nothing to be jealous of when studying their lives.  So many of them were miserable.  Those who were not miserable had something other than wealth that was providing for their happiness.

The Prophet ﷺ told us very clearly that true richness is the richness of the heart and true poverty is the poverty of the heart.  
إنما الغنى غنى القلب والفقر فقر القلب [Nasai and Ibn Hibban]

Somebody could be rich and miserable. Even worse, for those people who look towards wealth and think that wealth will bring some happiness in their life, they basically become slaves to wealth; they think they are happy if they get wealth and they think they will be unhappy if they don’t get that wealth.  It becomes a kind of servitude (slavery) when it is the main thing in one’s life.  

The Prophet ﷺ said that may the slaves of dinars, dirhams and of clothing perish as this individual is pleased if they get these things and are displeased if they don’t get these things and therefore they shall perish.

تعس عبد الدينار وعبد الدرهم وعبد الخميصة إن أعطي رضي وإن لم يعط سخط [Bukhari]

Preference of Hereafter over accumulation of wealth
Wealth, when given such a priority, can often become a priority over the Hereafter for people.  This is something that Allah swt has reminded us about in a number of places in teh Qur’an.  ‘You prefer the life of this world.’  ‘For he has transgressed and wealth has become his abode, he shall be in the Hellfire.’
They end up selling the Hereafter for this life. [Anfal:67]

From a contemporary scholar, one of the signs of danger is when people start looking for loopholes in the shariah related to getting halaal wealth.  We need to be cautious about the wealth we get and once we start looking for a loophole (fatawah, shuyukh, etc) and one just jumps on it because it’s wealth.  The simplest excuse will be used.  This is a strong sign that wealth has been given too much importance.  Once given the green light for wealth, people jump on the opportunity.

Proper attitude towards wealth
The correct attitude is that weath is not evil but it can become evil when it is given too much preference.  At the same time, wealth is insha’Allah a great source of good, which is the case with almost any ni’ma from Allah swt.  For example, some people have been given the ni’ma of intelligence;  some use it to benefit others for the sake of Allah swt, and others use it to figure out amazing ways to cheat people.  

Wealth can be one of the greatest sources of reward from Allah swt when used properly, especially when used to support one’s self and their family.  This can be a great source of reward but we must make sure that we achieve it through halaal ways and use it in halaal ways.  We must also remember that Allah swt is Al Rizzaq.  The way we behave is a reflection of our aqeedah.  We need to realize that Allah swt is the Provider, and anything that we achieve is the will of Allah swt.  

Take two stock traders.  One of them from 1929 and another from 1990.  The classical trader may have followed all the proper steps to make million of dollars yet that person goes bankrupt and commits suicide due to circumstances that Allah swt has created. (Ed: 1929 and 1990 were two black dates in the stock market, when they collapsed.) The contemporary trader may not have known much but earned millions due to the circumstances created by Allah swt.  Any wealth received will be from Allah swt.

The ulimah has talked about 17 different causes that will cause people to get rizq from Allah swt.  These are the laws of Allah swt that go above the physical asbaab (causes) of this world.  Allah swt can bring wealth to someone and keep wealth from others for various reasons.  This is a “supra-fiqh” issue.

2010-10-19 Class Notes

Our purpose in life
Allah swt says in a verse that is quoted often as one of the verses that clearly demonstrate to us as human beings what is our purpose and goal in our life; Allah swt says “and I did not create the jinn and human kind except to worship me.”
“And I did not create the jinn and mankind except to worship Me.
I do not want from them any provision, nor do I want them to feed Me”. Surah Dhariyat 56-57

Allah swt continues by saying “I do not want from them any provision nor do I want them to feed Me.”

All of the bounties and guidance Allah swt has sent as a great na’ma is a great benefit for us;  He is need of nothing.

Allah swt reminds us that this worship of Him is what we need.  Right after that, Allah swt says indeed it is Allah that is the continual provider, the firm possessor of strength.  The meaning of the word Ar Razzaq which is in the intensive form is someone who is continually providing and providing in great amount.  Some of the ulemah highlighted the relationship of Allah swt mentioning this attribute after the previous verse mentioned is that what sometimes causes people to swerve from the straight path is the issue of rizq; the issue of getting part of the dunya/getting the needs they feel they require in this world.  There can be a perceived conflict between worship and dunya; that one may be “poorer” if one focuses on worship over dunya or vice versa.  Here Allah swt is answering that by reminding us that He is Ar Razzaq.  If one is not going to get provision from Allah swt, one won’t be getting provision from anyone.  

All our provisions are from Allah swt
Allah swt says “Oh mankind, rememember the favor of Allah over you... there is no deity other than Allah then how is it you are deluded.”  Here Allah swt is stating that all of the bounties come from Allah swt and emphasizing that there will be no other provider that will give those provisions.  They have to come from Allah swt.

O mankind, remember the favor of Allah upon you. Is there any creator other than Allah who provides for you from the heaven and earth? There is no deity except Him, so how are you deluded? Surah Al Fatir V:3.

Allah swt is one the one who has determined one’s rizq.  The rizq received in this dunya has already been determined by Allah swt; He is the one who is in control of all aspects of this dunya, and He won’t leave you without that rizq.  

Al Albani has declared this hadith as hasan sahih.  The hadith is from Musnad al Basar, where the Prophet saas said the angel Jibreel, this messenger of this world, has come and inspired me that no soul will die until his rizq has been completed.  

Our rizq is predetermined
The Prophet saas said if the rizq is slow-coming, be patient and moderate and reasonable and do right in seeking your wealth.  Then he said, do not let the rizq coming to you slowly let you take rizq in a way that is disobedient to Allah swt, for verily Allah swt does not give what He has except through obedience to Him.  

ان روح القدس نفث في روعي : إن نفسا لا تموت حتى تستكمل رزقها فاتقوا الله و أجملوا في الطلب ، و لا يحملنكم استبطاء الرزق أن تطلبوه بمعاصي الله ، فإن الله لا يدرك ما عنده إلا بطاعته


In essence, the Prophet saas is saying that one’s rizq is determined, even before the person is born and that no one will die until he attains the rizq that Allah swt has decreed.  The reality is that no one knows what that rizq is, one has to accept what they are given and seek through the halaal ways.  Once an individual begins to resort to haram ways, they begin to transgress the laws of Allah swt.  

Someone might follow one path and earn millions of dollars whereas another may follow the same path and get nothing; this is all under the control of Allah swt.  There are ways in which we can increase our rizq through halaal ways.  We are not saying that qadr will be changed but rather increase one’s rizq by following certain asbaab.  

When we say Allah swt is going to increase the rizq, it does not mean that He will increase the rizq above what has been decreed for you.  Allah swt knows that because you are following the asbaab, the actual final amount will be based on the path you follow.  If you harm yourself by following haram, Allah swt knows this and there are many ways Allah swt can take rizq away.  The number one cause of bankruptcy in this country is caused by medical expenses incurred by those who had medical insurance that refused to cover some procedure or medicine. This point was made to highlight that our savings could disappear in the blink of an eye.

Putting our trust in Allah swt
We have to turn to Allah swt and put our trust in Allah as He is Ar Razzaq.  This act of placing our trust in Allah swt (believe by following what Allah swt is ordered us to do), Allah swt is going to provide for us with test and trials along the way (which will ultimately benefit us).  This reliance on Allah swt is argued to not have any worldly affect; however in reality, it is one of the asbaad in which Allah swt will provide for you and take care of you.  As Allah swt says in the Qur’an, “and whosoever puts their trust in Allah, Allah will suffice him”
And will provide for him from where he does not expect. And whoever relies upon Allah - then He is sufficient for him. Indeed, Allah will accomplish His purpose. Allah has already set for everything a [decreed] extent. Surah At Talaq:3

Allah swt will be sufficient for that person.  The one being entrusted must be capable of providing what is needed; Allah swt is the only one capable of bringing to pass what is needed.

We still have to earn our livelihood
Having tawwakul in Allah swt does not mean that the asbaab are ignored, this is important in the financial realm.  One needs to support themself through halaal ways; the asbaab that will bring about this sustenance must be sought.

[Hadith of tying the camel and putting trust in Allah swt]

The Prophet saas set the example for us for following the asbaab; it is an obligation for us to follow in this dunya so that we don’t go to the extreme of putting trust in Allah swt and sit back and expect money to flow like a river.  There are two extremes we must be ware of.  Any cause that is followed cannot come to fruition unless Allah swt allows it to happen.  Even when we are earning our livelihood, our heart must always be attached to Allah swt.  The results will not simply be through the physical asbaab.  This is the example that the Prophet saas has shown us as to what is the proper approach of having tawaqqal to Allah swt.

Aspire for good expectations from Allah swt
It is also very important to have good expectations of Allah swt.  [Recorded in a hadith qudsi from the Prophet saas.]

Hadith: I(Allah) am as my servant expects me to be. (what is the reference?)
إن الله تعالى يقول : أنا عند ظن عبدي بي إن خيرا فخير و إن شرا فشر

قال الله عز وجل : أنا عند ظن عبدي ، و أنا معه إذا دعاني

This is very important in the field of financial issues.  Allah swt is not looking for anything from us, not looking for any provisions from us.  Everything that Allah swt has revealed in this world for us is for our benefit.  Allah swt has no need to harm us, and as such we should expect good from Allah swt.  

We should expect that if we are following the commandments of Allah swt, nothing but good in this dunya and the akherah should result.  If someone keeps this point in mind and has the right attitude towards Allah swt, they should be protected from transgressing against Allah swt in financial issues.  Allah swt also has the right to punish you; if you are obtaining rizq through haraam means then why should Allah swt bring good to you.  

If you are sincere to Allah swt and have the correct belief in Allah swt along with good expectations, one’s mistakes will be forgiven by Allah swt.  This attitude in itself should keep you from even being tempted to do something haraam.  The more one gets involved with haraam, the more one’s relationship with Allah swt is harmed.  This is too great of a relationship to be put at risk.

Given all of that, Allah swt has shown us and has given us signs as to how we can increase our rizq in this world.

Q&A:
Q: We can clearly say that whatever approach that one takes that is haram will not ultimately increase our risk.  People often equate rizq with cash and as such seek cash by any means necessary.
A: The Prophet saas describes that no matter how much riba we have collected, we will not benefit from it.  Ultimately, it will not end up in any good because it will not be blessed by Allah swt.  This is not good “accounting” on there part.  There is a classic debate between the mu’atezilah and ahlus sunnah on this issue.  The problem is that only Allah swt knows what state you are in and if the person if only going by a balance in a bank account, he is deceiving himself.

Q: What’s the definition of rizq?  Is it only money or is it all other blessings?
A: Rizq is any kind of blessing/provision from Allah swt.  In this class we will be discussing more the financial aspect.  Allah swt also provides the spiritual rizq.

Q:  Some people may get affect by natural disasters and the Qur’an warns that some people will be punished, so how does having good expectations fit in?
A: Even if one faces hardship in this world, the person will ultimately find good in it.  Allah swt will not wrong anyone.  Allah swt has said that He has forbidden dhulm for Himself.  Allah swt has created this world with trials.  The ultimate result for believers in this dunya will be good, even though they may go through great material hardships.  Some people find spiritual joy when going through physical hardships.  We have become accustomed to focus on one’s physical state as opposed to the spiritual state.  Ibn Taymiyyah, when he was jailed, said that no one could remove this spiritual state from him.  [My jannah is in my heart, even if they imprison me, they cannot harm my spirituality which is in my heart].  It is not the standard for how happiness is brought in this world ($$$ in a person’s hand).  There is no comparison between gains by obeying Allah swt and gains from riba or inflation.  The priorities must be kept in check.  

Q: Will the tawaqul be visible physically or is it only a state of the heart?

A: It will be reflected in the person’s actions.

Q: In the view that since humans sin, how are the good intentions and fear of deeds not being accepted affected?
A: the individual must be in balance between having hope and fear in Allah swt.  One is responsible for their sins and Allah swt has the right to take anyone to account for their sins.  The hope in Allah swt should dominate when one is performing good deeds and hoping that they would be accepted.  There are aspects in life where one of these may dominate over the other; the reality is that the fear and hope are always there but in certain circumstances one component of emaan might affect one more (or should affect the person more).  Focusing on one aspect without keeping the other in perspective can cause major problems like one being in a continual state of despair, etc.

Q: The rizq and qadr is determined by Allah swt, but the choice of doing halaal and haram lies with the human being.  Do that determine the magnitude of the rizq.  What about the timing of the rizq, is that affected by the choices humans make or is that by qadr?
A: The steps being taken affect the magnitude of rizq.  If one follows certain asbaab and did nothing to prevent you from accomplishing that goal at that time, then the rizq can come to you at that time.  Sometimes it can be related to one’s actions but sometimes one may be blessed with rizq outside of one’s direct actions (could “come from no where”).

End of Q&A

Actions that will increase your sustenance
Twenty one points from the Qur’an and Sunnah which describe how to increase one’s rizq
These are aspects where there are ayaah or hadith that tie these actions to bringing rizq from Allah swt or increasing rizq.  Most of them are very straightforward and some of them require some ijtihad from scholars to reach that conclusion.
  1. Seeking forgiveness from Allah swt and repenting to Allah swt.
    1. Verses from the Qur’an that the ulimah point to where if one turns to Allah swt sincerely seeking forgiveness, then Allah swt will bless you in this life.
      1. Surah Nooh, verses 10-12
        1. Here there is a direct relationship with what Nooh said in these paragraphs with Allah swt providing.
        2. One time, Umar and went out to make the prayer for rain.  The only thing that Umar said during his dua’a was asking for forgiveness.  He was later asked why he wasn’t asking for rain.  Umar said that he was performing the act for which rain would be provided.
        3. In this surah, there is explicit mention of mentioning Allah swt and seeking His forgiveness and receiving an increase in wealth and children.
      2. Surah Hud
        1. This relationship is being described as the method for which Allah swt provides rizq
        2. Allah swt begins the surah with a number of instructions.  
        3. Ibn Abbas explained this portion of giving good provision that Allah swt will bestow upon you provisions and ease.  
  2. Taqwa - See notes from 40 hadith of Nawawi for an accurate understanding of taqwa
    1. Verses from the Qur’an
      1. Surah Talaq, verse 2-3
        1. Allah swt can provide for someone in so many ways through means that one does not even know of, all by having taqwa of Allah swt.
  3. Tawakkul of Allah - both trust and reliance in Allah swt.
  4. Set aside some time for the worship of Allah swt.
  5. Following up Hajj with Umrah, one after the other. Performing them one after the other
  6. Keeping the ties of kinship.
  7. Giving for the sake of Allah swt. (a classic example of doing one thing that looks like it will lead in an opposite result)
  8. Providing for someone who is dedicating himself to the study of the deen.  (evidence not quite direct). [the term “student of knowledge” is being overused these days]
  9. Being good to the poor. (al ahsan ila al duafa)
  10. Making hijra for the sake of Allah swt.  (an interesting one in the sense of how the concept has been changed so much that people do this for the sake of rizq but are missing one little component which is making hijra for the sake of Allah swt)
  11. Giving thanks to and praising Allah swt.
  12. Getting married.  (may be more specific cases)   
  13. Being honest in one’s dealings.  
  14. Making the Hereafter one’s main concern
  15. To establish the law of Allah swt.
  16. Dua’a
  17. Taking one’s needs only to Allah swt.  When in need, express it only to Allah swt and only to Allah swt.
  18. There is also some evidence of salaat as an asbaab here.
  19. Istiqama - remaining steadfast in the name of Allah swt.
  20. Striving to achieve the permissible goal - wealth in itself or rizq is not haram.  Reward for the effort put into doing something good/halaal.
  21. Working for the sake of Allah swt and trying to increase one’s hasanat.


These were collected from .... and they are in no particular order. [LIFO :) ]

Actions that will decrease your sustenance
There are some explicit things about what will decrease rizq.
  1. Acts of disobedience to Allah swt.
  2. Not making the scales or giving proper weights i.e. being dishonest in business transactions.



Seeking forgiveness from Allah swt and repenting to Allah swt.

The following verses are for the actions that will increase your sustenance

Sahih International
And said, 'Ask forgiveness of your Lord. Indeed, He is ever a Perpetual Forgiver.

Sahih International
He will send [rain from] the sky upon you in [continuing] showers

Sahih International
And give you increase in wealth and children and provide for you gardens and provide for you rivers.


We find in surah an Nuh v 10-12    notes above

وَيَا قَوْمِ اسْتَغْفِرُوا رَبَّكُمْ ثُمَّ تُوبُوا إِلَيْهِ يُرْسِلِ السَّمَاءَ عَلَيْكُمْ مِدْرَارًا وَيَزِدْكُمْ قُوَّةً إِلَى قُوَّتِكُمْ وَلَا تَتَوَلَّوْا مُجْرِمِينَ (



And [saying], "Seek forgiveness of your Lord and repent to Him, [and] He will let you enjoy a good provision for a specified term and give every doer of favor his favor. But if you turn away, then indeed, I fear for you the punishment of a great Day. Surah Hud V3

Ibn Abbas said Allah will bestow ease on you.


Taqwa

The following verses are for the actions that will increase your sustenance
Surah At Talaq V2-3 with respect to taqwa.


Sahih International
And when they have [nearly] fulfilled their term, either retain them according to acceptable terms or part with them according to acceptable terms. And bring to witness two just men from among you and establish the testimony for [the acceptance of] Allah . That is instructed to whoever should believe in Allah and the Last day. And whoever fears Allah - He will make for him a way out

Sahih International
And will provide for him from where he does not expect. And whoever relies upon Allah - then He is sufficient for him. Indeed, Allah will accomplish His purpose. Allah has already set for everything a [decreed] extent.


2010-10-26 Class Notes

Spending in the cause of Allah swt does not decrease your wealth
There is a good english book on increasing one’s rizq by Sheikh Yassir Qadhi called “15 ways to increase your earnings.”  [ http://store.dar-us-salam.com/product/R56.html or http://www.islamicbookstore.com/b8332.html ]

A reminder of one of the aspects talked about last week.  When we talk about Allah swt being al Razzaq, we have to realize that there are some laws of Allah swt (Sunan of Allah swt) that exist in this dunya that are above and beyond the simple asbaab we see in this world.  In the contemporary secular world, there is a great emphasis on the worldly causes while neglecting and ignoring the higher causes.  There are things that happen in this world that we can’t explain.  

Allah swt makes clear to us that if we spend for the sake of Allah swt, our wealth does not decrease as a result to it.  If we look at our bank account for the moment, we see a debit.  However, Allah swt has made it very clear that we will be rewarded.  

The Prophet saas has made clear in a hadith qudsi as he relates from Allah:
 قال الله تعالى يا عبدي أنفق أنفق عليك
[Bukhari]

Sadaqah does not decrease wealth.
ما نقصت صدقة من مال وما زاد الله عبدا بعفو إلا عزا وما تواضع أحد لله إلا رفعه الله عز وجل
[Muslim and Tirmidhi]

Q: Should we expect to see the wealth increased in this lifetime?
A: As a simple human being, even with the most advanced technology, we would not be able to comprehend the rizq given to us by Allah swt and how it is delivered to us.  It’s not like any financial bookkeeping.  Only Allah swt knows the long-term effects of what we spend for the sake of Allah swt.

Q: Question about qadr and efforts????
A: You qadr is not a result of a random number generator. Allah swt asks to strive and make an effort. Some of the rizq is a result of your efforts. Two people might put in the same effort but not receive the same results.

What happens to people is the result of their actions.  Only Allah swt knows the exact details or reasons behind it.

Q: Do you just have to earn enough to support yourself and no more??
A: You have an obligation to support yourself and how much you should support yourself is based on customs / standard of living / urf. Even when you are working to satisfy your basic needs, you cannot allow these attempts to keep you from worship of Allah swt. You should not divert from your ultimate purpose and goal. Once you have met your needs, you are allowed to become rich.

Wealth in itself is not considered evil. Prophet has said that wealth in the right hands can be a blessing???
It is not expected that if you reach a level of income and then you are supposed to spend time in the masjid. There is no such thing. Anas ibn Malik and the houses that they lived in Basrah were described as mansions.

Q: The meaning of the word masakeen in the hadith quoted earlier
A: Masakeen does not mean that he does not have wealth, it could mean that he does not have respect or his priorities in life might not be correct. The more wealth you have, the greater your reckoning. In general, the richer people do not fulfill their obligations and allow wealth to effect them, hence it is considered a fitnah.

Patience in the time of hardship is easy, for example if you are imprisoned, you have no choice but to be patient. But if you have power and fame, then you will have many more temptations, ibtilaah, and then they dont succeed. Sometimes it is good to be poor and meeting your obligations, ie you should not be dependent upon others to meet your obligations.

Ethics of Muslim in financial issues
When a Muslim takes a job, his attitude should reflect Islamic teachings.  Unfortunately, if you look at the muslim world, the Islamic ethics are many times missing, even here in the United States.  One might think that people who are a minority in a country would be more “religious.”  Muslims should have very specific ethics and yet when it comes to actual business dealings there is something lacking.  Even people who attend the mosque can conduct business in ways that don’t reflect Islamic teachings.  We can go to people who have done business with Muslims and find out their experiences.

Fiqh and Spirituality go hand in hand
Fiqh is not just about halaal and haraam, it’s not a straight line.  There is a driving force in a human that should guide them to what is right and what is best.  Sometimes this means even among things that are halaal; you don’t do things halaal just because they may be halaal according to a strict fiqh point of view (eg from an online fatwa of some kind) yet they might be bringing harm to someone or causing an injustice.  There are other rules that must be kept in mind.  The books of fiqh have one purpose, and one of the biggest problems we’ve had in our history are those that write about fiqh are attacked as not being spiritual.  There is no divide like this in Islam; the Sahabah knew the fiqh and were also spiritual, the two should not be divided.  

Altruism and Western Capitalism
One of the things that we see from the Prophet saas is that Islamic business and economics should not be a kind of cut-throat reality for the purpose of profit.  This goes against everything that Western economics teaches.  In western economics, the profit motive drives all business dealings.  The hope is for the best of both worlds, which is sort of a delusive.  There should be a spirit behind the business dealings of a Muslim.  Looking at the US, the corporate profit is at an all-time high and unemployment is at an all-time high.  The bonuses are still at an all-time high.  The corporations are so worried that they might lose out of their massive profits that they are very reluctant to higher.  It’s better for them to not hire people according to their way of thinking which is actually backward when one analyzes the mechanics of it.

Spirit of brotherhood in business dealings
The spirit of brotherhood in Islam when dealing with brothers is important.  The Prophet saas said, “May Allah swt have mercy on the one who is (samaha) easy-going and generous while engaged in buying, selling and demanding his rights.”
رحم الله عبدا سمحا إذا باع سمحا إذا اشترى ، سمحا إذا اقتضى [Bukhari]

One of the principles in business dealings is complete honesty
We know that there are laws of Allah swt that are above the laws we see in this dunya.  One might be able to get away with cheating until they die.  What Allah swt is doing to them in this life and in the Hereafter are not considered b y these people, who instead focus on the immediate numbers.

Reward for pious and honest businessmen
Allah swt shows us that in particular with business dealings, we must be honest to the point where the Prophet saas said the honest trustworthy business/trader will be with the Prophets and the sincere and the martyrs on the day of judgement.  Al-Albani declared this weak but later said it was sahih.  Business is a big fitnah and overcoming those trials is not easy and as such the reward for doing so is great.  

The Prophet saas also said Shaytan and sin are present at the time of a business dealing and accompany the business dealing, so therefore business dealings should be mixed with some sadaqah.  Shaytan is going to try and convince you to try to affect you on any business deal and if you do something wrong, it will be sinful.  One has to be very careful and has to do something to counter these threats, and as such the Prophet saas recommended that people mix some sadaqah with their dealings, particularly with the other party.

Punishment for evil businessmen
The Prophet saas also said that the businessman will be resurrected on the day of judgement as evil doers except those that have taqwa of Allah swt and remain pious and honest.
إن التجار يبعثون يوم القيامة فجارا إلا من اتقى الله و بر و صدق [Tirmidhi]

These are strong words from the Prophet saas.  They show us that the possibly ramifications and potential behind business dealings is great; both harmful or beneficial.  The reward of dealing ethically in business and in the workplace is so great as shown by the emphasis placed on honest business dealings.

If people can get away with tricking or deceiving an employer, they will do it.  Muslims however should know that we should not play with these things; it’s not a joke.  We need to take it seriously.  A muslim should not use an employer’s wrong actions or sins as an excuse for not putting in honest work.  It is not one’s business to delve into the wrong-doings of an employer for the sake of making excuses or committing fraud or deception.

Deception in business dealings
The Prophet saas one time visited the marketplace and found someone selling a pile of grains.  When the Prophet saas put his in the grain pile, he felt some that were wet on the bottom.  Wet grain does not last as long.  The man did not show that the wet grains were on the bottom.  The Prophet saas said to the man, (the man said it had rained),

أفلا جعلته فوق الطعام فتراه الناس من غشنا فليس منا

“Why didn’t you put it on top of the food so people could see it?” If it is defective let people see it is defective.  “Whoever deceives is not from me.”  One is not following the way of the Prophet saas when they are deceiving people.  This kind of sin happens even amongst believers and we as Muslims have an obligation to do what is true.  Between believers, we have an extra obligation of brotherhood.  

This hadith is stating a general principle that applies to non-muslims and muslims and is emphasizing that muslims have rights upon each other.  The Prophet saas said that the muslim is the brother of another muslim and it is not permissible to sell something defective to his brother without making the defect known.  This is a general principle that is emphasized higher in respect to dealings with other Muslims.  

The Prophet saas also said that the two parties of a contract (any kind) are honest and clarified all their matters, their business dealing between them will be blessed.  If they concealed things or lied, then the blessings would be destroyed.  
البيعان بالخيار ما لم يفترقا فإن صدقا وبينا بورك لهما في بيعهما وإن كتما وكذبا محقت البركة من بيعهما [Tirmidhi]
This re-emphasizes complete honesty in business dealings. Muslims have to be honest but specially in honest dealings.  Working for someone is considered a financial contract.

Q: How can we be easy going and yet demand our rights?
A: Easy-going: not demanding all one’s rights from another party for the sake of easing hardships or relieving tension. Example of give and take between husband and wife, we should not say these are my rights, if you live your life this way, then your marriage will be a disaster. Similarly when you have somebody working for you, you can give and take and be gentle with the person who is working for you.

Q: Non-ethical behavior in business dealings / Kickbacks / Corruption
A: A huge problem when living in the west is when a Muslim has to make a decision based on non-ethical practices or methodologies that are not ethical by Islamic standards.  This non-ethical behavior has become a sort of a norm and acting on a higher road can often lead to being terminated.  In other parts of the world, one has to pay a little extra as a bribe or kickback to get their rights.  Our ulimah are aware of these kinds of situations and sometimes there is no way to avoid these kinds of situations.  The general principle we get from Allah swt and the Prophet saas is that we have as much taqwa of Allah swt as possible.  We should never lose sight of the guiding principle behind ethics in Islam.  Paying bribes is prohibited and is a sin.  The situation needs to be evaluated; if something is makrooh versus being haraam.  
When a muslim takes a job, he should have an understanding of what the limits are of his behavior in terms of daily schedules and work habits.  

Another bad practice:  Some industries bank on the fact that they get more money than most others, like health care or defense industries.  This can lead to deception and price-fixing, etc.



2010-11-02 Class Notes Last time we talked about ethics of a muslim, we will continue with it in this class. Complete Honesty Complete honesty should be conduct of a muslim businessman can be proven from the Quran and Sunnah. It also brings barakah to his earnings. Being honest in business transactions, providing necessary details and not hiding anything is obligatory for a muslim. Ehsaan Another characteristic of a ethical muslim businessman is Ehsaan. Hadith of the prophet, every aspect of a muslim’s life should be ehsaan and the hadith continues with ehsaaan even when slaughtering an animal. The quality of ehsaan in matters of financial or work should also be applicable. When you work for somebody, you should not try to do just the minimum, you should try to be best. This is a recommended quality. When you are getting paid for something and a level of quality is expected of you. A muslim should try to excel and go beyond the minimum Naseeha Prophet said, the essence of religion is naseeha. And then the people asked to whom, the prophet replied to Allah, to his book, to..., and to others???. Naseeha is a true feeling of good to others, And this rules out that cheating others. A companion, Jareer, in a famous story sent a slave to buy a horse, this person bought it for just 300 dinars and informed his master. The companion went to the owner of the horse and told him it is worth 400 dinars, and continued increasing it until he said 800 dinars. The owner asked him why he is doing so. The companion said that he promised to the prophet that he will do naseeha to others. And the owner was unaware of the true value of the horse. Naseeha compelled him to make the owner aware of the true value of the horse. This is antithetical to what is taught in business schools today. It is a rare quality. And we know how we are supposed to bargain and to be cut-throat like in the West. The ethic of Naseeha is lost that we have to revive. Fulfilling other’s rights If somebody has some rights upon you, then you have to fulfill those rights. In surah Mumeenon, Allah swt begins with many qualities of the believers, such as successful, and it continues that they are taking full care of the trust that they have, which includes promises and contracts. Allah swt also reminds us to fulfill our contracts in surah ??? Prophet said that if you have hire someone, then you have to pay his wages before his sweat dries. You have to pay their wages as soon as they are done with their job. أعطوا الأجير أجره قبل أن يجف عرقه (Ibn Majah) And if you have means to pay and delay the payment, then it is a form of dhulm (wrongdoing). And we are all familiar with the punishment for those who do dhulm. Hadith Qudsi: There will be three types of people who will be the opponent of Allah swt. And of those categories is one who has delayed the payment of worker unjustly??? ثلاثة أنا خصمهم يوم القيامة ومن كنت خصمه خصمته يوم القيامة رجل أعطى بي ثم غدر ورجل باع حرا فأكل ثمنه ورجل استأجر أجيرا فاستوفى منه ولم يوفه أجره . [Ibn Majah] When you harm the economic well being of your brother, then it is even more grievous sin. So all of the above are sins when you do it to others, but now if you do the same sins to somebody who shares your deen, then the sin is more grievous. Prophet said, in which prophet is describing the characteristics of muslim brotherhood, do not be envious towards one another, do not artificially raise prices (do not bid up prices for no reason) do not hate one another, do not .... do not undercut one another during business deals. قَالَ رَسُولُ اللَّهِ صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ لَا تَحَاسَدُوا وَلَا تَنَاجَشُوا وَلَا تَبَاغَضُوا وَلَا تَدَابَرُوا وَلَا يَبِعْ بَعْضُكُمْ عَلَى بَيْعِ بَعْضٍ وَكُونُوا عِبَادَ اللَّهِ إِخْوَانًا [Muslim] This hadith is very comprehensive and describes how to relate to one another. Prophet said, that the blood, wealth and honor of muslim is inviolable to a muslim. كُلُّ الْمُسْلِمِ عَلَى الْمُسْلِمِ حَرَامٌ دَمُهُ وَمَالُهُ وَعِرْضُهُ [Muslim] Do not artificially rise prices When you raise the price of an item in order to discourage the sale of an item or you are trying to work with a seller to artificially raise prices, it is not part of an open bid. So your actions to raise prices are to cause harm to your brother. You are free to profit, but it should be done in an honest manner and without resorting to cheating or dishonesty. Do not undercut one another during business deals A buys an item from B. While the contract is being finalized, C comes and underbids the sale. C offers a lower price. A lot of economists will not have problems with it. But here the deal is being done and actions of C are harming his brother B. The exception is when C knows A is being cheated. Similarly if D comes along and bids up the price, he is being unfair to A. If you feel in your heart that you are cheating someone, then don’t do that. You don’t need a faqih or mufti to tell you that. If you feel that you are being unfair, then don’t do it. اسْتَفْتِ قَلْبَكَ وَاسْتَفْتِ نَفْسَكَ [Musnad Ahmad] Markets are supposed to be open and people should have knowledge. Sheikh narrated a hadith, where a bedioun was approached away from the market and sold an item, meaning the bedioun was not given an opportunity to know the price of the item in the market. Prophet said that this was haraam. Prophet said, the wealth of a muslim person is not allowed unless by his consent. لا يحل مال امرئ مسلم إلا بطيب نفس منه . [Jami’ al Sagheer] لَا تَأْكُلُوا أَمْوَالَكُمْ بَيْنَكُمْ بِالْبَاطِلِ إِلَّا أَنْ تَكُونَ تِجَارَةً عَنْ تَرَاضٍ مِنْكُمْ Do not devour each other’s property except through trade or mutual consent. [Nisa: 29] Avoid doubtful matters If you want to make your deen safe, then you should avoid doubtful matters. Prophet said what is halaal is clear and what is haraam is clear and what is in between is doubtful and then he gave the example of graising your cattle in an area which is close to your neighbor pasture, and you know that it will be difficutl to control your graising animals. إِنَّ الْحَلَالَ بَيِّنٌ وَإِنَّ الْحَرَامَ بَيِّنٌ وَبَيْنَهُمَا مُشْتَبِهَاتٌ لَا يَعْلَمُهُنَّ كَثِيرٌ مِنْ النَّاسِ فَمَنْ اتَّقَى الشُّبُهَاتِ اسْتَبْرَأَ لِدِينِهِ وَعِرْضِهِ وَمَنْ وَقَعَ فِي الشُّبُهَاتِ وَقَعَ فِي الْحَرَامِ كَالرَّاعِي يَرْعَى حَوْلَ الْحِمَى يُوشِكُ أَنْ يَرْتَعَ فِيهِ [Muslim] Leave things that make you doubt for those that do not make you doubt دع ما يريبك الى ما لا يريبك [Tirmidhi] Israaf - Avoiding extravagance Do not commit extravagance, Allah swt does not love those who commit extravagance وَلَا تُسْرِفُوا إِنَّهُ لَا يُحِبُّ الْمُسْرِفِينَ [Anaam: 141] Allah swt also says that do not spend wastefully وَلَا تُبَذِّرْ تَبْذِيرًا [Israa: 26] Definition of israaf Extravagance includes spending money on things that you do not need, or wasting it. Why would somebody spend money on things that you do not need? Maybe to show off, show you reputation, just to show to others. This is israaf. Israaf leads to Al Hajr There is another concept called al hajr in fiqh. Al Hajr is situation where you will be removed from your authority to spend your wealth. A custodian for an insane person is one example. Another cause of Al Hajr could be israaf. Islamic court could rule you Al Hajr and remove your authority to spend your own wealth. The richer you get, the more israaf you encounter. Israaf also includes spending beyond your means. Spending money that they do not have. They do not track their own expenses. Credit counselling typically finds money that people are spending on things that they do not need.


2010-11-09 Class Notes

Next week, there’s no class because of Eid al Adha. Sheikh was planning on having 10 classes and no exam. Now we have lost one lecture; the sheikh will need to figure out the updated schedule.

Role of Economic Agents (Human beings in this case)
A very important point in Islam, as economic agents Muslims do not have complete freedom. 

Theoretically, the capitalist system has the most freedom and the socialist system has the least freedom and Islamic system is somewhere in between. Freedoms are another way of saying rights. The Islamic system falls in the middle someone. The Islamic system talks about the rights of the human being at the micro level, i.e. as a business owner, trader, consumer, etc.

Four main categories of rights in Islam

1. The rights of Allah swt

When the Muslim scholars speak of the rights of Allah swt, they are thinking of.
a, Ibadah (worship Allah swt and no one else)
b. Rights that have to do with the welfare of the society as a whole (e.g when humans are doing things that are harming society as a whole). 

These are known as the rights of Allah swt from the shariah perspective. Example: Committing adultery (zina) -- they are doing an action that harms individuals but much more than that harms society as a whole. Similarly suicide. Anything that relates to or touches society as a whole.

2. The rights of society dominates the rights of humans.
You start moving into more personal areas.

3. Rights of individuals dominate the rights of society.

4. The rights of human beings

Things that the shariah has given an individual the right to do. e.g if one wishes to work, they can work. The work options are limited; someone cannot be a hit-man. The shariah has not prescribed what work one must do. When buying and selling, an individual has the right to determine what the fair price is and if a potential customer wants a discount, one can give a discount. These are the rights one is free to fulfill in accordance to the shariah. The rights listed in 1. above supersede the rights listed in this category. [the contemporary Tea Party is a group that represents an extreme in this category.]

The category 1 and 4 represent the two extremities and the categories 2 and 3 are rights that are in between those two extremities. We are studying these rights to determine what is the role of the economic agents (human beings) in financial transactions.

Characteristics of Rights of Allah swt and Rights of society that dominates rights of humans
The rights of Allah have special characteristics to them. We are speaking about category one and two. The rights of Allah are more then the rights of human beings.

Characteristic #1. The rights of Allah swt cannot be bought out, dropped, compromised, etc. This realm of rights cannot be infringed upon.

This means that two people cannot come together and make a compromise or agreement saying that a right of Allah swt will be forgone.

Khiyaar ur ruya خيار الرؤية
The shariah of business transactions. It is called خيار الرؤية khiyaar ur ruya in shariah. The option of seeing the item for purchase. There are many options but they are more rights than options that are built into the Islamic contract of sale. This is considered from category 2 above. He does not have the right to put this condition and the buyer does not have the right to accept this condition. Also like putting the condition of riba in the contract. This is the right of Allah. The individuals do not have the right to drop the rights of Allah.

You have the right to inspect it. So if you are buying something online, you have the right to inspect it. It implies if you have inspected it, then you can return it if it does not match the description. Sheikh gave an example of a pen that does not match the characteristics as described and then you can return it.

Characteristic #2. The rights of Allah swt cannot be changed. 

There are other characteristics of rights of Allah swt but they are not relevant for our discussion, so we will not discuss them here.

Characteristics of Rights of Humans

The rights of humans can be overlooked. Like if you damage someones property. Like a brother whose car was hit from the back and he lets it go. You have right to overlook the damage. That is only if it is from the rights of human beings. The rights of humans have some qualities that are not fixed.

The rights of human beings can be changed. They can be established through ijtihad or through public policy/greater needs of society. These can change over time as well as societal needs or norms change.

Constraints on Economic Agents in Islam

If something is from the right of human beings then it can be given up and you can be paid to give it up. If it is the right of Allah you cannot give it up and you cannot receive payment for giving it up. The important aspects of this is that the economic agent is bound, he is not as free as in capitalism and not as restricted as as in socialism. 

For example if you come up with some new scheme in the West, most likely that is going to be permissible by western law. it would only be forbidden if they find it is causing harm. you are free to enter any kind of contract in general. That’s not the case in shariah. it must meet certain criteria. That’s why in the textbook when they talk about .......missed this part..........rather limited in the shariah. the kind of trading, short-selling that is being done that causes a lot of harm. the financial reforms did not change much. because of the freedom of contract in western economics. with respect to rights we have to distinguish between moral right and legal rights. any time you talk about rights there is a responsibility on the other end. 

A legal right versus moral right
With respect to rights, we also need to differentiate between legal rights and moral responsibilities.  Any time we discuss rights, there are two ends and there are different parties that have involvement.

The main difference is that if something is of a legal nature, it can be handled through the court system.  If something is simply a moral responsibility, the same recourse is not available.  In what has become a classic case, the topic of promises has become a more important issue.  

What’s the difference between a promise and a contract?  
A promise is just an initiative from someone to do good for someone in the future.  If something is promised and that promise isn’t fulfilled, can one take the person to court to have that promise fulfilled or be punished for not fulfilling that promise?  Breaking a promise is something we will talk about later. 

The important thing to recognize is that there are legal rights and there are moral rights.  Violation of moral rights and responsibilities typically result in different levels of sin.

Bidding up a price
When eBay came up, some people would go and bid up a price and they had no intention of buying an item. They thought it was okay to do and they were practicing Muslims. This is one of the reasons why we are discussing this topic of financial transactions.

The Theory of Wealth

What is maal?  What is wealth?
Classroom discussion about the definition of maal. The following are some of the suggestions from the class
Something that societies and individuals value?  Something that’s scarce?  Something that you can buy, sell or trade?  A possession?  

Definitions of maal
Basically, looking at the encompassing definition of wealth, we can say it includes something that has economic value but at the same time it also must be something useful, capable of being bought, sold or stocked for future disposition.  It must be something permissible in the shariah.  

One of contemporary Muslim scholar has defined it as anything that can be possessed by an individual regardless of whether it is a physical item or of usufruct value.  

Usufruct means the the value or benefit obtained through using something.  For example, say I have a car and someone wants to borrow it for an hour.  The borrowing of the car results in some benefit for using it.  This benefit is considered a type of wealth.  

The owner can charge the “benefiter” for the use/benefit of the car.  From the shariah point of view, this is considered a kind of wealth.  Paying for the benefit of using something is considered usufruct. If there did not exist the concept of usufruct value, then you would not be able to rent houses or cars, etc.

Intellectual property also falls under the category of wealth by many of the contemporary ulimah. So you can buy and sell it.

Different categories of wealth
1. Wealth that has commercial and economic value
2. Wealth that looks to be valuable but really has no commercial value

Characteristics of wealth
Possession / Control
Wealth must be in possession and control of an individual and must be permissible to use during normal times.  There are cases of exception.  If it is not in control of an individual, it will not be considered something that has commercial or economic value.  

Compensation
If some valuable is destroyed that belonged to someone else and was of economic value, that individual has the right to be compensated.  

Like if you pour out the alcohol that is in a muslim’s house then you don’t have to compensate him for it (of course there are restrictions to it), since alcohol has no economic value for a muslim. But if you did it in a Jews or Christians house then you must compensate it for him because for him its wealth that has economic value. There are also limits here.  

Transactions that have no value in Islam
Suppose a Muslim sells alcohol to a non-Muslim.  Does he have right to that money?  
From a contemporary scholar (based on a classical fiqh ruling): That wealth that is considered as having no economic value has no protection and no sanctity in the law such that if it’s destroyed, no one can be held responsible for it.  For example, if someone destroys the fish in the sea, he cannot be held accountable for that.  

Once the harm becomes societal, such as in the case of the BP disaster, then you have moved into the realm of rights of Allah swt.

There are other characteristics of wealth that we have to discuss.

All of the Islamic financial products are based on the premise of promise which we will have to discuss later.



    • 2010-11-23 Class Notes



Different types of Wealth and its ramifications

The distinction of different types of Shari’ah wealth:

1a. Wealth that has economic/shariah value.
1b. Wealth that has no economic/shariah value.

The distinction is important. Fish in the sea fall into category from 1b but not in 1a since it is not under control. It is potential wealth but at this time it does not have economic value.

Alcohol also falls into category 1b if it is sold by a Muslim.

2a. Wealth that is transportable/movable.
2b. Wealth that is not transportable/movable (e.g. property or real estate).

This distinction is important because it has some ramifications. For example, the rights of pre-emption. Or in the case of bankruptcy, they will sell his movable assets over his immovable assets.

Abu Hanifah and Abu Yusuf have the opinion that movable assets can be sold before it is in your possession.

3a Fungible
3b Non-fungible

Goods that are interchangeable (e.g. money, or loaves of bread etc) are fungible, whereas a car is non-fungible, for example a particular car has certain properties that no other item is likely to have.

These can have an impact. If someone damages an item, the compensation differs. If it is fungible, then someone has to return an equivalent iterm; whereas if it is non-fungible then he has pay the value.

For example, if you damage a 10 year old car, how can you find another car that is 10 years old and has the same value as the damaged car? So a used car is non-fungible, as we had discussed earlier.

Payment of kind has to be fungible. It is acceptable for spot transactions, hand to hand for non-fungible goods. Future transactions must be made with fungible goods.

4a. Durable Goods (last for a period of time)
4b. Perishable Goods (small lifespan or perish)

Biryani from Sunday (perishable) but hamburger from McDonalds (non-perishable), [Ed: this was a joke because of the recent news item that showed that a McDonald burger had not decomposed even after a long period of time]. Difference is that perishable goods drop to a value of 0 very quickly. This means that some types of financial transactions can only be for durable goods.
. You cannot lend perishable goods, however you can lend durable goods.

5a. Ribawi wealth (Wealth that falls under the law of riba)
5b. Non-ribawi wealth (Wealth that does not fall under the law of riba)

Certain types of wealth need to be dealt with specifically. Example: Money has special rules since it becomes open to Riba. Non-ribawi goods could be exchanged more easily.

Example: gold and silver are ribawi goods, hence we can only exchange them on the spot -- cannot do future transactions with them, you can only do spot transactions with ribawi wealth. But we can for instance buy a car using gold and agree to pay back the car using gold as a medium. Cars are non-ribawi.

Dates, barley, wheat are also considered ribawi goods. Even though they are food items, they can be durable, for example, we have wheat from the time of the Pharoah.

Q: Are only things used as a medium of exchange ribawi assets? A: In general yes, but people can get creative about what are mediums of exchange.

We also need to work out different types of transactions: Is this an investment, a purchase, or something else?

Ownership
Definition: Something that you have in your possession through legal means.

Suppose I am renting a house from you, am I the owner? Or are you the owner?
Who has full ownership of the house? It depends on the nature of the contract.

Types of ownership:
- Complete ownership through permissible means has the right over a property: use it, benefit from it, to alter it, to dispose it (all within the bounds of the law).
- Even though someone is the owner of something, he may not control all aspects. For example, he has the property, but he may have exchanged it in exchange for the wealth. At that time, he does not have ownership of the usufruct.

It is important that the ownership be defined. Open-ended contracts sometimes have issues. Example: if you can return it at any time in the future, then the question of ownership is unresolved, so the transaction is never completed and is therefore not acceptable in the shariah.

Islamic Contract Theory:
In Western law, there is more or less an absolute freedom of contract. Two people can more or less come to any agreement. And this will be considered acceptable, except for sometimes when it is prohibited by law (e.g. Ponzi schemes). Sometimes a few types of contracts are prohibited but not many.

Some of the financial crisis was caused by new types of schemes (derivatives) that were bundled together in ways that had never been done before without any kind of idea what the impact of these new derivatives would be.

What about Islamic “schemes”? Coming up with new product -- is it acceptable? You can innovate financially, but the restrictions are much tougher in the Islamic contracts. The idea of freedom is there in Shariah, but the limitations in the Shari’ah are more in number as compared to the western laws.

From a fiqh perspective, you can define the types of contract the Shari’ah approves of.

Mutually Onerous Contracts:
1) The simplest is bay’ (البيع) or sale -- I give you something and you give me something in return. But this is a spot transaction. This is known as a mutually onerous contract. Both are giving up something. This is the basic form of contract in Islam.

2) Al-Ijaarah ( الإجارة)  -- rental contract. It has some similarities to a sale -- it is mutually onerous. But you do not get ownership. Also, for example, you can not rent perishable goods.

3) Al-Salam (السلم) -- a forward purchase. More restricted than other forms. Has to be for fungible goods. For example, a farmer growing grain, he has to produce for you the goods, but because it’s a fungible good, that means that if something happens, he might be able to produce the goods from another source. A derivative al-bay’, but unfortunately it is one of the things that is abused extensively in Islamic financial transactions.

4) Al-Muraabahah (المرابحة) -- cost + profit. Idea amongst scholars is that the person does not know much about the market, so buys the item, then sells it at cost + profit. Sometimes it is abused. What are the conditions for it and does it meet the conditions?

5) Al-Istisnaa (الإستصناع)  -- commissioned manufacturing. Another exception to Al-Bay’. You need something to be built/made for you. This is different from al-bay’ because the thing is actually being sold. Different from as-salam, this is definitely non-fungible. We’ll need to talk about how payment is done in this category.

5) Al-ji’aala (الجعالة) -- “Reward” -- set a price for something if someone gets this job done for me.
Reward for winning contest, for example, a Ramadan Quran contest where if you fulfill the obligations of the contest then you are eligible to receive a reward. A sweepstake contest does not fall in this category because you are not doing anything, other than entering your name and address.

Gratuitous contracts are those in which you do not expect any reward or profit, for example when you lend money to somebody and all you get in return is the exact amount that you had given and nothing more.

Once you determine which contract the transaction falls under, then you can start determining what is permissible and what is not permissible.  We will continue with the contracts in the next class.



2010-11-30 Class Notes


One of the keys to analyze a new and innovative financial transaction is to categorize it in one of the above categories. Once we do that then we can apply the laws.

A: Types of Mutually Onerous contracts
Al Bai3a Sale
Al Ijaarah Rent
Al Salam Forward Purchase
Al Muraabah Cost plus
Al Ja3aalah Reward
Al Istisnaa3 Commissioned Manufacture

We covered the Mutually Onerous contracts in the last class. Now we will discuss the next type of financial contract which involve gratuitous benefits where there are no expectations of benefits from the financial transaction.

B: Types of Gratuitous Benefit or Charitable Contracts

1. Al-Qardh (Loaning money - القرض):
Loaning money is considered a charitable act. You don’t expect any kind of benefit or any kind of loss. Loss means more of a opportunity cost. One thing for sure you gonna lose is opportunity cost. So you are going to lose the time value of money. The value of the money is not going to be the same when you get it back. In real terms  what you can actually buy) for example: if someone gets $100 from you, you could have bought more from it when you had it and less after you get it back from the person.

Western economic system is inter-spaced. Because the prices are driven up by market factors. So we don't have deflation but we have recession. Usually, we don't have deflation because there is too much built into the system. sticky prices, sticky wages. Any time there is oil shortage prices shoot up. But as soon they are relieved the prices slowly go down thus the term sticky.

2. Al-3ariyyah (العارية):
Lending actual physical goods: difference between ijarah and aariya is ijarah you get paid for usufruct and al-3ariyah you lend a physical good without usufruct. Like borrowing a car for a weekend. Principles are going to be different in these two cases. This is a charitable act.

3. Al-Hiba: ( الهبة) Gift:
Gift is a transfer of ownership. Some fiqah rulings.

4. Al-Waqf (Endowment -- الوقف):
Some of the main charitable contracts. Sadaqa will have same rulings as hiba or gifts.


Now we will discuss the next category of financial transactions which are labeled as Investment transactions.

C: Investment Transactions

What are the differences between investments and the mutually onerous contracts?
There is risk involved in this category. In the onerous category the returns have to be well defined. Nothing is open. In this transaction you cannot define how much you going to get back. Things are pretty much open. They cannot be defined as fixed amounts but can be defined as percentages.
All of these are found in the Quran and Hadith.

Different types of Investments: (Profit-loss sharing)



1. Al-Mudarabah: (المضاربة)
One of the most common forms of investment in Islam historically speaking. Some individuals would invest capital and others would invest their labor in a joint venture. And they would agree on some form of profit-loss sharing.

This is similar to some kinds of modern venture capital were some would put in capital and others would just put in labor.

2. Al-Sharikah: (الشركة)

All parties are active participants. In the sense everyone can put in labor and capital. Some of other forms.

We will have to discuss corporations in the Investment transactions to understand the differences between corporations and partnerships.

What is unique about a corporation?
A corporation is a created, artificial, economic agent and entity. This is the main difference between a partnership and corporation.

Imagine that you want to start some kind of economic activity. One of the advantages of a corporation as a type of economic activity  is limited liability. If you put $100K into the corporation, each one of them put up a $100K.  If that corporation starts borrowing money and gets into debt then the only amount you could lose is $100K. You might be a millionaire, this corporation can owe tons of money to the laborers. Once the company’s money is gone the people cannot really go after anyone. This artificial entity, the people who ran up the debt, the people cannot be touched.

Does this sound just? From a shariah point of view, this is something we are going to discuss if it is ethical and just or not. If you decide to work on your own then you look at it all of these things then this is very important to discuss if it is a proper form of business or not.

D: Other transactions:
Here we will categorize financial transaction into a general other category.

1. Ar-Rahan: (الرهن) pawning or mortgaging
You have some debt on your shoulders and you give a collateral. Something that they hold until you can pay that debt. The one who is holding it does not become the complete owner. and the one who has given it up has given up the usufruct rights to it.

Examples: When the Prophet (SallAllay alayhi waslalam) died his court of arms was being pawned and in possession of a Jewish merchant. The prophet had bought some food from him. You buy something on debt and you give something as collateral. Its not like the transactions that occur in pawn stores today.

Pawning is a purchasing items on collateral.

The next two types discussed below are very important. When you give your money to a bank. The bank uses it. They use it to create money. It doesn’t sit there. If they are going to use it, there is a difference if it is a deposit or a trust. What they can do in either case is going to differ and the responsibility is going to differ. If we ever get into the concept.

2. Al-Wadee3ah (الوديعة): Leaving something as a deposit/trust.
When you deposit your wealth in a trust

3. Al-Dhaman (الضمان):  trust/guarantee
When you deposit your wealth in a trust or a guarantee.
Dhaman has two ways. i leave it with you and you don’t touch it.  The other way is I leave it to you and you can use it. depending on how you use it will effect its ruling.
Fungible and non fungible plays some role in it.

Q: What about layaway transactions?
A: Layaway is a product that you own shares of it. Discussion about harm that happens to layaway as an act of God and not due to negligence on the part of a worker. Who will replace it? Sheikh is trying to determine the ownership of an item on layaway. I guess once you determine who owns it, you can categorize it.

Q: What about rain checks?
A: It has to do with advertisements.  If they have limited amount of merchandise, the merchant cannot do bait and switch to just get customers in the store, unless they advertise it as limited quantities or specify a limited amount.

Q: What category do rain checks fall into?
A: Sheikh will have to analyze it and figure out which category it belongs. He did not want to answer in haste and make a mistake. Biggest mistake you can make is take something and put it in the wrong category.

Q: What is a contract and what are some of the basic criteria that the contract has to fulfill?
If you are talking about a loan, it belongs to category B (Note: I added this label to Gratuitous Charitable transactions). If you say you are gonna say you are going to pay this loan and this then this is not acceptable.

Discussion about what we will discuss in the next session
Finish discussion of all riba related issues and then whatever riba related issues are remaining we will discuss them individually.

Q: What about bonds?
There are two types of bonds: government or a private bond.
We are going to discuss the shares and stocks in investments. When you buy a bond do you become an owner? No you don’t. Do you get paid back? From a western perspective you will get a yield a fixed return on your investment, so it is actually interest. Since you gave money and got back money. It will be a fixed return.

Q: Can you do something in category C (Investment) that will be give you back a fixed return?
In “Islamic finance”, what they do is they bundle a bunch of category A (Mutually Onerous Contracts) and then they do investment and you will get a return on all of this money. This is the same as what happens in the Western system. Mufti Taqi Usmani says that a large number of them(80-90%) are not halal, and he is the most liberal when it comes to Innovative Islamic Financing schemes.

An innovative Islamic scheme is one which has a very complex relationships between categories and it will be our goal to unravel it.

Plan is to do Contract theory in the next session.

















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