Islamic Finance (Part 1)

AS-SALAAMU ALAIKUM, WA REHMATUL LAAHI WA BARAKAATUH,

Wait for adhaan

Standard Introduction:

AUZO BIL LAAHI MIN ASH SHAYTAANIR RAJEEM,

BISMIL LAAHIR RAHMAANIR RAHIM

AL HAMDU LILLAAHI RABBIL ‘ALAMEEN. WAS SALAATU WAS SALAAMU ‘ALAA ASHRAFIL MURSALEEN. SAYIDINAA WA NABI YENAA WA MOULANAA MUHAMMADIN WA’ALA AALEHEE WA AS HAABEHEE WASALLIM.

All praise is due to Alláh, the Lord of all the Worlds; may the greetings and peace be upon the best messenger, Prophet Muhammad (SAW), and upon his family and upon all of his companions.

AL-HAMDU LILLA HIL LAZI HADAANA LIHAAZA WAMA KUNNA LANAHTADIYA LAW’LA ANN HADAANA ALLAH. (You must expand this Arabic portion of Khutbah, depending on the month/season, e.g. Hajj, Ramadaan, etc.)

Meaning:

Praise is due to Allah,

Praise is due to Allah who guided us to the righteous path, and indeed we wouldn’t have attained this state of guidance without Him Allah,

AMMA BA’AD.

English Part of the Khutbah:

IKHWATI FIL ISLAM, ASH-HAAB AL ILM, WA RUWAAD AL ILM, Brothers in Islam, Learned Colleagues and Scholars,

The topic of today’s Khutbah is Riba coupled with Islamic Finance and as this is a vast topic, and its many dimensions cannot be covered in a Weekly 15 mns Khutbah so it will be done in 2 Phases. As most authors cover the present day situations so in contrast in today’s Khutbah, we will look at the Historical background.

With this in mind, today, Insha Allah, we will select some ayats from the Quran and hadiths from Sihaah Sitta as to what exactly led to the revelation of these Ayats in the Quran and in the final Khutbah we will look at the future of the Islamic Finance; where its heading and why.

So in the short time we have today, we can only focus on a few essential points.

Of course, Usury is condemned and prohibited in the strongest possible terms. There can be no question about the prohibition. However, when we come to the definition of Usury there is room for difference of opinion.

In the words of Ibn Kathir (in his commentary in Section 2: 275), “the subject of Riba is one of the most difficult subjects for many of scholars (ahl al-‘ilm)”. Hence, I would appeal to readers to read the entire article, understand the various issues with an open mind and then make their own decisions.

So first of all with regards to the word Riba almost all the translators of the Qur’an, have translated the Arabic word Riba as “Usury”, “an increase” (or interest) upon the capital.

From a banking perspective, the argument against Riba is that money is not “goods” and that profit should be earned on goods and services only – not on control of money itself (i.e., return on assets).

It should be borne in mind that the passage condemning or prohibiting Riba in the 2nd Surah Baqarah, Ayats 275 to 281, was the last revelation received by the Prophet Muhammad (SAW), who died a few days later; hence the Sahaaba had no opportunity to ask him about the Shar’i implications of the relevant injection – so much so that even H. Umar ibn al-Khattab (RA) is reliably reported to have said: “The last [of Qur’an] that was revealed was the verse on Riba; and, behold, the messenger of ASWT passed away without having explained its meaning to us”. [This was narrated by H. Ibn Hambal (RA), on the authority of H. Sa’id ibn al-Musayyab (RA)].

So let us look at the cause, the root and ask ourselves why these ayats on Riba were revealed in the first place. The way in which Riba was doubled and redoubled in the pre-Islamic period is expressed by the son of H. Zayd b. Aslam (RA) as follows:

“Riba in the pre-Islamic period consisted of the doubling and redoubling [of money or commodities], and in the age [of the cattle]. At maturity, the creditor would say to the debtor, ‘Will you pay me, or increase [the debt]? If the debtor had anything, he would pay. Otherwise, the age of the cattle [to be repaid] would be increased … If the debt was money or a commodity, the debt would be doubled to be paid in one year, and even then, if the debtor could not pay, it would be doubled again; one hundred in one year would become two hundred. If that was not paid, the debt would increase to four hundred. Each year the debt would be doubled.”

The exploitation and injustice of such Riba-based transactions are obvious, and hardly require any further explanation or rationalization. This type of Riba is known as Riba al-jahiliyyah, and according to some Islamic scholars, such as Imam Ahmad Ibn Hanbal (RA), only such Riba is unlawful without doubt from the Islamic viewpoint.

Hence the Ayats prohibiting Riba were revealed in the Qur’an and among verses that deal with Riba are as follows:

First of all, Surah An nisa, Ayat 160, wherein Allah says:

Translation: For the iniquity of the Jews, we made unlawful for them certain (foods) good and wholesome which had been lawful for them;- in that they hindered many from God’s Way;-

Surah An nisa, Ayat 161:

Translation: That they took usury, though they were forbidden; and that they devoured men’s substance wrongfully; we have prepared for those among them who reject faith a grievous punishment.

Surah 2, al-Baqarah, Ayat 275:

Translation: Those who devour Riba will not stand except as stands one whom the Evil One by his touch hath driven to madness. That is because they say: “Trade is like Riba but Allah hath permitted trade and forbidden Riba. Those who after receiving direction from their Lord desist shall be pardoned for the past; their case is for Allah (to judge); but those who repeat (the offence) are companions of the fire: they will abide therein (for ever).

Surah 3, Al Imran, Ayat 130, wherein Allah says:

Translation: O ye who believe! Devour not Riba, doubled and multiplied; but fear Allah; that ye may (really) prosper.

Surah 2, al-Baqarah, Ayat 278:

Translation: O ye who believe! Fear Allah, and give up what remains of your demand for usury, if ye are indeed believers.

Translation: If ye do it not, Take notice of war from Allah and His Messenger. But if ye turn back, ye shall have your capital sums: Deal not unjustly, and ye shall not be dealt with unjustly.

But these verses do not really define what is Riba and based on the historical practices during the period of revelation, what is definitely prohibited in the Qur’an is known as Riba al-Jahiliyyah.

There is a “room for difference of opinion”. In the Sahih Al-Bukhari, under Hadith number 3:579 narrated by H. Jabir bin Abdullah (RA) it is recorded that the Prophet Muhammad (SAW) repaid his debt that he owed H. Jabir (RA) plus he paid him “an extra amount”. The scholars who do advocate “zero tolerance” explain; a borrower is permitted to pay an “extra amount” to the principal sum borrowed, while repaying his debt, provided it is given of his own free will and is not stipulated as a condition of the borrowing. Such a payment is neither Interest nor Riba.

But no doubt you will counteract this with either the hadith on dates from H. Abu Sa’id al-Khudri (RA) wherein the Prophet (SAW) said: “Do not sell gold for gold except when it is like for like, and do not increase one over the other; do not sell silver for silver except when it is like for like, and do not increase one over the other; and do not sell what is away [from among these] for what is ready.” (Bukhari, Kitab al-Buyu’, Bab bay’i al-fiddati bi al-fiddah; also Muslim, Tirmidhi, Nasa’i and Musnad Ahmad).

Or the hadith from Sahih Al-Bukhari on dates from H. Abu Huraira that “The Prophet Muhammad (SAW) said, “Usury has got seventy divisions. The easiest division of them is a man’s marrying his mother.”

And finally, H. Abu Said al-Khudri’s (RA); hadith from Sahih Bukhari, Vol 3 Hadith No.506 wherein it mentioned that “Once H. Bilal (RA) brought Barni dates) to the Prophet Muhammad (SAW) and the Prophet (SAW) asked him, “From where have you brought these?” H. Bilal (RA) replied, “I had some inferior type of dates and exchanged two Sas of it for one Sa of Barni dates in order to give it to the Prophet Muhammad (SAW); to eat.” Thereupon the Prophet Muhammad (SAW) said, “Beware! Beware! This is definitely Riba (usury)! This is definitely Riba (Usury)! Don’t do so, but if you want to buy (a superior kind of dates) sell the inferior dates for money and then buy the superior kind of dates with that money.”

Let me reiterate once again that the IKHTILKAAF or the difference of opinions will always exist between brothers and on their interpretation, as it did between the Sahaaba such that at the Battle of the Jamaal or Camel in 656, thousands of Sahaaba became shahid.

Conclusion of the First Part of the Khutbah:

NAD’OO ALLAHA AN YAGHFIRA LANA ZUNUBANA

Meaning: We make Duas to ASWT, so that he will accept all our Ibadat & forgive our sins.

WA AAKHERO DAA’ WAANA ANIL HAMDO LIL LAAHEY RABBIL AALAMEEN

Sit down & make a du’a yourself.

Second Khutbah:

Globally Standardized Conclusion:

AL HAMDU LILLAAHI NAHMADUHU WANAS TA’EENAHU, WANASTAGH-FIRUHU, WANATOOBU ILAYHI, WANA’OOTHU BILLAAHI MIN SHUROORI AN-FUSINAA, WAMIN SAYYI AATI AA’MAALINAA.

MAY- YAHDILLAAHU FA HUWAL MUHTAD, WA MAY- YUDLILL FALAN TAJIDAA LAHU WALIYAN MURSHIDA. WA ASH-HADU AN LAA ILAAHA IL LAL-LAÁH, WAHDAHOO LAA SHAREEKA LAH, WA ASH-HADU ANNA MUHAMMADAN ‘ABDUHOO WARASOOLUH

All Praise is due to Alláh, We praise Him and we seek help from Him. We ask forgiveness from Him. We repent to Him; and we seek refuge in Him from our own evils and our own bad deeds.

Anyone who is guided by Alláh, he is indeed guided; and anyone who has been left astray, will find no one to guide him.

I bear witness that there is no god but Alláh, the Only One without any partner; and I bear witness that Prophet Muhammad (SAW), is His servant, and His messenger.

YA AY-YUHAL-LATHEENA ‘AAMANUT TAQUL-LAAHA, HAQQA TUQAATIHEE WALA TAMU TUN-NA, IL-LA WA ANTUM MUSLIMOON.”

O You who believe, – Fear Allah, as He should be feared, and die not except as Muslims.

YA AY-YUHAL-LATHEENA ‘AAMANUT TAQUL-LAAHA, WA QOOLOO QAWLAN SADEEDAA. YUSLIH-LAKUM A’MAALAKUM WA YAGHFIR LAKUM THUNOOBAKUM, WAMAY YU-TIL-LAAHA WARASOOLAH, FAQAD FAAZA FAWZAN ATHEEMAA.”

O You who believe, – Be aware of Allah, and speak a straightforward word. He will forgive your sins and repair your deeds. And whoever takes Allah and His prophet (SAW) as a guide, has already achieved a mighty victory.

INNALLAAHA WA MALAAIKATAHU YUSALLÚNA ALAN NABI. YAA AY YOHAL LATHEENA AAMANU SALLÚ ALAYHI WASALLI MÚ TAS LEEMA.

ALLAHUMMA SALLI ALAA MUHAMMAD, WA AALA AALI MUHAMMAD, KAMAA SALLAYTAA ALA IBRAHIMA, WA AALA AALI IBRAHIM. ALLAHUMMA BAARIK ALA MUHAMMAD, WA AALA AALI MUHAMMAD, KAMA BAARAKTAA ALA IBRAHIM, WA AALA ALI IBRAHIM, INNAKA HAMEEDUN MAJEED.”

Behold, Allah and his angels shower blessings on the Prophet (SAW). O you who believe! Ask for blessings on him, and salute him with a worthy greeting.

The Du’a – before the Khutbah Ends:

Again, for the sake of global standardization using the global “Islamic Language”, one uses a standard and brief du’a:

ALLAHUMMAGH FIR LIL’ MUSLIMEENA WAL MUSLIMAAT…. Stop for the congregation to say AAMEEN

WAL MOAMINEENA WAL MOUMINAAT…STOP FOR AAMEEN

AL-AHYAA’EE MINHUM WAL AMWAAT…STOP FOR AAMEEN

INNAKAA SAMEE’UN MUJIBUD DA’WAAT… STOP FOR AAMEEN

Meaning:

Ya Allah, forgive all our Muslim men and women,

Forgive the believing men and women,

Those who are alive and those who died,

You are indeed the One who listens and accepts all supplications.

RABBANA LAA TUZIGH QULOOBANAA, BA’DA ITH HADAY TANAA WAHAB LANAA MILLA DUNKA RAHMA. INNAKAA ANTAL WAH-HAAB.

O Allah, do not let our hearts deviate from the Truth now that we have been guided , but grant us Mercy from Your very Presence, for You are the Grantor of bounties without measure.

RABBI JA’ALNI MUQEEMUS SALAATI, WAMIN DUR-RIY-YATI, RABBANAA WATA QABBAL DU’AAH.

My Lord, help me to perfect my salaat, and of my descendants, Our Lord, accept this dua.

RABBIGH FIRLEE WALI WAALI DAYYA, WALIL MU’MINEENA YAWMA YAQOOMUL HISAAB.

My Lord, forgive me, and my parents, and all Believers until the Day of Reckoning.

SUB’ HAANAKA RABBEKA RABBIL ‘IZZATI ‘AMMAA YUSIFOON, WA SALAAMUN ‘ALAL MURSALEEN, WAL HAMDU LIL-LAAHI RABBIL AALAMEEN.”

Glory to Allah, Lord of Majesty and Honour, and Peace on the Prophets, and Praise to Allah, Lord of all creation!

Other Duas you could make:

Ya Allah, accept our Ibadat and forgive us.

Ya Rabb, have mercy on us. Help us obey you and praise you.

Ya Allah, we stand before you having observed all the tenets of Islam, so lead us to prosperity and growth, to triumph and solidarity, to unity and wealth beyond our imagination.

Ya Allah, we beg for your MAGFIRATAK, and ask you for success, health and wealth for all the brothers who are present here and now in this blessed room.

Ya Rabb, increase our love that binds us together now, and in the future to come.

With regards to their dear beloved ones who have passed away, Ya Rabb, may you grant them a place in Jannatul Firdaus. May you forgive all their KHATAYAA, KABEERA WA SAGHEERAH. May you fill their Qabr with your holy noor. Ya Rabb, may you also save us from ADHAAB AL QABR. Ya Allah, grant their rooh, eternal peace, AR RAAHA AL ABDIYYAA on the YAWM AL HISAAB.

Ya Allah, accept all our duas, fulfil all our righteous wishes, fulfil our dreams,.

Ya Allah, may your rehma and safety encompass all our families, wherever they may be.

Ya Allah, grant these brothers who are present, here and now, SABR that is YUHIB HUM AS SABR.

Ya Allah, make the Prophet Muhammad (SAW) intercede or YASHFAAH on our behalf on YAWM A QIYAAMAH.

Globally Standardized Conclusion:

IBAA DAL LAAH:

IN NAL LAAHA YA’A MURU BIL ADLI WAL IHSAN

WA EE TA’EE ZIL QURBAA WA YANHAA ANIL FAHSHAA’EE WAL MUNKAREE WAL BAGH’YI

YA EE ZUKUM LA AL LAKUM TAZAK KAROON.

FAZ KU ROONI AZ KUR KUM WAS KU RU LI WA LA TAK FURUN.

Then you conclude by saying to the mu’azzin:

WA AA QIMUS SALAAH