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Islamic Finance
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Message Icon Topic: 3 Questions YOU need to ask about any “Shariah-Com Post Reply Post New Topic
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Quote Rakaan Replybullet Topic: 3 Questions YOU need to ask about any “Shariah-Com
    Posted: 02 April 2015 at 8:46am
The generous Quran in Surat Al-Nahil Verse 43 says: “Ask the people

who know if you do not.”

In other words, the first person you should ask is yourself. It is only

after you ask yourself and you are unable to determine whether

something is right or wrong should you ask others. Too many Muslims

forget the “if you do not” part of the verse and

immediately delegate their judgement responsibilities to others. The

prophet Mohammad, peace be upon him, mentions this meaning in

the beautiful Hadith narrated by Imam Ahmad:

Wabisa bin Mabad said: I approached the prophet, peace be upon

him, and he said: You came to ask me about right and wrong didn’t

you? I replied:Yes, The prophet said: ask your heart, that which is

righteous settles in one’s self and comforts the heart, and that which

is sinful upsets one’s self and wavers in the heart, regardless of what

people tell you.

To assist in determining right from wrong regarding the Shariah-

compliance of a certain financing product, here are 3 useful questions

to ask:

1. When you try to justify using the product, is the only

argument you can make: “they have a sharia council that

approved it”?

If you can’t convincingly articulate how a product provides a

substantively different experience than another product you know to

be prohibited in Islam, I’d stay away.

Albert Einstein famously said: “If you can’t explain it to a six year old,

you don’t understand it yourself.”

And if you don’t understand how a personal financing product is

Shariah compliant, it’s probably not. Trust your judgement and don’t

be intimidated by the beard length of someone who says it’s Shariah

compliant. With all due respect to people who sit on Sharia-boards,

but Shariah compliance is not rocket science. It’s a judgement call that

the average person can make if they spend some time to educate

themselves on the topic.

I’ve created some mental tools to assist the average Muslim consumer

in doing just that. e.g. 3 ways to identify Riba.

2. Assume Shariah-compliance doesn’t matter to you. Would

you still use this product?

If the answer is no, then the product is probably not Shariah-


It is impossible that Allah, the most compassionate the most merciful,

will ask His believers to use a product that is inferior in utility to other

products on the market. Especially if the products that it is inferior to,

let’s say a traditional loan, is prohibited in Islam because

it’s considered unfair to the consumer!

I say it’s probably not Shariah-compliant because it is always possible

that the product contains benefits that are unknown to you or that you

just have bad judgement. I consider both these possibilities to be

relatively small since:

1- Whoever is selling the product will make sure you are aware of every

single possible feature and benefit of their product, even the very far

fetched ones.

Case in point, I was watching a promotional video for one of the

“Islamic” financing solutions and they mention, quite enthusiastically,

that they will share their customers any loss incurred from “Eminent

Domain”. I admit I didn’t know what that was so I looked it up. Turns

out, Eminent Domain is the power of a government to acquire private

property for public purposes. Really? How often does that happen?

Also, this was an American company and nowhere in the video did it

mention that “Just compensation” from the government to the

property owner is already guaranteed in the U.S. Constitution!

2- People wise up over time. You may exercise bad judgement the first

time you choose a product, but the second and third time? It’s unlikely

if you have alternatives.

If you’re unclear on how to answer would you still buy this product if

Sharia-compliance wasn’t a consideration? there’s actually a very

straight-forward way to get a feeling for the answer. Does the

product have non-Muslim customers? If the answer is no, there

is a good chance you are just buying the words “Sharia-compliant” that

were used when they marketed the product to you. Otherwise, if the

product was superior to alternatives, some non-Muslims would have

seen this and bought the product. Especially if the product is being

offered in a predominantly non-Muslim country.

3. What do state and federal government agencies think?

If the company’s disclosure documents include the words “loan” and

“interest” that’s because the government thinks the product is these

things and requires the company to use this terminology. This is not a

matter of government bureaucracy or people in the government not

having the mental capacity to understand the genius behind this

particular “Islamic” finance product. The government looked at the

product, read the terms, and said something along the lines of

“yeeaaah I’m not sure what exactly you Muslims are up to, and while

you have the freedom to call your product whatever you like, this sure

as hell seems like interest-bearing debt to us and you need to make

this clear to your customers.”

For example, in the United States, if you were truly paying “rent” or

some other euphemism used to disguise interest-bearing debt, the

IRS wouldn’t require the people receiving “rent” payments from you to

disclose how much they received ininterest from you last year.

So the next time your weighing whether or not to buy a product that

claims to be “Shariah-compliant” make sure you ask yourself the

above 3 questions. If one or more of the answers doesn’t check out,

trust your logic, and make your decisions accordingly.

For more on Islamic finance see:

Edited by Rakaan - 02 April 2015 at 8:49am
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