Islam and Banking

Pretor

This might not be the right forum to ask this qu but here goes...

According to Islam interest received on money is Haram, therefore ppl say to give away the interest u receive, that i can understand but someone then told me that this is all interest including the one u pay to banks on a mortgage, how does Islam overcome this issue if someone wants to buy a house?

Can someone also give me a reference to where this no interest issue is dicussed in the Qu'ran, Thanks.

Kernel

There are a growing number of low interest Muslim banks in the UK, which non-muslims are increasingly availing of.

OfflerCrocGod

Kernel wrote:

There are a growing number of low interest Muslim banks in the UK, which non-muslims are increasingly availing of.

So it's Haraam as long as the interest isn't to high? Interesting religion - so is it tied to international stock markets and bond selling markets

r3boot

its one of those problems without a solution IMHO. people can either avail of the current services offered or they can choose not to . Either way the banks are still here and you will still be a good muslim.

Pretor

r3boot wrote:

its one of those problems without a solution IMHO. people can either avail of the current services offered or they can choose not to . Either way the banks are still here and you will still be a good muslim.

I've come across a few of those kind of issues, it really comes down to a case of Islam vs. Modernity...

Custom22

Pretor wrote:

I've come across a few of those kind of issues, it really comes down to a case of Islam vs. Modernity...

I'd say more modern Ireland than simply modernity. You see, in the middle east where most countries have a population that is majority muslim they do have banks that do not charge or give interest but charge certai anual admistration fees and also, as said, are linked to the international stock exchange. In Ireland there is not the demand for such systems as the banks can obviously make more money using the current traditional system that people are perfectly happy with. In this case, I think people have to use thier common sense, everyone needs a home in Ireland. As far as I know though there is no middle ground on the issue. The only reason I'd imagine that the banks in England offer only a little interest is because they cannot opperate in Britain on a 0% interest basis. I'd reckon they are making an effort to go as low as possible to appease their customers.

rcunning03

Pretor wrote:

I've come across a few of those kind of issues, it really comes down to a case of Islam vs. Modernity...

First of all, goto Dubai if you want to see what a truly modern city looks like, it puts any European or American city to shame. On second thoughts your probably better off just sticking to Magaluf or Teneriffe.

In relation to Mortgages the Bank buys the house for you and you buy the house back from the bank at a fixed sum each month which would include an administration fee, but your protected from any increase in interest rates.

In the rich Arab countries the government give their citizens houses or your Father would give you a plot of land.

In the UK they had to changes the rules for property tax, cause they would of ended up having to pay it twice.

Islam see interest rates as a bad thing and they have a point, a lot of our taxes are being used to pay back just the interest we have on loans, without bringing down the sum owed instead of spending it on other more important things.

rcunning03

http://www.islamic-banking.com/ibanking/whatib.php

rsynnott

Of course, strictly speaking, Christianity and Judaism have similar rules...

Wibbs

I was aware that Christianity had the same rules, now it seems Judaism has too(didn't know that). It seems a much more equatible system altogether and seems to work out for those countries that use it. Can't see the banks hereabouts going for it sadly. Too much money from the greasy till to be made.

edit * BTW, is it OK for non Muslims to use such a bank. I'm wondering as if others started to use such a system, the current banking system might change for the better.

rcunning03

Wibbs wrote:

I was aware that Christianity had the same rules, now it seems Judaism has too(didn't know that). It seems a much more equatible system altogether and seems to work out for those countries that use it. Can't see the banks hereabouts going for it sadly. Too much money from the greasy till to be made.

edit * BTW, is it OK for non Muslims to use such a bank. I'm wondering as if others started to use such a system, the current banking system might change for the better.

In Ireland buying a house under Islamic banking practices would cost you a lot more because you would end up paying property tax twice (First when bank buys property, then when you buy property from the bank).

Western society seems to be geared towards keeping us indentured to the banks, it's not a perfect system but nobody starves and people seem happy enough with it otherwise we'd stop believing in the system and it collapse.

Society exists the way it does cause we as the populace believe it's the way it should be.

rsynnott

rcunning03 wrote:

Western society seems to be geared towards keeping us indentured to the banks, it's not a perfect system but nobody starves and people seem happy enough with it otherwise we'd stop believing in the system and it collapse.

Not really; Irish/English/American society is. Many European countries have EXTREMELY low rates of home ownership by population compared to us...

Mucco

rcunning03 wrote:

In relation to Mortgages the Bank buys the house for you and you buy the house back from the bank at a fixed sum each month which would include an administration fee, but your protected from any increase in interest rates.

Yeah, this is what happens in the UK. However, it's just a ruse to get around paying interest, because the bank makes the same amount of money. There are plenty of similar ruses in other religions, it's all a bit silly if you ask me.

M

rcunning03

Mucco wrote:

Yeah, this is what happens in the UK. However, it's just a ruse to get around paying interest, because the bank makes the same amount of money. There are plenty of similar ruses in other religions, it's all a bit silly if you ask me.

M

Its a fixed rate though, your not at the mercy of what a couple of bankers decide tio charge you

Santa Claus

Just spotted this thread now.
I'm working for a Banking Software company and the "conventional" banks are falling over themselves in the past year to get software to handle islamic banking.
The General Council of Islamic Banks reckon there's $260 billion of assets under the control of muslims in Europe ALONE !

There are various ways for Banks to gets around Sharia banking laws.

I know of 1 bank in the UK that will buy a house for you and then draw up a contact agreeing a set price at which you will buy the house off them and then you proceed to pay that price over the life of the contract (i.e. mortgage but it's called a murahaba where they charge you a fee for living in the house while they own it over the life of the contract..this fee takes the place of the interest on the traditional mortgage).

On the savings side (or al-wadiah - safekeeping) the bank takes your money to mind and then pays these "savers" a bonus based on the profits made by the bank.
So the bank aren't paying you interest, just sharing their profits with you.


I've heard that 1 of the 2 major Irish Banks is launching an Islamic banking package in the next year !