islam's solution to the global financial crisis
DESCRIPTION
A presentation made in Vadodara by Ashraf MohamedyTRANSCRIPT
Islam’s Solution to
the Global
Financial Crisis Ashraf Mohamedy
Managing Director
Idafa Investments Pvt. Ltd.
Our Progress in Modern Times
Our Progress in Modern Times
Our Progress in Modern Times
Our Progress in Modern Times
Our Progress in Modern Times
Our Progress in Modern Times
Our Progress in Modern Times
Our Progress in Modern Times
Our Progress in Modern Times
Our Progress in Modern Times
Our Progress in Modern Times
Our Progress in Modern Times
Our Progress in Modern Times
Our Progress in Modern Times
Kevin Carter
CAPITALISM IS BASED ON
• Private Ownership of the means of production,
distribution & exchange
• Profit motive being the prime stimutus for all
efforts
• Production and what to produce being decided
on Price mechanism
• Unrestricted economic freedom
• Free Market
• Interest
The richest 225 people own more
wealth than the poorest 2.5 Billion …..
The richest 3 people have wealth equal
to GDP of 47 poorest countries of the
world . . . .
If the richest 225 people gave a wealth
tax of 4% . . . . .
(Findings of United Nations Development Prog,
Human Development Report 1998 on the theme of
Poverty Alleviation)
SOCIALISM IS BASED ON
• State / Govt. ownership of means of
production
• State / Govt. interference on all enterprise
• No ownership of property by the Citizen
(everything belongs to the state)
• Centrally planned economy
• Totalitarian state under dictatorship
• No freedom of Expression
WHAT IS THE SOLUTION?
• Man made systems are bound to fail
• Communism had brought misery and was
discarded
• Capitalism continues to oppress people
and is being opposed world wide
• In the absence of a new MAN MADE
system, there is confusion globally
WHAT IS THE SOLUTION?
• The Solution lies in following the ‘way of
life’ offered to us by GOD himself!
• HOW?
Features of the
Islamic Economic System
1.Allah is the Sustainer (29:62)
2.Allah is the Absolute owner; man trustee (6:165)
3.Everything created for Service & Use of mankind (2:29)
4. Ibadat & Muamlaat
5. Concept of Halal & Haram (2:168, 2:188, 5:3, 5:90)
6. System of Zakat & Sadaqah (2:43, 2:219, 2:274)
7. Prohibition of Interest
8. All activities based on Justice & Equity
Meaning of Riba
Definition of Interest
- Money paid for the use of money
Definition of Usury
- Exhorbitant amount of Interest
Meaning of Riba (Arabic)
- Increase, Addition or Growth
BIBLE ON INTEREST
Exodus 22:25
If you lend money to any of My people who are poor among you, you shall not be like a moneylender to him; you shall not charge him interest.
Leviticus 25:35-37
If one of your brethren becomes poor, and falls into poverty among you, then you shall help him ………. Take no interest or usury from him; but fear your God, that your brother may live with you. You shall not lend him your money for usury, nor lend him your food at a profit
Manu Smruti Prohibits Interest
Slaying cows, sacrificing for those who are unworthy to sacrifice, adultery, selling oneself, casting off one's teacher, mother, father, or son, giving up the (daily) study of the Veda, and neglecting the (sacred domestic) fire . . . . .. . Defiling a damsel, INTEREST, breaking a vow, selling a tank, a garden, one's wife, or child
Living as a Vratya, casting off a relative, teaching (the Veda) for wages, learning (the Veda) from a paid teacher, and selling goods which one ought not to sell
Chapter 11: Shloka 60 – 63
AL- QURAN
Those who consume interest cannot stand [on Judgement Day] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
Surah baqarah 2:275
AL- QURAN
Allah destroys interest and
gives increase for charities.
And Allah does not like every
sinning disbeliever.
Surah Baqarah 2:276
O you who have believed, do
not consume usury, doubled
and multiplied, but fear Allah
that you may be successful.
Surah Aly-Imran 3:130
AL- QURAN
And [for] their taking of usury while they had been forbidden from it, and their consuming of the people's wealth unjustly. And we have prepared for the disbelievers among them a painful punishment.
Surah Nisa 4:161
Hadith on Interest
Sahih Al-Bukhari Hadith 7.829
Narrated by Abu Juhaifa The Prophet forbade the use
of the price of blood and the price of a dog, the one
who takes (eats) usury the one who gives usury, the
woman who practises tattooing and the woman who
gets herself tattooed.
Hadith on Interest
Al-Tirmidhi Hadith 2826 Narrated byAbuHurayrah Allah's
Messenger (peace be upon him) said, "Usury has
seventy parts, the least important being that a man
should marry his mother." Ibn Majah and Bayhaqi,
transmitted it in Shu'ab al-Iman..
Hadith on Interest
Sunan of Abu-Dawood Hadith 3327 Narrated
byAbdullah ibn Mas'ud The Apostle of Allah (peace
be upon him) cursed the one who accepted usury,
the one who paid it, the witness to it, and the one
who recorded it.
Hadith on Interest
Sahih Al-Bukhari Hadith 7.259
Narrated byAbu Juhaifa The Prophet cursed the
lady who practices tattooing and the one who gets
herself tattooed, and one who eats (takes) Riba'
(usury) and the one who gives it. And he
prohibited taking the price of a dog, and the
money earned by prostitution, and cursed the
makers of pictures
Types of Riba
Riba Al – Nasi’ah
- Interest on loans
- Also known as Riba Al- Qur’an
Riba Al – Fadl
- Exchange of good quality, with poor quality of the same thing
- Other forms of malpractices
Arguments Galore
• Is interest same as riba?
• Banks are institutions of development
• Interest is the cost of development
• Banks should be commended for the public
service they do
• The interest of today is different from the days of
Jahilliya
• WHAT IS THE REAL STORY?
War from Allah
“O ye who believe! Fear Allah, and give up what
remains of your demand for usury, if ye are
indeed believers. If ye do it not, Take notice
of war from Allah and His Messenger. (Quran
2:278-279)
Effects of Interest on Society
Interest Contributes 96% to Inflation
Effects of Interest on Society
• Inflation
• Lack of demand
• Lower production
• Job cuts
• Unemployment
• Social Unrest, Chaos
& Anarchy
Effects of Interest on Society
Farmers Suicide
OLUSEGUN OBASANJO, Former
President of Nigeria
Nigeria borrowed $5 billion
from Western creditors in
1978. Since then, we have
paid back $16 billion. It may
also surprise you to know that
we still owe $31 billion! This is
largely due to compound
interest and interest rate
fluctuation.
Benjamin Disraeli
Governments do not govern, but merely control the machinery of government, being themselves controlled by the hidden hand.
The governments of the present day have to deal not merely with other governments, with emperors, kings and ministers, but also with the secret societies which have everywhere their unscrupulous agents, and can at the last moment upset all the governments’ plans.
Thomas Jefferson,
3rd President of the USA
“If the American people ever allow the banks to control the issuance of their currency, first by inflation then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied. The issuing power of money should be taken from the
banks and restored to Congress and the people to whom it belongs. I sincerely believe that banking institutions are more dangerous than standing armies.“
Lord Josiah Stamp, Former
Director, Bank of England
The modern Banking system manufactures
money out of nothing. The process is
perhaps the most outstanding piece of
sleight of hand that was ever invented…If
you want to be slaves to the bankers, and
pay the costs of your own slavery, then let
the Banks create money
Jesse Jackson, US Civil Rights
Leader
They no longer use
bullets and ropes, they
use the World Bank and
IMF
Interest Free Banking is
Equity Based
• Mudaraba (Fund Manager)
• Musharaka (Venture Capital)
• Ijara (Leasing)
• Murabaha (Cost Plus)
• Diminishing Musharaqa (Reducing Balance JV)
Some Successful
Interest Free Banks
Questions?
Get them addressed
Ashraf Mohamedy Idafa Investments Pvt. Ltd.
Office: +91 22 23472118;
Email: [email protected];
Www.idafa.com