Islam and Charging Interest?

Question

Does Islam really prohibit charging interest? Why?

Thanks

Answer 1

Your charged a Head.

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Answer 2

Islam strictly prohibits interest and says that taking interest is like declaring war against GOD and the Holy Prophet. Islam tries to eliminate interest from society as it considers interest as injust.

Interest encourage a very unethical attitude of taking advantage from other’s problems and needs where as Islam wants people to help each other only to take advantages available in the life after this one. Therefore Islam wants a Muslim to help another Muslim if he needs money to study, to get medicaton or pay rent of his house etc.

There are 2 kinds of loan. One kind of loan is what a person seeks during problem/need where as other is the one a person requires to expand or to start a business. People who say that interest has encouraged people to share money and has benefited the middle class have not studied or thought about the interest system otherwise they would have identified the injustice that is done to the middle class by this system. For example a person invests money in a bank on the basis that it will get 5 % of the money each year. It means that even if the bank is making 70 % more through the money invested (which in most cases it does) yet the poor investor gets mere 5 %. So it clearly shows that in majority of the cases the person who has given or invested money is getting loss. However if the condition of investment is sharing of profit and loss which is encouraged by islam then the investor would get an amount that is deserved.

Now if the scenario is turned the other way round. The bank for instance invests in a Small business which it does for instance on 10 % markup. The business for instance runs fine for a few months then goes into loss. In this case the poor business man has to pay an amount which is not being earned. In case if he is unable to pay for a month, then the amount starts to get increased each month due to compound interest. This suggests that interest in both cases is MOSTLY a burden on common man. And if the terms are shifted to profit and loss sharing then both the parties will benefit.
The Islamic system of economy encourages more people to be self employed this requires easy access to capital and on easy terms which is made possible by encouraging people to invest on the basis of profit and loss sharing rather than on a fixed amount that has to be paid in the case of profit as well as loss.
Thus resulting a deacrease in unemploybility.

It is a very vast topic and you can find a lot of literature on it ..

Answer 3

yes, islam prohibits charging of interest.Aside from being a law in the koran, the most logical reason is islam does not tolerate anyone to benefit from the expense of others. There must be a give and take relationship, both should be in a win-win situation. Usury is prohibited even how minimal the interest is. Charging, consenting, or even being a witness in a contract wherein interest is invloved is not allowed.In islamic banking, if a depositor wants to do business with, he can not have his accounts earn thru interest, one should have a joint account contract or partnership contract with other businesses in a profit and loss sharing plan,the bank earn thru commissions or handling fees..This applies too in other transactions.
There are exceptions as any rule there is in islam, if in dire needs like hospitalization, medicine, foods etc, one can engage in borrowing with interest, but not in lending, of course.

Answer 4

This is very interesting question and really requires detailed discussion, yet to be brief let us take some examples:
- Something urgent and you need money of USD5000, you manage a group of persons on shares basis let us say USD500 and that make you need 10 persons. You get the money first, so your problem is solved and you pay installements on say 100 a month. I and other will get the benefit of saving small amounts of 100 a month and gain at one of those 10 month 5000. So your problem is solved without interest.

- You need to do business and need finance, instead of going to a bank go to a venture capital who share you the profits and losses as well. (You need to know what is a venture capital through Internet search) that instead of lender, lendee it turns into partnership.

- Also, investing in stock market will generate money without interest.

Why no interest, because Islam wants everyone to participate and share losses and profits. What do you feel about a bank giving you a loan at an interest..Do you really favor that?

Also, it is known that in economy as interest decrease, the business grows and the unemployment decreases, so if it reaches zero, the growth at its peak.

So Islam is encouraging people to use the money not as a resource but as an aided tool for your efforts.

Thus if you are interested to know more, please search internet for Islamic Finance system and this is very hot topic and being followed greatly as an alternative to the convential system by world class financial institutions.

Answer 5

The reason is that Islam is a religion of slavery. It is a tool used by ultra-wealthy and excessively cruel and evil people to force submission to their rule and legitimize it by falsely claiming it is the word of God. It has been used as such, without exception, since it was created for this purpose by the violent criminal Muhammad (a biography of his life and behavior makes very interesting reading),

Anyway, part of that is destroying anything that could possibly challenge the rule of those Islamic kings. Systems of banking and interest allow people to work together and develop a middle class with a relatively large amount of personaly power compared to the typical ignorant peasants enslaved by Islam. That cannot be allowed. This is why there is virtually no middle class in any country ruled by Islam.

Answer 6

what do u mean in changin interest. if u mean in changing religion then it is because at the first stage u have to be sure before entering into islam. im not a zealot so ill answer using logic. when u want to be a citizen of a country u must choose it without any compulsion or duress. no one canforce u to be a citizen of any country but once u become a citizen u must follow all its rule and if its rule does not allow u to change citizenship then u cannot. it is the same principles with the religion of islam. hope that answer ur question. good luck and god bless.

Answer 7

Yes Islam really prohibits charging Interest. There are many reason behind it I will give you one reason and if you are interested in learning in depth e-mail and inshallah (God Willing) I will answer you. One of the reason is specified by the Qur'an for the prohibition of Riba (Al-Baqarah 2: 279) is that taking Riba is a case of injustice, that is there is absolutely no justification of adding any amount to the principal amount lent.

http://askmuslims.com

Answer 8

Yes and no. During the old days, some one would lend some one some money, and ask extra money back. Islam teaches that you must work for your money. If you give money to invest in a business for a return, this is allowed I believe b/c it is a business transaction. I believe banks can charge fees for security holdings and keeping your money safe. It is better to go to a marja for more detail.

Answer 9

oftentimes funds lenders for the time of any era, first seize unfavorable persons to grant very own loan against some activity and illiterate persons - without calculating danger or making plans reimbursement - have been forced to pay heavy activity, lots so as that unfavorable persons have been especially much ruined economically and socially. with a view to save such illiterate debtors, Islam introduce a outstanding rule in call of religion, that funds lander can no longer cost activity in any respect. So a minimum of many households have been saved from atrocities of funds lenders. this occasion advance into in those few hundred years in the past. as we communicate venture is definitely diverse yet definite it advance into and it rather is seen as sin to cost activity.

Answer 10

That is correct. It was meant to refrain rich people from making money out of needy people. That was a very good teaching from Islam. Just look at how today's pay-day-loan companies make needy people's lives miserable.