Earning money from money against Islam?

Question

Is it true that paying someone interest on a loan, or earning interest on a financial investment is against Islam? I understand that there are Islamic banks in the middle-east the manage to do things correctly under Sharia law. However, what about muslims in the West? How do they reconcile this issue when they bank (borrow, invest, etc) at western institutions?

Answer 1

In Sharia there's a section called: "The voidable contracts in non Muslims countries"...

According to this contract, you can do things that are actually not ratified by Sharia, or refrain from doing things that are Halal, in order to respect the law of the country that hosted you as a Muslim.

For example, you may sign a document in the USA requiring you not to divorce your wife except by a court decision.. Despite Sharia grants you this right.. but to comply with this section you'll have to comply with the law of the non-Muslim country you're in...

Same rule applies when you are signing a treaty with Bush.. he may after signing the treaty drink some wine.. According to Sharia, you Must not share the same table with a man drinking.. But according to this rule (you wont drink with him) you can share the table with the president till the cermonies are over...

Answer 2

Below you will find a site that explains the Muslim position on money lending and under what circumstances it is permitted.

It might be well to also point out that there was a time during the Middle Ages when Christianity also prohibited money lending. That prohibition likely had something to do with what the Bible says about money changers, etc. The first to be allowed to collect a fee for handling money or lending money were the Knights Templar. And their biggest clients were the governments of Europe. That is until the Pope had them eradicated because the King of France didn't want to have to repay his debt.