Before you Invest...Our Financial Woes by Nisaar Yusuf Nadiadwala

Before you Invest...Our Financial Woes

August 3, 2013 at 1:39pm

A young graduate once inquired : Sir ! is there any Islamic bank which can give me an Interst free loan?

I countered him with another question : Why do you need a loan?

He replied : I want to start a business of Ready to wear garments.

I asked again: Do you have any experience in it? Do you have any knowledge about the whole line?

He said : No, but can you find out for me an investing partner or one who can give Qard e Hasana if there is no Islamic bank?

I inquired again : Do you know how to write or read an account sheet?

He replied : No, but my business idea is very good it will click hundred percent.



Many people assume that because they have an business idea, it is going to click hundred percent. They look around for loan (with or without interest) . Some even look for Investing partners. Are bussiness assumptions always correct? Would I ever risk my money to some one if he is not experienced in any bussiness or never worked on it and also no project report to present his case ? Nobody would risk even to an honest man because honesty, though is important but equally important is a person's effeciency too.



A widow's story once came accross me. She trusted her nephew with her precious savings and became her investing partner. There was no accounts maintained. The boy did not have an expereince in the field. He didnot have a list of his debtors and creditors. He had a beard, he prayed regularly and he was no doubt an honest person. But these are not the only qualification you need to run a business. Many of us do not know how to read an account sheet. Today Financial education is no longer just an option but it is now necessary.



Many people are totally dependant upon some one else to make their financial decisions. The moment some people around you come to know that you have money they will swarm around you with business ideas, inviting you to invest. And people invest without examining the prospect of the business or inquiring the nature of the business. They invest because they want a financial security. A steady income out of their savings. It can be possible that our life time earning can go in waste if we do not update our financial statements. ( Inshallah I will write about WHAT IS AN ISLAMIC FINANCIAL STATEMENT ? in my upcoming notes)



Many people after running into loss have a long list of creditors and debtors. Out of carelesness they avoid going to borrow their money and out of spiritual lethargy and being heedless of accountablity on the Day of Hisaab they do not pay their creditors. They do not worry about returning the people's money. This is called a 'Financial Cancer'.



Islamic financial system is not only about acounts but also accountablity. You are suppose to repay the debts. It is sad to note that our schools teach us only accounts but no accountablity so we have financial frauds and our Madrasas teach us only accountablity but not accounts, so we have financial illiteracy. Illiteracy in Finance cause frauds to harvest on our hard earned money.



Author Nisaar Nadiadwala can be responded at nisaar_yusuf@yahoo.com. He has launched BEYOND EDUCATION , an Institute that imparts Real life Education. His workshops are conducted on many topics. rangining from Family, Education, Social Problems and Interfaith dialogues too. He is a trainer in Islamic Public Speaking.

Taken from FB

Printing Money Without A Printing Press !!! A Brief Study of Conventional Banking System

Printing Money Without A Printing Press !!! A Brief Study of Conventional Banking System

by Nisaar Y. Nadiadwala on Tuesday, January 3, 2012 at 8:14pm

A large number of banks have gone bankrupts due to loan losses or credit losses.But where does the money
vanish ? Let me make it simple for my readers. Suppose if you put $1000 in a bank. As per the rule (with a little difference here and there, the bank cannot trade with your entire money, so it has to keep atleast 10 % ) The bank will keep $100 and it will lend out the remaining $900. Then I will apply for a loan and get $ 900.. But that is your money, right ? I may not pick up the money so it remain there in my account, but in the bank's ledger the amount is now $1,900 !!! Then Robert applies for a loan, so he get from my $900, so he get $ 810, but he too does not require it now so he sticks it inthe bank. There fore in the Bank's ledger it is now 2710... and this goes on till your money is counted as $10,000 in the ledger but actually it is only $1000.


It means there is no new wealth actually, unless every single money is paid back with interest. But we all know that not loans are paid back, and this is a global financial epedemic of not repaying your loans. And in the current crisis, many many loans aren’t being paid back – which means that dollars are out there that shouldn’t be out there – they are supposed to be representing wealth, but that wealth doesn’t exist, and never will, so the result is the inflation of the currency. This problem is created because of the “easy money” (banks can lend out almost an endless supply, so they do), so investors and loan recipients take unreasonable risks, and end up creating a buying/selling craze (like the recent housing bubble). An even worse result is that once the banks teeter on the brink of failure, the government swoops in and bails them out (which the banks knew the government would do – which is why they played games with our money) – with your money. Our money.


Conventional banks are the biggest culprits of present money crises. Look at another example. You are a middle class person who dreams of buying a house. So you put your wealth in fixed deposit for a few years hoping the wealth to grow and you can afford to buy a house. There are hundreds of depositers likes you. What does the bank do with your money ? After all it has to pay big fat heavy salaries to its caravanic staff. So they will approach a builder. The builder is running short of money to errect his structure. So he has two options.

1. To sell his products quickly with a little margin like other products (grains, vegetables...)

2. Take a loan from the bank and complete the project without selling his product at a lesser price. This is more beneficial for him. There fore he takes a loan from the bank which was actually your money. So he waits for customers who can pay him more. Now you cannot buy that house because it is expensive, more than your savings plus interest.


So the bank comes to you again offering you EMI, Easy Money Installment. You are told that you will have to pay easily for next 220 months and own our house. And you fall for that. So your deposit is now mortgaged as a guarentee. In the end, the builder becomes richer and you have to slought for 220 months to own that flat which is actually bought by your own money via a housing loan and interest.

One day you come to know that there are hundreds of defaulters who have not repaid the loans, so the bank does not have money to pay salary and the rent of huge offices and other bills. This is what has happened in global economy where besides individuals and companies, even nations and states are on the verge of bankruptsy...

Tomorrow Inshallah THE BRILLIANCE OF ISLAMIC BANKING.


Author: Nisaar Nadiadwala speaks and writes on socio-educational issues from Islamic perspective. He can be reached at nisaar_yusuf@yahoo.com
Taken From

The Brilliance of Islamic Banking !!!!!

The Brilliance of Islamic Banking !!!!!

by Nisaar Y. Nadiadwala on Wednesday, January 4, 2012 at 9:47pm

  Dr Hassan Hussain is known as the father of Islamic Banking. I saw his interview where he said : In past few years Islamic banks have grown at the rate of twenty five percent. This is amazing. In times when we have banks declaring bankruptsy we have a new type of banking system where the investors are part of business and not merely interest getters. The conventional banks are the only among the few business that begins with a huge debt. From day one they are in debt. The money that is deposited in the banks are not an asset of bank but a loan given by the depositers who take interest in return. So the whole game begins with a huge deficit.

In a conventional bank a borrower takes a huge amount of money but gives a share of few fixed percentage and keeps the rest of the money in his pocket. Only one section , the borrower, benefits. So the Realators and the entreprueners benefit . Islamic Banks have a risk sharing, equal partnership and minus ribaa' ( interest). In Islamic banks, the bond holders and the investors will get a share in the profit from the money borrowed from the bank by business. In fact the Islamic bank is just the manager of the depositer's wealth the real wealth belongs to the investors.


Islamic banks are a blessing to conventional economic system that is why even in Non Muslim country there are a lot of banks coming up and even non Muslims investing in and benefitting it and their money is safe unlike other banks. According to Dr Hassan.. he and his team were invited by the Nigerian Government to study Islamic banking system. The poor African nations are fed up trembling under the quaking western Euro economy which is tumbling down to its depth. They are looking for an option which is honest in dealings . Islam is the best rescue.


When British banking giant HSBC Group (HBC ) began offering mortgages carefully formulated to meet Islamic banking practices last year in Malaysia, it was surprised that more than half of its customers were non-Muslim. From Jakarta to Jeddah, 265 Islamic banks and other financial institutions are now operating in some 40 countries, with total assets that top $262 billion. Islamic Banking is reaching its zenith and as Islam is the religion of the entire universe, as the Qur'an says Rahmatulil Almeen a Mercy of entire mankind. as the title of Rasulullah peace be upon him...

http://www.businessweek.com/magazine/content/05_32/b3946141_mz035.htm

http://www.usnews.com/news/world/articles/2008/12/10/the-rise-of-islamic-banking-in-a-time-of-economic-crisis.
Author: Nisaar Nadiadwala speaks and writes on Islama nd Muslims... He can be reached at nisaar_yusuf@yahoo.com

Taken From

The Economic Terrorism: But No One is Terrified

The Economic Terrorism: But No One is Terrified

by Nisaar Y. Nadiadwala on Wednesday, April 27, 2011 at 11:38am

 Few years back a news paper headlines form Midday struck my eyes: Unable to repay loans,More than 5000 defaulters in New Mumbai.......We are observing a new system of slavery in today’s world. In this system people have willingly  sold their financial liberty to Banks, Financial institutions and money lenders. Indeed it is very sad to accept that most of the people’s financials liberty is held and controlled by various financial Institutions and banks through housing loans, personal loans, credit cards and what ever other loans they have taken.

   We are in an age where the economic system has a tremendous impact on our individual lives as well as on the whole society. Our choices, our tastes, our fashion, our food, our entertainment, our culture our national policies as well as international politics are influenced by conventional economic system.
The components of this economic system are banks, insurance, credit cards, as well as advertising and marketing world.

 So what’s wrong with this system?

   This system seems to be prosperity oriented but is it actually? In fact, scholars have already spoken vociferously against this economy stating that this financial system is creating more problems than solving. In fact we are seeing an emergence of slavery, as well as transformation of an entire civilization in to extravagant resulting in mass depression suicides, divorces, besides this, the  present economy strives on obscenity. Let us examine main hazards of this economy system.

  Mountainous loans

Whether it is the Indians, or Americans or Europeans, slavery is being revived almost globally. Individuals, local governments, as well as nations are burdened under mountainous debt. An average American has around 5,500 US$ as debt on his head, Great Britain itself has to pay around 2 trillion pounds to its creditors, this is worse than the economic condition during World War II.

   One of the Indian state Maharastra has 12 thousand crores of debt to be paid as per the budget of 2008, the budget said that around 13 % of the state’s income goes in Interest.

 How much loans are people taking?  In India housing loan is the biggest factor for domestic debt. In 1991, the total housing loan was 3,300 crore and in 2005 the total soared up to 1 lac 35 thousand crores. Besides this personal loans for marriage and other small business went up to 2 lac and 58 thousand crore.

   According to USA Today’s survey the greatest fear in US was not terrorism but the fear of running out of money during retirement. Today, the Americans are one of the most unsecured people in the world. Today due to economic meltdown, they have job insecurities which results in social insecurities leading to divorces, adultery, fornications, and domestic violence. This results in a hostile society where we receive news about people committing suicide or killing their whole families.

 The Moral of the story? Lets learn from the Qur'an itself :

Nor strain thine eyes in longing for the things We have given for enjoyment to parties of them the splendor of the life of this world through which We test them: but the provision of thy Lord is better and more enduring.  

(Surah Taha ch 20 verse 131)

Author: Nisaar Nadiadwala writes and speaks on Soico- educational issues from Islmaic view point. he can be reached at nisaar_yusuf@yahoo.com

Seriousness of debt

Seriousness of debt

Praise be to Allaah.

Firstly:

The fuqaha’ define dayn (debt) as an obligation to be fulfilled, as it says in al-Mawsoo’ah al-Fiqhiyyah (21/102). The linguistic meaning of the word dayn (debt) in Arabic has to do with submission and humiliation. The connection between the shar’i meaning and the linguistic meaning is clear. The debtor is a prisoner, as the Prophet (peace and blessings of Allaah be upon him) said: “Your companion is being detained by his debt.” Narrated by Abu Dawood, 3341; classed as hasan by al-Albaani in Saheeh Abi Dawood.

Secondly

Islam takes the matter of debt very seriously and warns against it and urges the Muslim to avoid it as much as possible.

It was narrated from ‘Aa’ishah (may Allaah be pleased with her) that the Prophet (peace and blessings of Allaah be upon him) used to say in his prayer: “Allaahumma inni a’oodhi bika min al-ma’tham wa’l-maghram (O Allaah, I seek refuge with You from sin and heavy debt).” Someone said to him: “How often you seek refuge from heavy debt!” He said: “When a man gets into debt, he speak and tells lies, and he makes a promise and breaks it.” Narrated by al-Bukhaari (832) and Muslim (589).

Al-Nasaa’i (4605) narrated that Muhammad ibn Jahsh (may Allaah be pleased with him) said:

We were sitting with the Messenger of Allaah (peace and blessings of Allaah be upon him) when he raised his head towards the sky, then he put his palm on his forehead and said: “Subhaan-Allaah! What a strict issue has been revealed to me!” We remained silent and were afraid. The following morning I asked him, “O Messenger of Allaah, what is this strict issue that has been revealed?” He said, “By the One in Whose hand is my soul, if a man were killed in battle for the sake of Allaah, then brought back to life, then killed and brought back to life again, then killed, and he owed a debt, he would not enter Paradise until his debt was paid off.” Classed as hasan by al-Albaani in Saheeh al-Nasaa’i, 4367.

The Prophet (peace and blessings of Allaah be upon him) refrained from offering the funeral prayer for one who had died owing two dinars, until Abu Qataadah (may Allaah be pleased with him) promised to pay it off for him. When he saw him the following day and said, I have paid it off, the Prophet (peace and blessings of Allaah be upon him) said: “Now his skin has become cool for him.” Musnad Ahmad (3/629) ;classed as hasan by al-Nawawi in al-Khalaasah (2/931) and by Ibn Muflih in al-Adaab al-Shar’iyyah (1/104).

Al-Haafiz Ibn Hajar (may Allaah have mercy on him) said in Fath al-Baari (4/547):

This hadeeth indicates how difficult the issue of debt is, and that it should not be undertaken except in cases of necessity. End quote.

It was narrated from Thawbaan (may Allaah be pleased with him) that the Messenger of Allaah (peace and blessings of Allaah be upon him) said:

“Whoever dies free from three things – arrogance, cheating and debt – will enter Paradise.”

Narrated by al-Tirmidhi (1572); classed as saheeh by al-Albaani in Saheeh al-Tirmidhi.

It was narrated that Abu Hurayrah said: The Messenger of Allaah (peace and blessings of Allaah be upon him) said:

“The soul of the believer is suspended because of his debt until it is paid off.” Narrated by al-Tirmidhi (1078).

Al-Mubaarakfoori said in Tuhfat al-Ahwadhi (4/164):

The words “the soul of the believer is suspended” – al-Suyooti said: i.e., it is detained and kept from reaching its noble destination. Al-‘Iraaqi said: i.e., no judgement is passed as to whether it will be saved or doomed until it is determined whether his debt will be paid off or not. End quote.

It was also narrated that many of the salaf warned against debt:

It was narrated that ‘Umar ibn al-Khattaab (may Allaah be pleased with him) said:

Beware of debt, for it starts with worry and it ends with war.

Narrated by Maalik in al-Muwatta’ (2/770).

In Musannaf ‘Abd al-Razzaaq (3/57) it says:

Ibn ‘Umar (may Allaah be pleased with him) said:

O Humraan, fear Allaah and do not die in debt, lest it be taken from your good deeds when there will be no dinars and no dirhams.

Thirdly:

These stern warnings about debt only came because of the negative consequences to which it leads both on an individual level and on a community level.

With regard to the personal level, al-Qurtubi said in al-Jaami’ li Ahkaam al-Qur’aan (3/417):

Our scholars said: It is a disgrace and a humiliation because it preoccupies the mind and makes one worried about paying it off, and makes one feel humiliated before the lender when meeting him, and feeling that he is doing one a favour when accepting a delay in payment. Perhaps he may promise himself that he will pay it off then break that promise, or speak to the lender and lie to him, or swear an oath to him then break it, and so on. Moreover, he may die without having paid off the debt so he will be held hostage because of it, as the Prophet (peace and blessings of Allaah be upon him) said: “The soul of the believer is held hostage by his debt in his grave until it is paid off.” Narrated by al-Tirmidhi, 1078. All of that undermines one’s religious commitment.

With regard to the community level, specialists have described the negative consequences and the danger it poses to the economy, for example:

• 1- Desire for immediate gratification with no thought of the future
• 2- Lack of responsibility and self-reliance
• 3- Poor distribution of wealth

In order to understand these negative consequences better, please see the study by Shaykh Saami al-Suwaylim entitled Mawqif al-Sharee’ah al-Islamiyyah min al-Dayn (6-11).

Fourthly:

Based on the above, the scholars have stipulated three conditions for debt to be permissible:

• 1- The borrower should be determined to repay it.
• 2- It should be known or thought most likely that he is able to repay it,
• 3- It should be for something that is permissible according to sharee’ah.

Ibn ‘Abd al-Barr said in al-Tamheed (23/238):

The debt for which a person will be kept out of Paradise – and Allaah knows best – is that for which he left behind enough to pay it off but he did not leave instructions to that effect, or he was able to pay it off but did not do so, or he took the loan for some unlawful or extravagant matter and died without having paid it off.

As for the one who took a loan for something lawful because he was poor, and he died without leaving behind anything to pay it off, Allaah will not keep him from Paradise because of it, in sha Allaah. End quote.

Fifthly:

So long as you have taken on a debt so that you can fulfil the duty of helping your husband and family to pay for living expenses, you will be rewarded by Allaah for this good deed. I ask Allaah to reward you greatly for that. Remember that He will help you to pay off this debt. The Prophet (peace and blessings of Allaah be upon him) said: “The one who takes people’s wealth intending to pay it back, Allaah will pay it back for him, and the one who takes it intending to destroy it, Allaah will destroy him.” Narrated by al-Bukhaari (2387).

Seek help with that by working and striving hard to pay off the debt, and by putting your trust in Allaah, and praying to Him to make it easy for you to pay off your debt.

In the Sunnah there are a number of du’aa’s which specifically seek the help of Allaah in praying off debts. They are:

1 – It was narrated that Suhayl said: Abu Saalih used to tell us, when one of us wanted to sleep, to lie down on his right side and say:

“Allaahumma Rabb al-samawaati wa’l-ard wa Rabb al-‘arsh il-‘azeem, Rabbaanaa wa Rabba kulli shay’in, Faaliq al-habb wa’l-nawa wa munzil al-Tawraati wa’l-Injeeli wa’l-Furqaan, a’oodhu bika min sharri kulli shay’in anta aakhidhun bi naasiyatihi. Allaahumma anta al-awwal fa laysa qablaka shay’un, wa anta al-aakhir fa laysa ba’daka shay’un, wa anta al-zaahir fa laysa fawqaka shay’un wa anta al-baatin fa laysa doonaka shay’un. Iqdi ‘annaa al-dayna wa aghninaa min al-faqri (O Allaah, Lord of the seven heavens and the exalted Throne, our Lord and Lord of all things, splitter of the seed and the date-stone, Revealer of the Tawraat and the Injeel and the Furqaan [Qur’aan], I seek refuge in You from the evil of all things You shall seize by the forelock [have total mastery over]. O Allaah, You are the First so there is nothing before You, and You are the Last so there is nothing after You. You are al-Zaahir [the greatest and highest] so there is nothing above You, and You are al-Baatin [aware of the subtlest secrets] so there is nothing closer than You. Settle our debt for us and spare us from poverty).”

He narrated that from Abu Hurayrah, from the Prophet (peace and blessings of Allaah be upon him). Narrated by Muslim (2713).

2 – It was narrated from ‘Ali (may Allaah be pleased with him) that a mukaatib (slave who had entered into a contract of manumission) came to him and said: “I am unable to pay off my manumission; help me.” He said: “Shall I not tell you some words which the Messenger of Allaah (peace and blessings of Allaah be upon him) taught me? And if you have debt like the mountain of Seer, Allaah will pay it off for you. He said: ‘Say: Allaahumma akfini bi halaalika ‘an haraamika wa aghnini bi fadlika ‘amman siwaaka (O Allaah, suffice me with what You have permitted so that that I have no need of that which You have forbidden, and make me independent of means by Your bounty so that I have no need of anyone besides You).’”

Narrated by al-Tirmidhi (2563) who said: This is a hasan ghareeb hadeeth. It was also classed as hasan by al-Albaani in Saheeh al-Tirmidhi.

3 – It was narrated that Abu Sa’eed al-Khudri (may Allaah be pleased with him) said:

The Messenger of Allaah (peace and blessings of Allaah be upon him) entered the mosque and saw an Ansaari man whose name was Abu Umaamah. He said: “O Abu Umaamah, why do I see you sitting in the mosque when it is not the time for prayer? He said: Worries and debts, O Messenger of Allaah. He said: “Shall I not teach you some words which, if you say them, Allaah will take away your worries and pay off your debts?” He said: Yes, O Messenger of Allaah. He said:

“Say, morning and evening, ‘“Allaahumma inni a’oodhu bika min al-hammi wa’l-hazani, wa a’oodhi bika min al-‘ajzi wa’l-kasali, wa a’oodhu bika min al-jubni wa’l-bukhli, wa a’oodhi bika min ghalabat il-dayn wa qahri al-rijaal (O Allaah, I seek refuge with You from worry and grief, and I seek refuge with You from incapacity and laziness, and I seek refuge with You from cowardice and miserliness, and I seek refuge with You from being heavily in debt and from being overcome by men).”

He said; I did that, and Allaah took away my worry and paid off my debt.

Narrated by Abu Dawood (1555). Its isnaad includes Ghassaan ibn ‘Awf; al-Dhahabi said: he is not strong. Hence Shaykh al-Albaani classed the hadeeth as weak in Da’eef Abi Dawood. But the du’aa’ mentioned – “Allaahumma inni a’oodhu bika min al-hammi wa’l-hazani…” – is proven in al-Saheehayn in a report other than this story of Abu Umaamah.

And Allaah knows best.

__________________

Muhammed Ibn Ulaysh Al-Maaliki
Taken from Turn To Islam