Islam And Ribba

[DR OSMAN]

This is how we lost the world is in my opinion. The jews saw an opening that muslims do not operate 'banks' and turn 'money lending' into a business, which it is, waa 'ganacsi' laftigeeda. It's in the bible how jesus 'abused' their money lenders at the temple, these people were doing this for at least 2000 years and that's just documented part and they are not doing anything wrong either, their religion allows them to apply interest to any loan given to 'non jew'. The reason christians hate it is because when they saw jesus 'abuse them for lending money' in the temple. They thought all money lending is bad and barred it.

Anyways to blame jews is childish because our people were to stupid to figure out how banking operates, why didn't we realize 'ribbah' isn't interest rates? How else are you supposed to make your money back? you have to apply a 'percentage' to the money you loaned or else you will not make a profit. So if I give you 100k. I need to work out my percentage fee on top as profit. So I might say you owe me 150k in 10 years. As that 50k extra is to cover sicirki and my profit margin each year of how ever long the loan maybe. So each year I might return 1k in my interest on top of expecting you to pay back the 'principal' amount which is 100k divided by the number of years the loans is. So each year you will pay back a portion, we can even break down to months or weeks, it doesn't matter. You will still get your profit of your lendin to ensure you survive comfortably in society in 10 years time.

If I give you 100k today and a time period of 20 years to pay back. Can you demonstrate to me 100k is the same value in 20 years? For god sakes, even 1 dollar today isn't worth anything compared to 30 years ago. Money is linked to the 'market prices of goods' and if those goods price rises, his money is useless if you just pay him back the same amount he loaned you. The market will say sorry your 100k cannot buy you the same things it could buy you 10 years ago. That's why saving accounts don't work, by putting money into saving accounts, your not catching up with the 'sicir' that is happening in the market, so if you take out your money in 20 years after just storing it away, it is less value in the market because the prices of goods and services has skyrocketed in 20 years.

So what is 'ribbah' I can't believe it is 'interest' rate because interest rate is adding profit on top of 'inflation' rates. Each year inflation 'sicirku' waa kaca suuqa, things are not the same price every year by traders, it's up and down. Interest rate to me is just 'sicirki' oo aad 'percentage' uu samaysee that is 'comfortable' to you while also adding a 'profit' margin on top by dividing up the years the loan will take to be paid back, so each year you add that small layer of 'interest' which you can call a 'fee' or whatever name you want.

 

[Samaalic Era]

One of the reasons in the rise of global poverty is because of Riba. A riba free Economic system is what Somalia needs

 

[DR OSMAN]

The reason banks are successful is because of their business model. How can you not be successful when you provide money to any business or idea the nation has? you will be apart of all the success of any project and also their failures. That's why banks own the world. Where-as when your business guy, your just limited to your product or goods and u have to hope it turns over a profit, you don't have a say in other businesses, see?

 

[DR OSMAN]

One of the reasons in the rise of global poverty is because of Riba. A riba free Economic system is what Somalia needs

The question is what is 'ribba' cause it cannot be interest rates which is 'sicirka suuqa plus your profit' on top of your loan. This cannot be ribba, your taking care of your money so it's not useless in 10 years when the market rises in prices and you returned to no profit except what you loaned as principal amount. Infact your principal amount will be worth less in 10 years, so you lost money, forget making it due to sicirka suuqa.

There is going to be no economy without banks you know that? they provide capital to all business people who want to start business. We will return to slavery and working the land like peasants. Infact ppl won't be able to buy homes, they will be stuck taking their income an renting forever and never owning land or property.

Sometimes in life u need a 'loan' ama 'dayn' in af somali to get yourself up and running without a bank to provide this, you cannot move forward beyond working the land and renting which will eat your life savings and u will die a peasant.

Maybe you can predict what prices in the market place will be in 10 years and show us a working model, but noone can, it's called 'variable' interest rates, since it's set by the government, noone can predict this. Once the interest rate is lifted or downed, it will effect the whole economy, as they re-adjust prices in the suuq because everyone wuxu ku xiran yahay 'dayn' banki which means he has to pay back the bank and if he has to pay more, he will add it to his products and goods that his selling to you. It's all normal waxani. I am not sure why ppl fear banks or have phobia. It's a business

 

[DR OSMAN]

I am prepared to listen to the 'respected scholars' and their views and what the majority say of course. But I honestly do not think 'loaning' money for people to buy a home or business and have a start in life and pay it back over a time period is 'haram'. Or else how else can people buy something? work all their lives and save money and every year they save 'sicirka' suuqa ayaa percentage uu kacayo, so their money is losing value each year, they will be out of pocket by the time they finish their life and spent their life just renting and eating and having no 'assets' to pass onto their children to start life with hanti.

But then again this is the spot and there is no innovation in any topic or questioning. There is just a-lot of reporting and posting verses or scientific journal or reporting the politics of day with an 'fadhi ku dirir', there is no deep discussions around concepts that we may not even understand.

I think Ribba is when 'people cannot afford' to pay back their 'loan' or even when they can't afford to buy 'goods' in the market because 'sicirka' is to much for their salaries. So Ribba isn't only applicable to banks since banks are 'business'. It's applicable to all traders to keep prices in-line with people salaries and do not add to much excess profit' to anything your selling be it money or even 'goods and products' so that the people cannot live life anymore. This doesn't mean banks or business start to become 'charities' and lose their money. Waa ka diiday arintasi anigu.I think that's ribba, but it's not ribba interest rate that is to cover your loan so it doesn't lose value in 20 years because loans are 'big loans' and it takes years to pay off.

Right now the sicir in 'markets' of Garowe is unacceptable, no-one can buy land anymore, diaspora have pushed up prices and the locals are under the YOKE of RIBBA, this makes sense if you mean that's ribba because the locals cannot survive anymore or buy land for themselves or it's out of their price range and not matching their salaries, lakin it's not ribba to make a profit of anything you sell to the customer. It's not a charity ama 'sadaqo' bahashani, it's someone livlihood his business and he wants to live a good life.

PL needs to 'zone' of land for local consumption. Sharci soo saara in dhulkani yahay dhulka dadka localka ah ee puntland oo dhul ku iibsado mana uu furna dadka diaspora oo lacag ka xoogan haysta. That's a fair market now. They can work out the local salary and multiply it by 30 years loan period and you know what to price the land. If they make 300 a month, you know 30% of that is fair amount for his loan, so you can find out what 30% is of 300 and multiply it by 30 years or a respectable time period for a shaqaale guy then say this is how much this land will cost you. He will spend his life happily working and paying it off. If he has a disaster in his life and loses his job, thats not the bank problem they will retake their land and house, waa musiibo allah lakin bahashu waa ganacsi sxb. I cant go to dukan and say give me free IPHONE musiibo igu dhacay.

What u will see is umadi wada kacayo shaqo radsado as they can 'see' dhulki iyo gurigi is within their range of salary, he will work 30 years to pay off his loan to somali bank. Wuxu noqonaya individual markasi sida cadaanka manta, oo hanti dhisanayo. He wont have time for fadhi ku dirir, graduating university with no job outside, he will find any work.

But the banks have to be fair and also the govt. Do not be excessive and make him work 30 years and lose all his salary and he cant eat food anymore. This is marki arimo diini laga fekero how far you make him work and buy land and forget his stomach or his life and kids. The west is pushing the cadaan very tough, they need know niin iyo nag inay lacag isku darsadan to buy a property. This is excessive ribba i agree, but he is pushing them inay wax noqdan. Ganacsiga ma jiro 'limit' they will try to get as much as they can from you.

 

[DR OSMAN]

I am not saying the western model of banking is good and perfect, but I disagree banking is haram all together, it's just another business model, to make money from money itself by injecting it to people who want to buy properties or businesses. I don't see it any different to any other business in the world like traders selling goods and products or services like 'barbershops' and 'massage shops' which are services it's not a product or good that your receiving.

I would like an 'cadalaad' banking system, today the western system wuuu noqday ribba but it wasn't back in the 50's and the great boom for the low class to become middle class, it was an cadalad system back then. Now the salaries do not match the 'sicirka' suuqa, so they now need women to work in order to get a mortgage. Lets plan our banking system with ideal islamic values so they don't become slaves like that but they also to have work, cayaar kuma helayan guri iyo dhul iyo barwaaqo nooleleed.

Xaarkaga ayaa 30 sano soo cunaysa to pay your loan off but it won't be extreme, it will be portion of salary or the average salary in your city. If you can't earn your average salary in your city, marka your not an average person, you won't be getting loan, you will be treated like the low class and poor class. Stay renting, maybe the 'islamic sadaqo' guys can help you ileen iyaga sadaqo shaqo ku leh, not bankiyo iyo ganacsi.

 

[Ras]

How do we protect our savings against inflation?

Would it be Haram to lend out your money for interests as long as you only it doesn't exceed the inflation rate?

 

[DR OSMAN]

How do we protect our savings against inflation?

Would it be Haram to lend out your money for interests as long as you only it doesn't exceed the inflation rate?

How do you protect? Put in high interest rate account, make sure the interest rate 'matches' inflation. You can tell how much inflation will occur by the government you live in and the interest rate they apply to banks, the banks will pass this extra layer of interest to the loaner and the loaner is usually you a person seeking to buy a property or business. Usually interest rate account is where you put your money, I will be. I save my money but I don't save it in a normal saving account, what's the point, when inflation is rising 2-3% a year, by the time I finish saving in 30 years. 2-3% inflation multiplied by 30 years, you do the maths how much value my money lost. Maybe lost 30-50% by that time I am guessing roughly now, I didn't put it in a calculator. So you are basically 30% less money with your normal saving account in 30 years.

Especially when you withdraw your cash and see everything has risen in price by 30% your 100k is now possibly 50-70k? So it was a pointless exercise putting into a normal saving account. Ask for a high interest savings account. And put portions of your money into 'investments' be it property or business or shares. Never let it sit in a saving account, it's the worst thing you can do for yourself.

 

[Ras]

How do you protect? Put in high interest rate account, make sure the interest rate 'matches' inflation. You can tell how much inflation will occur by the government you live in and the interest rate they apply to banks, the banks will pass this extra layer of interest to the loaner and the loaner is usually you a person seeking to buy a property or business. Usually interest rate account is where you put your money, I will be. I save my money but I don't save it in a normal saving account, what's the point, when inflation is rising 2-3% a year, by the time I finish saving in 30 years. 2-3% inflation multiplied by 30 years, you do the maths how much value my money lost. Maybe lost 30-50% by that time I am guessing roughly now, I didn't put it in a calculator. So you are basically 30% less money with your normal saving account in 30 years.

Especially when you withdraw your cash and see everything has risen in price by 30% your 100k is now possibly 50-70k? So it was a pointless exercise putting into a normal saving account. Ask for a high interest savings account. And put portions of your money into 'investments' be it property or business or shares. Never let it sit in a saving account, it's the worst thing you can do for yourself.

Was asking because the current Islamic banking Murabaha method is just traditional Riba with extra steps...

However inflation protection banking would allow us to run a modern financial market using halal means.

Might not get us to lend money to risky projects since the payouts are zero but it'll do more good in the markets than in our pockets.

The only problem I see with this is inflation spiraling out of control since a higher inflation leads to higher interest rates and in turn more money on the streets which increases inflation.

The opposite of how central banks control currencies... Maybe that's why it won't work?

 

[DR OSMAN]

Was asking because the current Islamic banking Murabaha method is just traditional Riba with extra steps...

However inflation protection banking would allow us to run a modern financial market using halal means.

Might not get us to lend money to risky projects since the payouts are zero but it'll do more good in the markets than in our pockets.

The only problem I see with this is inflation spiraling out of control since a higher inflation leads to higher interest rates and in turn more money on the streets which increases inflation.

The opposite of how central banks control currencies... Maybe that's why it won't work?

Even if you protect your capital against inflation, you need to add 'profit' margin or it's pointless, to return the same money you loaned in 30 years? what's the point of that? it's not a business(making more money) and it's not a charity(losing money). What would you call that? I call it breaking even idealogy to just have a banking system that protects against inflation but doesn't incorporate 'profit' margin or 'layer of fat' at the end of loan-cycle.

You can break up the 'profit margin' over 30 years into manageable 'portions' each month of the loan period so they pay say on top of the 'loan' you gave them an extra $100 for profit and then 3% blanket against inflation. Either way your going to apply interest rate. Hence why I say 'ribba' the actual way we understand it to be interest rate needs to be 'reviewed' maybe it means 'excessive' interest is bad or excessive profit that makes people hard to pay back their loans. But the way we understand it as 'all interest rates' is bad needs to be 'revised' or else you cannot have financial market place without banks which are the ENGINE.

 

[Ras]

Even if you protect your capital against inflation, you need to add 'profit' margin or it's pointless, to return the same money you loaned in 30 years? what's the point of that? it's not a business(making more money) and it's not a charity(losing money). What would you call that? I call it breaking even idealogy to just have a banking system that protects against inflation but doesn't incorporate 'profit' margin or 'layer of fat' at the end of loan-cycle.

You can break up the 'profit margin' over 30 years into manageable 'portions' each month of the loan period so they pay say on top of the 'loan' you gave them an extra $100 for profit and then 3% blanket against inflation. Either way your going to apply interest rate. Hence why I say 'ribba' the actual way we understand it to be interest rate needs to be 'reviewed' maybe it means 'excessive' interest is bad or excessive profit that makes people hard to pay back their loans. But the way we understand it as 'all interest rates' is bad needs to be 'revised' or else you cannot have financial market place without banks which are the ENGINE.

The whole point behind banning usury is to prevent people making money of money.

There are other ways to profit of zero interest (exc inflation protection rate) lending.

Somali banks could use the money on their own low risk projects and use cheap halal financing to scale up their growth.

Each bank could back a conglomerate like they had in Korea and Japan which owned their own banks.

1. We deposit money in the corporate banks to project against inflation (let's say 2% this year).
2. Banks reinvest those deposits in their own projects.
3. Bank's conglomerate adds 2% into their accounts regardless of profits, losses or growth that year.
4. Depositers don't lose the value of their assets while at the same time consuming tributing to the economy and in turn their job security.

 

[DR OSMAN]

The whole point behind banning usury is to prevent people making money of money.

There are other ways to profit of zero interest (exc inflation protection rate) lending.

Somali banks could use the money on their own low risk projects and use cheap halal financing to scale up their growth.

Each bank could back a conglomerate like they had in Korea and Japan which owned their own banks.

1. We deposit money in the corporate banks to project against inflation (let's say 2% this year).
2. Banks reinvest those deposits in their own projects.
3. Bank's conglomerate adds 2% into their accounts regardless of profits, losses or growth that year.
4. Depositers don't lose the value of their assets while at the same time consuming tributing to the economy and in turn their job security.

I heard the islamic financing buy the asset and then work out profit margin on top and they incorporate 'fixed interest rate' into the profit margin but sell it back to you. For example the islamic bank says 'I'll buy your house'. Let's say it's 500k the property. He will lay down the 500k and now the islamic banks owns it as an asset. Then they ask you to 'pay' 500k back over 30 years but the thing is he now treats the 'house' as a 'goods' and not 'money' and then applies 'profit margin' which incorporates 'flat fee on top'. So you end up paying back 600k. He made 100k over the 30 years. While you paid back the 500k principal he laid down for your house. Obviously he will include 'inflation' protection before acconting for his profit. He needs to be 100k ahead of the market in 30 years which requires adding an inflation price on top. So if it's 100k he seeks in profit he will need to multiply that again by 3% a year x 30 years. 90%. So his 100k profit that he seeks x 90% inflation rate over 30 year loan period will give him his ultimate outcome. So his inflation rate is 90k plus 100k. He needs to clear back 200k on top of the principal. So he will sell the house to you as 700k even though it was only 500k to begin with. You need to make your money back sxb no matter what bank you and then still be ahead in profit wise

Your basically buying the house from the bank and not the bank giving you the loan and buying the house yourself. How they can apply this to a business which isn't an 'asset' yet unless their is equipments involved as assets but beyond that, how they apply that thinking of 'buying the business' for you and then selling it back to you and asking you to repay it incorporating their profit margin im not sure.

 

[Ras]

How they can apply this to a business which isn't an 'asset' yet unless their is equipments involved

That's exactly what I meant. They use the money on their own assets and pay them out of their own revenues.

This way the banks don't give the money to bad lenders and the default rate will be non-existent unless the conglomerate itself goes bankrupt.

The example you described above is called Murabaha and it's just a loophole we created and I doubt it's part of any Sunnah and it's definitely not in the Quran.

You're basically lying to Allah since that additional fee is usury regardless of the additional steps you add.

The solution I provided means that the savers don't make money from money but get to keep the value of it ... a worthwhile service that's needed in a system where you can't use traditional interest/Riba based accounts.

The banks get cheap halal financing to invest in their conglomerates.

The economy gets filled with liquidity and more jobs are created which in turn feeds back to the original saver.

Bit similar to the Japanese model where savings literally are holding up their huge economy.