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Q.: What is the difference between
transactions of Islamic banks or Companies & that
of interest/usury banks?
A.: It is a known fact that interest/usury banks cannot,
from the legal point of view, sell and buy, and thier activity is restricted to
lending and borrowing, meaning that they are establishments conduct credit operations
in respect of lending & borrowing.
Thus the main undertaking of the interest/usury banks is specifically allocated firstly
to (borrowing), and the second is (lending)
The bank lends to the members of the public from the funds collected from people’s money,
associated with increase on the initial amount, which is defined as Riba (interest/usury)
Since the bank activity is established on borrowing beforehand, and consequently on lending,
adopting interest/usury as it includes increase, and accordingly the bank dealings are based
on interest/usury from A to Z.
Q: Many people claim
that interest/usury is effected only, when somebody delays settlement; is that true?
For example, if you buy a car from an interest/usury bank, and you have been committed to timely settlement, what is the objection in this case?
A.: (a) As we have stated, interest/usury banks cannot legally buy and sell, but its jurisdiction rests on lending and borrowing, and what you get from them is a loan, and every loan that incurs interest is haram (banned).
(b) The usury which Islam has banned, and which was practiced in the
pre-Islamic times (paganism) and has banned by Islam is not restricted to default in settlement, but it includes all types of increase to the initial debt incurred during the prescribed period for settlement
“But if ye turn back, ye shall have your capital sums; deal not unjustly, and ye shall not be dealt with unjustly”.
Q- In credit sale, is it permissible to acquire an increase on the initial cost in return for settlement postponement?
For instance, if a man goes to Nissan Vehicles Agent and says he wants to buy a certain car, and the salesman asks him “Cash or by installments”, and the man inquires again “ how much for cash and how much for installments? And the staff tells him “20 thousand for cash and 26 thousand for installments”. Do you consider the increase of 6 thousand Riyals interest/usury?
A.:
- Increase in the sale price for deferred payment can be based on loan which constitutes Riba (interest/usury), such increase is prohibited. Similarly, in a Sale, the increase in price for deferred payment, without involving a bank loan, is permissible provided that the period of installment and the selling price is agreed by both parties.
- The sale price will not be increased, even if the buyer delays payment upon maturity, and the seller will not be entitled to anything more than the cost agreed upon, whereas in a loan, the interest will be continuously progressive upon delay in payment.
- From the economic viewpoint, credit sales cost should be higher than the prevailing cost, because commodity costs differ from one time to another, since it will have a cost in a certain time, and will have a new cost in some other time; thus the seller must take his precautions, and accordingly sells the commodity with a credit price higher than that of the cash price, as it is probable that prices of this commodity will decline.
- People’s requirements and interests call for this sort of sales, because it will be difficult for somebody, who doesn’t find cash, to buy a commodity, and that would lead to recession.
Q.: Is it permissible to add the showroom commission on the declared price?
For instance: a customer wants to buy a car costing 50 thousand from the showroom, and asked the company to buy for him, and showrooms usually collect a commission from the customer, so is it permissible for me to add the commission to cost of the car that is normally paid by the customer to
the showroom?
A.: It is not permissible to add the showroom commission to the cost, because it is the liability of the customer, and therefore he has to pay to the showroom owner.
Q.: What is the crucial
factor in the retention of the sale items by the company before its sale?
A.: In order that the company would be able to determine the time for bearing any risks that might encounter the commodity (duty with guarantee).
Q.: Why should we
inspect the sold item?
A.: To avoid exposure to sale risks, and review the item you have acquired, because it is not sensible that you proceed to buy something, which you don’t know what it is all about.
Q.: What is the sale
on sample and why “Tawaruq” is permitted?
A.: Muslims legitimately ban Sale on sample unanimously, Malikiya have given 25 types of sale on sample, the most of which are:
A needy person goes to a showroom owner who offers to sell him a car for 50 thousand, then the needy person asks the showroom owner to buy it for 45 thousand, and the difference in this instance is the interest/usury and it is banned, but if he sells the car with the same price or with a higher price, then the dealing is permissible and nothing wrong with it; or if a period elapses after the sale, and the price has then changed, then such a sale is permissible.
A needy person may approach a furniture agent and ask him to issue to him a bill for 40 thousand for a commodity I will buy through First Finance, and consequently First Finance buys the commodity and passes the cost to the agent, and then the agent gives the commodity cost to the needy.
Whereas “Tawaruq” is when a customer buys a car from First Finance by installments, and sells it to a third party who buys it from him with the purpose of acquiring money, and due to this reason scholars have permitted the dealing to satisfy the need of people to it.
Q.: What is meant
by two sale transactions in one?
A.: Prophet (peace be upon him) said that he who sells two sales in one will have the least price or usury; thus two sale transactions in one has many interpretations:
For instance, the agent says to the customer: “this is a credit commodity for one-thousand Riyals, and cash for one-thousand, one-hundred Riyals”, and the customer says: “O.K. it is a deal”, and they part without verifying which of the two sale transactions has been effected, the credit or the cash sale?
Or, if one says “I will sell this car to you, provided that you sell me your house or car”
- The first manifests non-stability of the cost
- The second is linked to a future condition, which might take place or will never happen.
If such a thing happens, it will not be out of two options, either lesser price or usury.
Q.: May the company
enter into Murabaha transactions in which the customer has made a down payment?
A.: This is impermissible, and the reason is that when the customer
makes a down payment to the agent, this would be considered as a
contract between him and the agent for purchase of what had been
agreed upon, and accordingly, how it would be possible for the
company to contract on a commodity that has been already purchased
by the customer himself, and the prophet (may peace be upon him)
says: “Nobody will sell over the sale of his brother”.
Q.: A customer wished
to buy building materials by Murabaha, and asked that we will add building and contractor
cost to the transaction cost; is that permissible?
A.: It is permissible to sell the building materials to the customer through Murabaha, but including labour and contractor costs is not permissible, because the wages cost has become a debt that could be not settled without the equivalent and it has become a liability on the customer.
Q.: Upon adding insurance
premium to the commodity cost price, shall I calculate the profits on this value
or not?
A.: The Company, upon buying the commodity, must bear the insurance premium, because it represents expenses related to property ownership, but the company has the right to include after that to the sales costing, and subsequently to Murabaha sales price.
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