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Interest free economy promulgated by the qur’an
1. Interest Free Economy Promulgated by THE QUR’AN Presented by: Mohammad Aamir Khan 2K10IB13
2. RIBA RIBA IS MENTIONED 8 TIMES IN THE QURAN RIBA means :an addition to, an increase, over and above the original size. In other words: interest Interest: amount paid for amount lent The practice of lending money is known as usury or interest According to islam: unlawful addition Any act of interest is prohibited in islam
3. What does the QUR’AN say about riba(interest) SurahBaqrah chapter 2 verse 278 O you who believe! Fear ALLAH, and give up what remains of your demand for usury, if you are indeed believers Allah says in the QUR’AN that HE has allowed trade but prohibited USURY.(RIBA)
4. Types of Riba RIBA NASIYA: Loan for bussiness on which interest is charged RIBA FADAL: Exchange of a superior good in return of larger quantity of inferior goods. BOTH TYPES OF RIBA IS STRICTLY PROHIBITED
5. System of Zakat Compulsory on all muslims who are sahib-e-maal 2.5 % per year Should be given to the poor ,needy , debtor, traveller , feesabeelillah (in the way of allah)
6. Objective of Zakat To prevent the wealth from circulating among the rich and wealthy The serious issue of hunger and poverty would be in control if everybody in the whole world starts giving out zakat
7. Modern banking interest Increases the cost of living if Firm takes a loan and goes under loss, it has to pay the debts + interest A bank will prefer giving loan to an alcohol producer rather giving it to a social cause
8. 1980’s 1980’s saw the world become a gambling den All financed by banks Huge and consistent returns Power is concentrated in the hands of few people
9. Principles of islamic banking Tawheed Divine origin of nourishment Khilafa Taskiyaa Accountablity
10. Islamic banking No interest Profit and loss sharing Reduce the cost of living Social justice Social consideration (loan wont be given to an activity against society) If the debtor is unable to repay, they let go
11. Factors of production Land - rent Labour - wages Capital - interest Organisation (entrepreneur) -profit/loss
12. ISLAMIC FACTORS OF PRODUCTION Land - rent Labour - wages Capital - profit/loss Organisation (entrepreneur) -profit/loss Islam does not differentiate between the entrepreneur and capital
13. Types of business unit Surplus unit Deficit unit Best example of the two units coming together in islamic history is of Our beloved Prophet Muhammad(s.a.w) And his wife Khadija(r.z.a) Shared their profit in predetermined ratio
14. How do islamic banks work Options available current A/c (Amanat) ( no interest) With the depositor’s permission, the bank can utilize the money No profit and no loss will be shared between the depositor and the bank As the primary motive of an account is safety of the money
15. Savings a/c Safety The bank invests your money in businesses In return bank may give u share of the profit The shariya allows it(sadqa)
16. Investment account(mudariba) Profit and loss sharing Fix period The depositor (sahibe-maal) (surplus) The bank (sahibe-amal) (deficit) The ratio of profit is 7:3 The depositor gets 70 % The depositor bears the loss
17. Project financing Mudariba All loss is burdened by bank Profit is shared The bank has no authority over the management
18. Project financing Musharika(partnership) Profit is shared on capital ratio More loss is burdened by the bank The bank has a control over the management of the firm
19. Project finanacing Murhaba The bank buys an asset on behalf of the firm And charges service charge over it(negociable) It can be combined with mudariba(full finanace) or musharika(partnership)
20. Project financing Al ijra( hire purchase) Machinery is bought by the bank and lent on life span basis
21. KARZ-E-HASAN 10% of bank’s profit is reserved of karz-e-hasan Lent only to the poor and needy for bussiness The bank cannot ask for any profit The business man can give some profit if he wants
22. Quran is not just a book It’s the word of GOD almighty Islam is not just a religion It is the way of life