1. RIBA – THE UNTOLD STORY By Muhammad Zahid Abdul Aziz 1

2. What is riba? KomputerRiba 2

3. Quiz a) Is riba equal to usury? b) Is riba equal to excessive interest? c) Is riba equal to interest of any size? 3

4. 4 Answer c) Riba equals to interest of any size. Why?

5. Earning income without any assumption of risk. Its all about the risk aspect. Majelle legal Maxim : Al-ghunm bi al-ghurm Gain accompanies loss. i.e. legitimate gain can come only with possibility of loss Riba = “gain accompanies gain” No lose situation for the owner of money. 5

6. Lending capital and demanding guaranteed success. Predetermined return on capital regardless of outcome of business Predetermined return of capital regardless of outcome of business Does mere ownership of money makes one divine?!!! 6

7. 7 Riba distorts market Inefficient allocation and distribution of resources. End result rich gets richer ; poor gets poorer. Riba prices money. Money is not and should not be a factor of production. It is a means of exchange, a store of value, a unit of account. It is not a factor of production.

8. 8 Capital goods is a factor of production. Imagine if capital goods, a tractor for example is both treated as money and a factor of production. We use tractor to farm land to generate profit; others lend trade tractors now for guaranteed return of more tractors in the future. Which is the better business, farming, or lending tractors with no possibility of loss?

9. 9 Much distortion in market! Owner of wealth gets richer and richer. User of wealth? Good luck to you. If you’re lucky you will be profitable. If not tough luck. Whatever it is pay me back my tractors plus my guaranteed return! Rich gets richer, poor gets poorer system.

10. Leads to distortion in distribution of wealth Leads to concentration of wealth in a few hands. A maqasidSyariah or one objective ofSyariah is a good distribution of wealth, not concentrated in a few hands. 10

11. Proof of this maqasid is Far’aid. Far’aid breaks up concentration of wealth. Compare to non-Muslim inheritance rules of wills and sole heirs 11

12. 12 How riba brings down economies Riba financiers demand a return regardless of performance of companies. Example :Otherwise healthy exporting companies may suffer temporary drop in sales due to poor export market. Riba financiers demand return regardless. With continued poor export sales, caught between a rock and a hard place eventually healthy export companies collapse; lay off workers. If many similar companies collapsed and all lay off workers overall consumer demand fall. Leading to collapse of companies in other industries leading to more lay off of workers leading to greater fall in consumer demand leading to more lay off of workers……… And all because riba financiers demand an unjustified return.

13. Empirical objections to riba driven economy : 1) Leads to great disparity in world distribution of wealth. Today : 80% of the world’s wealth is in the hands of 20% of the world’s population 13

14. 2) Leads to unnecessary economic cycles 14 Studies have shown interest distort economies and and leads to ‘compulsory’ cyclical depressions to work itself out

17. Why then in many Muslim countries Alchohol is haram and illegal to Muslims but Riba is not? 17

18. How and where did riba banking originate? Riba is banned in Christianity and Judaism In seventeenth century Christian merchants of Venice outwitted the Church and legitimiseriba banking. They imported Jews to conduct riba lending on their behalf in Venice. 18

19. To the Jews riba is only forbidden when lending to other Jews: it is valid when imposed on non-Jews. To the Christian merchants they tell the Church its not them who’s doing it, its the Jews. A happy arrangement to both! This gave birth to riba banking. 19

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21. The Jews sit on the floor and write on Benches called “banco” in Italian giving rise to the word Banks as we know today. This practise was brought to our shores by the Western Colonialists and we have adopted it as our own since then. 21

22. Can the world grew to what it is today without ribai.e with Islamic Finance? Most certainly yes. Instead of a world of lenders and borrowers we will be a world of Investors and Entrepreneurs. Economy will be driven by equity instead of debt. Banks will be institutions extending equity, funded by profit and loss sharing depositors. 22

24. Greater filtering process by banks.

25. Unlike current riba system of collateral and interest based lending which empower crooks; crooks stand no chance of benefitting from strict equity system.

26. No collateral means more thorough processing.

27. 24 Less disparity in income distribution No debilitating economic cycles Ummah and society benefits Give Islam a chance

28. Other issues The rape and theft of our religion and belief by the Colonial western powers. The Islamisation of Knowledge. Sukuk is an Islamic Bond. Is Sukuk James Bond who converted to Islam? 25

29. Elliade in Encyclopedia of Religions 1987 “…this dichotomy between the religious and the remainder of human life is a Western product and concern…..This distinction between the sacred and the profane, between religion and other aspects of human endeavour is a result of the process of secularization that has been the experience of Christian/Western civilisation especially since the 17th century.” 26

30. Birth of Secularism The Christians sacked their scholars in the 17th century, divorced religion from the rest of their lives in toto, and created the new religion called secularism. 27

31. Christian’s view of religion today Watt 1979 “…….means a way of spending an hour or so on Sundays in practices which give him some support and strength in dealing with the problems of daily life, and which encourages him to be friendly towards other persons and to maintain standards of sexual propriety; it has little or nothing to do with commerce or economics or politics or industrial relationships……or may even look on religion as an opiate developed by exploiters of the common people in order to keep them in subjection.” 28

33. no role to play in determining public affairs

34. Science replaced religion as authority

35. religion for infantile man; science for modern man.How does this compare with our own beliefs on religion? Why is it so similar? 29

36. Answer : The western colonialists came to our shores and not only they raped us of our natural resources ; they also raped us of our religion and beliefs. Sure, they did not convert us to Christianity but they left our religion diluted enough to mould us to their cause. They preached and imposed Secularism and we became champions of Secularism 30

37. 31 And the process continues till today with our children with the western beliefs implanted in our education system they left behind, and which we so religiously uphold ( pun intended)

38. What was the Islam we were robbed of? Islam is DIN Watt 1979 “…..whole way of life….covers both the private and public/societal lives of man, it permeates the whole fabric of society. And include theological dogma, forms of worship, political theory and a detailed code of conduct, including even matters which the European would classify as hygiene or etiquette……” 32

40. obedience

41. judgement

42. way/customThe religion of Islam is the willing and conscious submission to God to ‘pay back our debt’ for our existence 33

43. AlHijr 28-29 Behold! Thy Lord said to the Angels : I am about to create man, from sounding clay from mud moulded into shape. When I have fashioned and breathed into him my spirit, fall ye down in obeisance to him. 34

44. AlBaqarah 31 And he taught Adam the names of all things…. AlTin 4 We have indeed created man in the best of moulds 35

45. AlDhariyat 56 I have only created Jinn and Man so that they may serve me AlBaqarah 30 Behold! Thy Lord said to the angels: I will Create a viceregent on earth Cannot be khalifah unless you are first and foremost an ‘abd. 36

46. Nasr 1990 “There is no more dangerous creature on Earth than a Khalifah Allah who no longer considers himself to be an ‘Abd Allah. 37

48. Vision of Islam became clouded with the alien vision brought with the colonizers…stayed primarily through education system.38

49. The problemThe main locus and core of the malaise of the ummah is the prevalent educational system. It is the breeding ground of the disease.Done injustice to Islamic educationIslamic vision not taught to all students as western tradition is taught to high school students in the west i.e. with consistency, universality, utmost seriousness and commitment. 39

50. The task1. Solving the problem of education….uniting the two systems of education based on the vision of Islam at all levels. 2. Instilling the Islamic vision via a. a compulsory study of Islamic civilization and b. through the Islamization of modern knowledge based on unity of Allah, creation, knowledge, life and humanity. 40

51. Islamization of Modern KnowledgeMaster modern knowledge,then integrate the new knowledge into the corpus of the Islamic legacy by - Eliminating- Amending- Reinterpreting- AdaptingIts components as the world view of Islam and its values dictate.. 41

52. Prof. Al-Attas, Islam and Secularism (1978)The Dewesternization of KnowledgeGreatest Challenge for Muslims is the challenge of knowledge as conceived and disseminated throughout the world by western civilization. Knowledge that is infused with the character and personality of western civilization …interpretation through western worldview.Two steps1. Isolate the elements, including key concepts which make up western culture and civilization2. Islamization i.e. after isolation, we infuse the key concepts with Islamic elements and concepts 42

53. Example of Modern knowledge infused with Western beliefs : Economic theories premised on riba as a key factor Accounting postulates and principles that goes against tenets of Islam Law textbooks which totally ignore Shariah Limited liability concept which allows Man not to honour his debt 43

54. 5) Limited liability companies that does not define Shariah relationship between Shareholders, Board and Management. 6) Biology textbooks that teaches man descended from Apes 7) Medical textbooks that denies existence of our Creator. 8) Theory building based on rationale and observation only, ignoring totally guidance from God from Quran and Sunnah. 44

55. Objective of Islamisation of Knowledge: To produce textbooks infused with the Islamic World view. To acknowledge the role of Allah swt and give thanks to Him as the ultimate owner of knowledge and all creations. 45

56. The Task The Problem Malaise of the Ummah Uniting the Two Systems of Education The Self Perpetuating Core of the Malaise Instilling the Vision of Islam The Present State of Education in the Muslim World Compulsory Study of Islamic Civilization Islamization of Modern Knowledge The Lack of Vision Mastery of Modern Discipline 1 2 Discipline Survey 3 Mastery of Islamic Legacy: The Anthology 4 Mastery of Islamic Legacy: The Analysis 5 Establishing the relevance of Islam to the Discipline Critical Assessment of the Modern Discipline 6 7 Critical Assessment of Islamic Legacy 8 Survey of the Ummah's major Problems Survey of the Problems of Humanity 9 Creative Analysis and Synthesis 10 11 The University Textbook Dissemination of Islamized Knowledge 12 46

57. 47 Is the Islamisation of knowledge not also our fight? To create textbooks that recognises and show gratitude to our Creator ? To rid the planet of the scourge of riba? Are these not also our fight to uphold our Covenant as the Viceregent and Abd’ of Allah?

58. Thank you. Ilaliqo’ Till we meet again. Wassalam 48

59. 49 Anyone who wants a copy of this Presentation please send an email To zaziz@hotmail.com (no copyright ; please distribute freely) Muhammad Zahid Abdul Aziz Director, Muamalah Financial Consulting Sdn. Bhd. Website http://muamalahconsulting.tripod.com