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RIBA – THE UNTOLD STORYBy Muhammad Zahid Abdul Aziz

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What is riba?

Komputer Riba

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Quiz

a) Is riba equal to usury?

b) Is riba equal to excessive interest?

c) Is riba equal to interest of any size?

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Answer

c) Riba equals to interest of any size.

Why?

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Earning income without any assumptionof 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.

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Lending capital and demanding guaranteedsuccess.

Predetermined return on capital regardlessof outcome of business

Predetermined return of capital regardlessof outcome of business

Does mere ownership of money makes one divine?!!!

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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.

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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?

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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.

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Leads to distortion in distribution of wealth

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

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

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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.

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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

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2) Leads to unnecessary economic cycles

Studies have shown interest distort economies and and leads to ‘compulsory’ cyclical depressions to work itself out

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Al-Ma'idah (The Table Spread)

•5:91 By means of intoxicants and games of chance Satan seeks only to sow enmity and hatred among you, and to turn you away from the remembrance of Allah and from prayer. Will you not, then, desist?'

Quranic Ruling on Alcohol and Gambling

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Al-Baqara (The Cow) 2:278 O ye who believe! Observe your duty to Allah,

and give up what remaineth (due to you) from riba, if ye are (in truth) believers.

•2:279 And if ye do not, then be warned of war (against you) from Allah and His messenger. And if ye repent, then ye have your principal (without interest). Wrong not, and ye shall not be wronged

Quranic ruling on riba

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Why then in many Muslim countriesAlchohol is haram and illegal to Muslimsbut Riba is not?

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How and where did riba banking originate?

Riba is banned in Christianity and Judaism

In seventeenth century Christian merchants of Venice outwitted the Churchand legitimise riba banking.

They imported Jews to conduct riba lending on their behalf in Venice.

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To the Jews riba is only forbidden whenlending to other Jews: it is valid whenimposed 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.

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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.

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Can the world grew to what it is todaywithout riba i.e with Islamic Finance?

Most certainly yes. Instead of a worldof lenders and borrowers we will bea 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.

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• No collateral, no fixed returns.

•Greater filtering process by banks.

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

•No collateral means more thorough processing.

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Less disparity in income distribution

No debilitating economic cycles

Ummah and society benefits

Give Islam a chance

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Other issues

1) The rape and theft of our religion and belief by the Colonial western powers.

2) The Islamisation of Knowledge.

3) Sukuk is an Islamic Bond. Is Sukuk James Bond who converted to Islam?

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Elliade in Encyclopedia of Religions 1987

“…this dichotomy between the religiousand 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.”

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Birth of Secularism

The Christians sacked their scholarsin the 17th century, divorced religion from the rest of their lives in toto, and created the new religion called secularism.

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Christian’s view of religion todayWatt 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.”

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Western understanding of religion• It is a private matter between an individual and his/her God• no role to play in determining public affairs• Science replaced religion as authority• religion for infantile man; science for modern man.

How does this compare with our own beliefs on religion? Why is it so similar?

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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

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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)

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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……”

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The term Din comes from the root word DANA and is mentioned 92 times in the Quran and has 4 connotations• debt• obedience• judgement• way/custom

The religion of Islam is the willing and conscious submission to God to ‘pay back our debt’ for our existence

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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.

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AlBaqarah 31

And he taught Adam the names of all things….

AlTin 4

We have indeed created man in the best of moulds

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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 willCreate a viceregent on earth

Cannot be khalifah unless you are first and foremost an ‘abd.

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Nasr 1990

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

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The Islamisation of knowledge

Ismail Faruqi -1982

• The Colonizers succeeded in deIslamising the top layer of society whilst demoralising the rest.

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

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The problem

The 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 education

Islamic 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.

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The task

1. 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.

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Islamization of Modern Knowledge

Master modern knowledge,then integrate the new knowledge into the corpus of the Islamic legacy by

- Eliminating- Amending- Reinterpreting- Adapting

Its components as the world view of Islam and its values dictate..

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Prof. Al-Attas, Islam and Secularism (1978)The Dewesternization of Knowledge

Greatest 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 civilization

2. Islamization i.e. after isolation, we infuse the key concepts with Islamic elements and concepts

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Example of Modern knowledge infused with Western beliefs :

1) Economic theories premised on riba as a key factor

2) Accounting postulates and principles that goes against tenets of Islam

3) Law textbooks which totally ignore Shariah

4) Limited liability concept which allows Man not to honour his debt

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5) Limited liability companies that does not define Shariah relationship betweenShareholders, 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.

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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.

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Islamization of Modern Knowledge

Compulsory Study of Islamic Civilization

Instilling the Vision of Islam

Uniting the Two Systems of Education

The Task

The Lack of Vision

The Present State of Education in the Muslim World

The Self Perpetuating Core of the Malaise

Malaise of the Ummah

The Problem

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Dissemination of Islamized Knowledge

The University Textbook

Creative Analysis and Synthesis

Survey of the Problems of Humanity

Survey of the Ummah's major Problems

Critical Assessment of Islamic Legacy

Critical Assessment of the Modern Discipline

Establishing the relevance of Islam to the Discipline

Mastery of Islamic Legacy: The Analysis

Mastery of Islamic Legacy: The Anthology

Discipline Survey

Mastery of Modern Discipline

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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?

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Thank you.

Ilaliqo’

Till we meet again.

Wassalam

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Anyone who wants a copy of thisPresentation please send an emailTo zaziz@hotmail.com(no copyright ; please distribute freely)

Muhammad Zahid Abdul AzizDirector, Muamalah Financial Consulting Sdn. Bhd.

Website http://muamalahconsulting.tripod.com