How is business defined in Islam? Question: 1. What is the linguistic meaning of the word Shariah? 2. How is business defined in Islam? 3. What is the concept of interest in Islam? 4. Which financial investments are Shariah Compliant? Answer: In the Name of Allah, the Most Gracious, the Most Merciful. As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh. 1). Linguistically the word Shariah means: a place of drinking water (especially for animals).[1] 2). Business generally refers to a dealing or transaction to earn profit by trading, selling, manufacturing, etc. If a business is in compliance to the dictates of Islam, such a business will be deemed permissible. 3). Riba (interest) literally means: increase.[2] In Shariah, not every increase in wealth is called interest. Rather, there are two types of interest in Islam which are impermissible. The first type of interest is lending of money with the condition of taking more than what was lent at a later date.[3] This type of interest is more commonly found today, in different forms. According to Islamic principles, a financier must determine whether he is advancing a loan to assist the debtor, or desiring to share in the profit accrued by the money, if any. If he wants to assist the debtor, he should resist from claiming any excess on the principal amount, because his aim is to assist the debtor.[4] Furthermore, Islam does not recognize money as a subject-matter of trade, usually. Money does not hold any intrinsic value; it is only a medium of exchange. Profit may be generated when something holding intrinsic value (books, clothing, utensils, furniture, food, etc.) is sold for money, or by the exchange of different currencies.[5] The second type of interest is a gain which is accrued not in lieu of wealth in a commercial transaction.[6] This is impermissible in the sale of an item for its like which is sold by weight or volume. For example, it is impermissible for person A to sell 2kgs. of rice to person B for 1kg. of rice, because person B will gain 1kg. of rice, which is sold by weight, in lieu of nothing in a commercial transaction. 4). One may invest his money to earn profits primarily through the following modes of investment: 1. Musharakah - A joint commercial enterprise enacted by mutual agreement wherein two or more partners invest some of their capital or undertake to render some services to customers in which all the partners share the profit or loss of the joint venture on an agreed ratio. 2. Mudharabah – A partnership wherein one partner provides capital to another for commercial investment with only the second partner being responsible for management and work. Profits and losses are shared at an agreed ratio. The above is a brief explanation on the two modes of investment. For further details on these, you may refer to the book ‘Islamic Finance’ by Hadhrat Mufti Taqi Uthmani Sahib Mudda Zilluhu. It is available at the following link: daruliftaa.net/index.php/resources/publications/finish/27-publications/279-an-introduction-to-islamic-finance-mufti-taqi-usmani And Allah Ta’āla Knows Best Hisham Dawood Student, Darul Iftaa Chicago,U.S.A. Checked and Approved by, Mufti Ebrahim Desai. [1] قال الليث الشريعة منحدر الماء و بها سمي ما شرع الله للعباد من الصوم..و قال بعضهم سميت الشريعة شريعة تشبيها بشريعة الماء بحيث إن من شرع فيها على الحقيقة المصدوقة روي و تطهر (تاج العروس ج-١١ ص٢٣٧، دار الفكر) موضع على شاطئ البحر تشرع فيه الدواب (لسان العرب ج-٥ ص-٨٣، دار الحديث) [2] Qamus ul Fiqh, Ml. Khalid Saifullah. Vol.3 pg.465, Zam Zam [3] Islam aur Jadid Maashi Masail, Mufti Taqi Uthmani. Vol.6 pg.14, Idarah Islamiyat [4] An Introduction to Islamic Finance, Mufti Taqi Uthmani. Pg.29, Idara [5] An Introduction to Islamic Finance, Mufti Taqi Uthmani. Pg.19, Idara Ihya Uloom Al Deen, Al Ghazali. Vol.1 pg.1425&1426, Dar Al Salam [6] Qamus ul Fiqh, Ml. Khalid Saifullah. Vol.3 pg.465, Zam Zam و هو في الشرع عبارة عن فضل مال لا يقابله عوض في مواضعة مال بمال و هو محرم في كل مكيل و موزون بيع مع جنسه (الفتاوى الهندية ج-٣ ص-١١٧، مكتبة رشيدية) _______________________________________________________ ~ Darul Iftaa ~ 35 Candella Rd. , Sherwood, Durban. South Africa Ph. 031-207-5772 Mobile: 079 394 5933 Email : [email protected] Web: daruliftaa.net , idealwoman.org, daralmahmood.org, askimam.org
Posted on: Thu, 14 Nov 2013 18:31:46 +0000
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