Do's and Don't Islamic Finance
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Islamic Economic System Do's and Don't
Islamic Economic System
Islamic economics is based on the Shariah i.e., the Islamic law, which governs secular as well as religious activities. The basic objectives are to ensure general human well-being and socio-economic justice. Presented below are the concepts that are to be followed to achieve equilibrium within a socio-economic framework:
Economic Well-Being and the Moral Norms of Islam
Islam urges Muslims to enjoy the bounties provided by God and to set no quantitative limits to the extent of material growth of the Muslim society. It even equates the struggle for material well-being with acts of virtue. It also urges Muslims to gain mastery over nature because, according to the Quran, all resources in heavens and on earth have been created for the service of mankind.
Prohibition on Taking Interest (Riba) Zakat Ownership
According to the Quranic verses, everything in this universe belongs to God, the Almighty. “Whatever is in the heavens and whatever is on the earth belongs to Allah” [Al-Baqarah, 2:284]. He is the real owner of everything. “And Allah’s is the kingdom of the heavens and the earth, and Allah has power over everything.” [Al- Imran, 3:189]. Sadr (1994, 98-114) illustrated that individual ownership, state ownership and public ownership are three parallel forms of possession in Islamic law. Real ownership, however, belongs to Allah. Man holds property in trust and he is accountable to Him, in accordance with the rules which have been clearly laid down in the Shariah Islami’iah [Islamic Teaching].
Economic Freedom within Reason
Islamic economy allows individuals freedom within the boundary of spiritual and moral values. The execution of this ‘freedom’ is undertaken as follows:
THE DISTINCTION BETWEEN CONVENTIONAL AND ISLAMIC THEORIES
The Role of Moral Values
The Importance of the Hereafter
Islamic Perspective of Firm
Islam is also aware of man’s inordinate love for worldly gains (Quran 100:8). Consequently, Islam instructs its people to be moderate in their pursuit for profit, behave in the prescribed way, and acquire only the legitimate, not the maximum.
Keenness to Earn Legitimate (Halal) Earnings
Says the Holy Qur’an: Do not devour one another’s property wrongfully, nor throw it before the judges in order to devour a portion of other’s property sinfully and knowingly. (2:188)
Do not devour another’s property wrongfully – unless it be by trade based on mutual consent. (4:29)
Trade through Mutual Consent
The Holy Qur’an says: “O you who believe! eat not up your property among yourselves in vanities: but let there be amongst you traffic and trade by mutual goodwill: nor kill [or destroy] yourselves: for verily Allah has been to you Most Merciful.” (4:29)
Truthfulness in Business Transactions
Trustworthiness in Business Transactions
Generosity and Leniency in Business Transactions
Honoring and fulfilling Business Obligations
A verse states thus: O you who believe! Fulfil [your] obligations. (5:1)
A tradition of the Prophet (sws) states thus: The Muslims are bound by their stipulations. (Abu Da’ud, No: 3120)
Fair Treatment of Workers
Prohibited Matters in Business Transactions
some of these prohibited and undesirable business practices are as follows:
Dealing in Prohibited (Haram) Items
Sale of Al-Gharar (Uncertainty, Risks, Speculation)
Arbitrarily Fixing the Prices
Hoarding of Foodstuff
No one hoards but the traitors (i.e. the sinners). (Abu Da’ud, No. 2990) He (sws) also said: The importer [of an essential commodity] into the town will be fed [by Allah], and the hoarder will have [Allah’s] curse upon him. (Ibn Majah, No: 2144)
Exploitation of one’s Ignorance of Market Conditions
Cheating and Fraud in Business Transactions
Giving Short Measures
Dealing in Stolen Goods
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