I am curious about the events that have lead to the development of Sharia banking. It seems to be partly a shield against runaway interest/inflation. This has a parallel to the idea of usury in Christianity. Perhaps societies that avoid becoming too financialised have a better chance of survival?
It is forbidden to lend money with interest in Islam. So they invented this thing which is exactly the same, but formulated with other words and so it's appropriate.
Just to be clear I was not making a value judgement, just an observation. I find it compelling that many traditional societies have come to this principle. I personally think that removing interest from a money system could go a long way to stabilise it.
I detest sharia law in general and the whole idea of a religious authority making rules others then have to follow but... There are subtle and important differences between Islamic finance and non Islamic finance and there are upsides to the Islamic approach. One example of this is that there is no chance of bankruptcy from debts or negative equity. This strongly encourages responsible lending.
I don’t think this is specific to Sharia law, those rules on lending is for Islam in general. I think giving away 30% of your income to the poor every year is one of the five pillars of Islam as well.
There is no set amount or percentage dictated by the Quran. Usually the customary amount is ~2.5% of capital assets earned in a year. And apparently somewhere around 20% on mining income, which obviously is only applicable to small number of people who own interests in mining operations.
Unfortunately mainstream undercurrents of islamaphobia/orientalism have hijacked the english use of an arabic word "Sharia" and made it into a knee-jerk scare word.
It seems weird to pronounce that you detest it in general since it's not a monolithic thing and is more of a general concept encompassing a law tradition informed by a moral/religious framework.
Is Sharia law not a religious authority ruling folks who do not belong to that religion? What exactly is Islamophobic about calling that out?
The exchange between Bill Maher, Sam Harris, and Ben Affleck[0] is a great example of hamfisting Islamophobia into completely legitimate criticisms of Islam, Islamism, Sharia over secular society, etc. Not every criticism of Islam (and truthfully, the vast majority of criticisms of Islam) are not racist of Islamophobic.
There is little to no difference between what the article is describing, a halal certificate on some financial instruments and the Kosher or Halal stamps you see on food products at the grocery store. In this case there is a consumer demand for products labelled Halal and it is being met by a body deemed to hold legitimacy in determining compliance, how this becomes a discussion about defending the entirety of a broad concept like Sharia is perplexing.
Is a "halal certificate on some financial instruments" a relevant thing outside of Sharia law? This is a serious question. Are more moderate Muslims okay with interest, or is it pretty much across the board? I'm sure you can find some of any group okay with just about anything, I just mean in general. I'm not sure where on the spectrum of atheist to Islamist something like this falls.
Right or wrong I have always associated refusal to use traditional banking a more hard-line Muslim belief.
Scale makes a difference here. Kosher food isn't in large enough demand in the US to transform the entire agricultural industry, so non-adherents still have real choice.
A closer example might be the MPAA (US film rating group). It's a voluntary certification, but it's become a de facto requirement such that the small, opaque, non-government group shapes the level of violence (high) and nudity (low) in all TV and films.
Surely most people will continue to be able to find a bank that will lend them money under familiar terms of interest. I find it hard to believe or take seriously that an Indonesian body certifying financial instruments of debt as Halal is going to upend JP Morgan and the western banking system en masse.
Exactly, in my religion/culture eating Halaal is forbidden, because of 100s of years of wars with Muslim Rulers. Forcing or scaling Halaal to transform the market that we non users have no choice will be totally unacceptable.
Did I misunderstand the article? I thought it said you were REQUIRED to have a certificate in order to operate...
Edit:
For most Sharia fintech startups, MUI certificates are not only commercially advantageous but legally required by the Financial Services Authority of Indonesia (OJK), the state financial regulator. Other areas of the Sharia digital economy, like halal e-commerce and umrah sites, travel-booking platforms for Islamic pilgrimages, do not require this certificate.
So yes for fintech, maybe for ecommerce in general?
Conventional banking and finance remains the bulk of activity within the country and I do not believe this announcement is declaring conventional products banned from the market at large. Rather I think this requirement only applies to a small section of the Indonesia financial industry, approximately 10% of the market.
Participating in the Indonesian sharia finance economy would be more akin to something like organic certification on produce. Most farms are not organic but if you want to label your products as such then you have to undergo a certification process with an agency like the USDA. In this case to be certified Halal you have to gain the MUI certificate which is recognized by the OJK Financial Services Authority of Indonesian. However, an Indonesian person is likely better person to clarify this more precisely.
But it applies to all of the fintech sector right? You cannot start or operate a fintech without religious permission? And by extension, forcing customers to buy products they don't actually want (sharia when they want non sharia).
I don't believe it's a blanket requirement, it's rather that if you want to market your product as being Halal then you have to get certification. Perhaps have a look at lemparin2020's comment https://news.ycombinator.com/item?id=24518270 who appears to be an actual Indonesian who is more familiar with the article's subject matter. lemaprin2020 says:
>>Well obviously. If you want to build a halal certified banking product it has to be implement syariah principles, thats the point.
I think it's because he's angry, which is somewhat understandable, because he thinks he's debating with a racist.
I'm not sure why he refuses to accept the fact that he might be wrong in this instance, though. I've seen him talk about other topics with Maher before and he's not nearly so bombastic or hard-headed.
I saw an interesting interview with Harris shortly after this where he said everyone was shocked that Affleck inserted himself into the conversation this way as well. I haven't seen many episodes of this show but apparently this segment is always a one-on-one between Maher and the guest in question, usually talking about whatever book or movie they're promoting, and given Ben's relative frequency on the show prior to this, he was aware of that.
That seems like a total lie by Harris. “Everyone”? The incident’s reactions are divided. Sam Harris is one of those people who has a huge [internet] rabid following. A following who love jumping on things and blowing things out of proportion while holding up their guy as amazing. Maher to a lesser extent.
Not surprising that their fanbases and communities loyal to them are going to jump on this far more than necessary. It doesn’t matter if Affleck didn’t do a horrible job in that scene, the reaction wasn’t going to be that much different from Harris’ fans.
> Is Sharia law not a religious authority ruling folks who do not belong to that religion?
Absolutely not.
It specifically applies only to Muslims, while excluding others (known as dhimmi, which translates to something like "protected people"). Others have protected rights to live, have property, and freedom of religion, and in exchange they're expected to respect the authority of the State and are subjected to different taxes (jizya tax). Everything else depends on the implementation.
It's basically how you get a vibrant expat community in places like Dubai.
Absurdly wealthy inheritors looking to improve their public image on the backs of a slave labor underclass is how you get a "vibrant" expat community in places like Dubai.
As someone with a close family member who spent much of their life working in explicitly Christian financial instruments (as offered by many companies in the US, e.g. Thrivent) it is shocking and sad to see the responses to this, which I am certain my family member never had to deal with.
My apologies if I've come across as islamiphobic, I have no problem with Islam itself or its followers. I would feel the same way about any other religious inspired law. For context, I'm gay, so my very existence is against many religious systems laws. That part is pretty easy to hate right?
>For context, I'm gay, so my very existence is against many religious systems laws.
Not really, there are no punitive consequences for merely being attracted to the same sex, but there are for acting upon it publicly. Furthermore the law doesn't interfere with what's private nor is it allowed to breach the individual's privacy.
Someone who doesn't wilfully disrupt the social order should have no problems in that regard.
I think reductionist views can be slightly misleading sometimes.
I am ninety nine percent sure that sodomy would be punished if discovered or even suspected in many sharia regimes. The notion that sharia doesn't involved what is private seems quite revisionist to me. Can you point to a country where sharia law is enforced by the state where sodomy is allowed when it occurs in private? Would you care to quantify what fraction of people living in majority muslim states enjoy such protection?
"where sodomy is allowed when it occurs in private?"
- Don't you see the absurdity in this question? They don't have to 'allow' anything when it is in PRIVATE to begin with.
There is nothing revisionist about the privacy rulings, so you are just trying to force your bigoted narrative. How would they even manage to find out what's going on in millions & millions of bedrooms, besides it being a colossal waste of time!? The whole notion is just grotesque.
And here's a more typical conservative regime. I guess I'll leave it to the reader to decide whether it's you or me who are being absurd.
FWIW, I have no problem w/ Muslims practicing their faith as private citizens. When the government of a country becomes dominated by a religion, though, I have a problem with that. And that goes for Christian theocracies too, although those are much less common these days.
He explicitly wrote: "Furthermore the law doesn't interfere with what's private nor is it allowed to breach the individual's privacy. Someone who doesn't wilfully disrupt the social order should have no problems in that regard."
You seem to have wilfully ignored that part, since neither you nor the article you linked addressed or opposed that part.
He seems to have a definition of "in private" which essentially renders his statement tautological. Of course the law can never punish anyone for a crime that isn't detected. But by that definition murder and rape are "legal" everywhere in the world, as long as they occur "in private." Being a Jew in Nazi Germany was also legal as long as it was "in private". Under that notion of privacy there has never been a time in history where sodomy or any other sexual act was forbidden. IMO this is not a useful way of thinking about legality or oppression. But if it works for you that's fine I guess.
>He seems to have a definition of "in private" which essentially renders his statement tautological. Of course the law can never punish anyone for a crime that isn't detected
Interesting change of rhetoric after being called out, since you formulated the bizarre question "where sodomy is allowed when it occurs in private?", before having the epiphany that "Of course the law can never punish anyone for a crime that isn't detected"
> But by that definition murder and rape are "legal" everywhere in the world, as long as they occur "in private."
You are really going out on a limb to make nonsensical statements. The law has quite naturally limits, one of them being: the inability to judge events that it can't detect or reach. “Covenants, without the sword, are but words and of no strength to secure a man at all.” ― Thomas Hobbes, Leviathan
Law needs to be enforced by humans, who can only do so if they can perceive that event.
>Under that notion of privacy there has never been a time in history where sodomy or any other sexual act was forbidden.
Same point, limits of law.
> IMO this is not a useful way of thinking about legality or oppression.
What some consider 'oppression' today was the norm globally.
The problem is moral realism/anti-realism, since you can't prove your moral value judgments with science they will remain subjective and thus naturally be opposed.
> What some consider 'oppression' today was the norm globally. The problem is moral realism/anti-realism, since you can't prove your moral value judgments with science they will remain subjective and thus naturally be opposed.
I'm afraid no amount of appeal to the evils of moral relativism are going to be enough to convince me that homosexuality is legal in most countries where the judgments of sharia courts are routinely enforced by the government.
> I'm afraid no amount of appeal to the evils of moral relativism are going to be enough to convince me that homosexuality is legal in most countries where the judgments of sharia courts are routinely enforced by the government.
That doesn't even make any sense. I am not trying to convince you of anything, all I did was educate you on the facts and I pointed out the inconsistencies in your arguments.
Nothing is bizarre about that question. Something can be illegal in public, but legal in private - meaning that even if evidence of it is discovered or published against any of the parties will it's not punished.
Or it's illegal, and it will be punished if discovered.
If the claim is that sodomy in private is legal, there's a simple test: What happens if (government or private) surveillance catches evidence of it, a third-party steals and publishes private letters discussing it, ...?
>Nothing is bizarre about that question. Something can be illegal in public, but legal in private - meaning that even if evidence of it is discovered or published against any of the parties will it's not punished.
Nonsense, so it's illegal then, full stop. It doesn't become legal just because it's private, when by discovering it is punished. The law just can't enforce the ruling when it can't detect it in the first place.
>If the claim is that sodomy in private is legal
You failed to read properly, no where did I or the other guy state that it is legal in private. The argument was about the limits of the law about events it can't perceive.
Please quote the part where anyone of us made that alleged claim.
> You failed to read properly, no where did I or the other guy state that it is legal in private. The argument was about the limits of the law about events it can't perceive.
They said: "Furthermore the law doesn't interfere with what's private". If that indeed was to mean "it's fine as long as you do not get caught", that's a pretty pointless argument when discussing laws - because that is indeed true of pretty much all laws. E.g. "Someone who doesn't wilfully disrupt the social order should have no problems in that regard." suggests that's not what's meant though, but rather that indeed as long as you don't do anything public (which might "disrupt social order") you are fine. Which AFAIK is the case in some places re religious practice: you can be of the "wrong" or no religion, practice it in private circles, but don't do anything public.
>Furthermore the law doesn't interfere with what's private. If that indeed was to mean "it's fine as long as you do not get caught", that's a pretty pointless argument when discussing laws
Wrong again, I stated several times that it's about the limits of law, yet you still keep ignoring the answer and asking if I meant X or Y. It's not 'pointless' because the hyperbolic statement about being punished just for 'existing' was made. At least try to be more charitable in your biased interpretation for the sake of civility.
>Someone who doesn't wilfully disrupt the social order should have no problems in that regard." suggests that's not what's meant though
I don't even see the how your inference makes any sense here. AGAIN it is about the LIMITS of the law, if you keep something private no one can punish you, but if you wilfully disrupt the social order it will have consequences in any place of the world.
I kinda assumed it was meant to be a defense, not a confirmation of "yes, sharia law is maximally oppressive about it" with a generic point of "actually, you don't get punished for doing something illegal if nobody catches you".
I am only responsible for what I state, not what others (mis)understand. AGAIN, it was in reference to the hyperbolic statement that the root comment made about being punished for just 'existing'.
In response to that "hyperbolic statement" jedimind who you are defending wrote
> but there are for acting upon it publicly.
So a discussion of acting on it non-publicly (=in private) is IMHO very well relevant, but you clearly interpreted the gist of jediminds argument differently than asdfasgasdgasdg and me, but that doesn't make the nuance bizarre.
>In response to that "hyperbolic statement" jedimind who you are defending wrote
You are really confused, it was "LatteLazy" who made the hyperbolic statement, not jedimind.
>So a discussion of acting on it non-publicly (=in private) is IMHO very well relevant, but you clearly interpreted the gist of jediminds argument differently than asdfasgasdgasdg and me, but that doesn't make the nuance bizarre.
There is nothing bizarre about it, what's bizarre tho is jumping into a discussion without having studied the root issue & the development of the discussion and in consequence failing to understand simple arguments.
Thanks for clarifying. I still don't see your point.
Fact is that the hyperbolic statement that one is punished for 'just existing' is false. The arguments dealing with that are quite simple & concise, so what exactly are you arguing for?
So if evidence of sodomy were captured by a hidden camera, private communication about it were stolen, ... and published the people involved in the act wouldn't be punished in any country, because it occurred in private and wasn't acted upon publicly?
The article below contains a long list of cases where courts determined peoples sexualities and punished them. I agree, it is absurd. All religious law is.
> The article below contains a long list of cases where courts determined peoples sexualities and punished them
Can you cite one from your linked article that fits your classification and contradicts his argument? I couldn't find one fitting in your classification.
Yes, in 2008 recession it happened. Middle east & Dubai have way way lot expats as compared to locals, sometimes like 90%. Most of the Dubai expats had lots of disposable income for similar jobs as compared to income from same jobs in their home countries, so many of them financed luxury cars, expensive houses etc. Once recession hit, the jobs started disappearing here & there, & expats had no choice but to return back to home. Now, if they inform bank first, banks can stop them from exiting country by government assistance, so many of them just drove to airport in those cars, parked, took flights & never looked back.
"How is [Islamic finance] different from secular finance?
The difference is, for example, that they don't charge interest. They can't indulge in some particularly risky or speculative transactions. There's actually a whole long list of requirements, such as not selling debt, that are derived from these basic prohibitions against interest taking and against excessive risk. So because of those specific rulings, they have to design the transactions in slightly different ways.
For example, rather than borrowing money to buy some goods, they'll have the bank buy the goods and then resell the goods to the customer, so the bank becomes involved as an owner at one stage of the transaction. That makes it lawful, from the Islamic perspective. Whereas if the bank lent the money to the customer, that's an interest-bearing loan, and that's not allowed. So they use slightly different routes, typically involving ownership of goods at some point, to achieve finance."
The do charge interests. Sorry, they "don't". They charge "administrative costs", percentual administrative costs that reoccur over time.
Although this comes in many different flavors. And, of course, despite everything sounding nicer ("partnership"), it is in fact a much worse position for the buyer to be in.
An example of islamic finance "without interest": you want to buy a house, and repay your "non-loan" over 30 years. You put down a 10% downpayment.
The bank purchases the home, immediately increases the price by the full interest (let's simplify that calculation to 30yearly interest rate/2, so let's call it 50% for 30 years at 4%) then leases it back to you, and if you run out the lease they promise to transfer (for an additional fee) the ownership of the property to you. This is called a "partnership". This is illegal in most of the world, because it's exploitative. Why?
1) you are charged all interest on day 0
2) if you fail to pay, the property is in the hands of the "not-" bank that will kick you out, you will STILL owe them, generally more money than was to be repaid for you to get the property
3) if the *bank* gets into financial trouble you will lose your house
4) there are none of the normal protections (such as maximum interest rates, limits on administrative fees, ... and technically 2) is also an example of lack of protections)
In Islam, the bank has to own the house 100% if they want to sell it. You are not allowed to sell item that isn’t yours in Islam. If the bank purchased the house via leasing and that it isn’t 100% owned by them, they are not allowed to sell it to anyone at all. You can not sell loan for loan in Islam.
It is similar to a seller buying some cars for $10k each, and sell them on their dealership for $15k each. They can provide installment payment for the buyer and sell it for $20k each and they can pay it per month for $500. The difference between price is not loan/interest, its their profits.
The bank does own own the house 100% in this case ... The distinction between profit calculated on de amount and duration of a loan and interest is the difference between 4 and IV. It’s the same amount, with the same reasoning behind it. It’s interest.
> 2) if you fail to pay, the property is in the hands of the "not-" bank that will kick you out, you will STILL owe them, generally more money than was to be repaid for you to get the property
3) if the bank gets into financial trouble you will lose your house
4) there are none of the normal protections (such as maximum interest rates, limits on administrative fees, ... and technically 2) is also an example of lack of protections)
Then I assume 2 would no longer be a risk? Bank owned the property, if you failed to pay bank will sold it to someone else who can pay, bank will then return your money if it sold higher than the set price.
Point is 3 is a weak contract issue, when you made the purchase, the contract should be clear that bank can not seize the house unless you failed to pay. If the contract says bank can cancel the transaction however they want or whenever they have issue, no one would want to do business with them. Imagine accepting a project but we put the terms, we can cancel the project and not return your money if we have issues with it.
Again 4 is also a contract issue, we have to draft the contract to make it feasible for both parties. It is basically an installment, you buy $100k house for $100/month. That’s it, the values are clear, the monthly payment will not go higher or lower, you can even pay the remaining directly with hard cash on the next month if you want.
Look if you think this is a good deal, people do the exact same deal in the US. They sell them, generally, to people in trailor parks. It's called "buy and lease back". Go ahead, it's certainly not hard to do.
A lot of states are working to outlaw these deals, because for these reasons and others they are considered abusive.
I am just trying to explain that profits in Islam are different from interest as you mentioned. If you want to learn more, I suggest you find an islamic scholar who had expertise on this field, they have better understanding on the law. It would result in misunderstanding if you tried to applied your terms / perspective without knowing the details of the law.
Well, I'm trying to explain that they are different in label only, and people are trying to use the different labels to force abusive loan conditions that you should never accept on unsuspecting people.
Stay very, very far away from these types of loans is the best financial advice here.
And, come on man, really, is it that amazing that financial advice from 1500 years ago is a little bit out of date ? Yes, the Jewish and Roman empires experimented a lot with interest rules and had some very bad experiences doing that, especially in the provinces, so yes, they considered it evil at the time Islam was created. Great. They also considered straight lines evil for a thousand years (not joking about the straight lines) ... And while both pieces of advice have some validity to them, they should be reevaluated when practical.
Sharia finance does use interest. They just call it something different. There is no difference between me buying a $100 product using a loan, and paying the bank $110 in total (Western banking), compared to the bank buying the product for $100, and charging me $110 for it (Sharia banking). The fact that it's different words doesn't mean it's not interest.
There is a difference in what happens if you fail to pay these 110 dollars or if product is broken.
With loan, bank will use a court system to get back its money, and court can size your other property to return your debt, and by the power of small text your fines can unexpectedly outsize the price of the product by one or few orders of magnitude. With Sharia banking you will never pay more than these 110 dollars, and if you fail to pay them, the bank will size that product without using the court as it is legally a property of the bank unless you paid these 110 dollars.
Inflation is like the metabolism of an economy. Money represents work done in the past. Inflation means that work done further in the past is worth less than more recently. So $10 today is worth less tomorrow. Some economies have a faster metabolism than others.
If I loan you $50, and ask for 10% interest, you must pay be $55. That $5 comes from somewhere. In a physical money economy, that literally means it comes out of someone's pocket in some way (starting a business etc.). You can imagine that if we have many many loans overlapping, over long periods, we might begin to have a money deficit.
To be honest, I don't have the proper expertise to explain it perfectly. But I hope that it gives an intuition.
> If I loan you $50, and ask for 10% interest, you must pay be $55. That $5 comes from somewhere. ... You can imagine that if we have many many loans overlapping, over long periods, we might begin to have a money deficit.
No. the interest is just a claim on part of real production.
Creditors would buy some products or services from debtors and that is where $5 came from.
Well imagine if there is only $55 worth of currency in circulation. Or better yet only $52. The lender ends up with all the currency in the end (and maybe some that does not exist yet). The response is that currency is printed. If the production of society increases at the same rate as interest, then there is no problem, but that is rarely the case. This is why there is more debt than money in the world. Currencies are then deliberately debased in order to pay back debt quicker.
First, central banks usually send any profit they make to their governments. (See eg https://www.google.com/search?q=fed+profits+to+treasury for lots of examples.) The governments then spend the money. There's no endless accumulation.
Second, there were long stretches of time in the past when inflation was zero or even negative. Have a look at the so called 'Long Depression', a period of rapid productivity growth in the latter part of the 19th century. Just look electronics usually fall in price these days, almost everything slowly fell in price back then over long periods of time.
But banks were just as 'evil' as they are now, and people paid interest.
Third, money doesn't have to be based on debt, either.
Historically money based on commodities was common. But in Japan their central bank recently bought stocks in return for newly 'printed' money. There's no obligation on anyone to ever buy the stocks back from the central bank.
I am not a finance or business expert but it is stated in the Quran that there is a clear distinction between "business" and "usury", where the former is encouraged but the latter is prohibited.
The implementation of it is opened for the interpretation of the experts based on the basis of this particular distinction.
Fun fact, Muhammad was a very successful businessman and has been doing international trading to Sham (modern Syria) since he was a very young boy. He managed to retire from business before he is 40 years old and it is due to his business success not because that he is married to his first wife Khadijah. Basically he is a business startup founder with Khadijah as one of his main VC partners.
I'm intrigued by how they (almost?) classified digital wallets as haram due to the cash back benefits which can act as a form of interest payment between businesses.
Do normal credit cards there not have cash back benefits? Do credit cards exist or because naturally they would charge you interest, do they not exist? It's interesting how there's a whole different ecosystem of apps in the part of the world that most of the world lives in.
Digital wallets must not be something akin to the Discover or Charles Schwab app on your phone, I recall hearing about them because there was an MLM ponzi scheme in Vietnam recognized last month where users would receive 80% cashback on paying bills and you'd receive more depending on how many friends you onboarded (with the app having a $100 minimum deposit to open an account). I don't know how that doesn't instantly seem too good to be true, then again I guess MoviePass seemed too good to be true.
> Do normal credit cards there not have cash back benefits? Do credit cards exist or because naturally they would charge you interest, do they not exist? It's interesting how there's a whole different ecosystem of apps in the part of the world that most of the world lives in.
I'm not familiar with how credit cards work there, but from my point of view cash-back benefits aren't all that widespread. Aside from AmEx I'm not familiar with any such arrangement available in France. And even AmEx is pretty much a joke, you'd have to spend an enormous amount of money every year just so that cashback could reach the price of the card.
Credit cards involve interest and thus are haram. Charging interest and paying interest are both haram.
> It was narrated that from 'Ata' bin As-Sa'ib, from Ash-Sha'bi who said:
The Messenger of Allah [SAW] cursed the one who consumes Riba, the one who pays it, the one who writes it down, and the one who withholds Sadaqah (Zakah). And he used to forbid wailing (in mourning for the dead).
Sunan an-Nasa'i 5105
It is still forbidden if that card has a introductory 0% APR or you intend to pay the balance in full because you are signing a contract which can required you to pay riba.
The banking system in Indonesia is predominantly conventional, not syariah. Credit card penetration is low but its more to do with credit risk than religious reasons. They operate as they do elsewhere.
The digital wallets are stored value. So kind of like a very limited bank account. Without registering your ID you can put money in there and purchase things online or at point of sales. With extra KYC (Your ID etc) you can store more money in there and transfer it to friends. But the limits are small (<$300) even for the KYCd accounts.
The digital wallets themselves though are in general part of large "super" apps, kind of like uber + supermarket delivery + parcel delivery and a whole host of other services. Big players include Gojek & Grab, which started as ride-hailing.
The cashback is to attract new users, its pretty rare nowdays though as the wallets tighten their belts. You used to get cashback at point of sale, but it was never a huge amount (typically $2-3). The general idea was to use cashback to encourage daily usage, gradually weaning people off them as they started to become dependant on the other services I mentioned.
Credit card charges interest, and any kind of interest is considered usury/riba and it is forbidden. Loan was supposed to be social activities where the other party should not benefits anything from it. If they want to provide money and gain profits, then they can do the investment contracts, which means now there’s a possibility of loss for the investor. This is halal and considered as a partnership.
Digital wallet is recognized as such:
1. User “lend” money to the digital wallet provider when they top up, say $100
2. The money is used for any kind of things as it enters the circulation of the wallet provider, it could be invested, it could be loss
3. When wallet provider provides cashback, say they spent $100 then they obtained back $10
4. The $10 is considered as interest because now the user have $110 on their wallet (the $100 already spent though) - despite they only “lend” the wallet provider $100.
Conventional bank and conventional credit cards exist in Indonesia, some provides cash back and other kind of rewards. So yes, it does exist.
What a load of baloney analogy and argument. No one "lends" Money when they deposit their cash in the wallets. Wallets are just that, wallets.
You simply don't understand cashback. Its not "interest". Its residual fees earned from selling your data to aggregators where in huge quantities it makes sense to quantify the rewards in percentage points. Besides, don't credit card companies charge transaction fees? So if they give you say 10% of your fees back as cashback, is that interest?
Does the Arabic word "riba" mean interest or excessive interest? Interest being 1-10% example and excessive one being upwards of 36%?
One question that no one is able to answer me, how does doing business, investing time and skill earn you "profit" while spending that same time and skill in investing your money and getting rewards is called "interest" and that gets shot down?
For someone who has spend some time trying to wrap my head around the Islamic banking concept, all I have come to understand is that this is just a feel good scheme to bring Muslims into the conventional banking fold by any means necessary.
> One question that no one is able to answer me, how does doing business, investing time and skill earn you "profit" while spending that same time and skill in investing your money and getting rewards is called "interest" and that gets shot down?
The difference is profit/loss guarantee. If as OP said you invest your money, you are bound by risk of either losing your money or making a profit. On the other hand, your money sitting on the bank account earning interest while you are not at risk of losing, but only of profiting is considered haram.
do you know about the 2008 crash? the foreclosures? the banks folding? the peoples deposits vanishing? in india, the law is clear on this. if you have any amount in a bank as savings or deposits or whatever and the bank folds, you are only insured up to Rs. 100k or us$ 1300. although that limit is being revised to 5 times. still.
please tell me how do you see this as "only of profiting is considered haram"?
I wrote in the earlier comment, unless you have done work with banks, eveyone says there is 0 risk to lender but that is just false.
why does the word foreclosure exists with banks? and debt collectors? the premise of halal banking is wrong. write it as shariah compliant banking and i will be happier, i will still NOT work with it though because it is just sneaky.
look dude, i am a professional who has to work with businesses as his day job and been doing that for years. let me tell you unless there is some tragedy or accident, a business is guaranteed to earn profits. its not speculation that you dont know if you will flip your money 2x or loose it all. that is gambling. real businesses is pushing profits up day in and out.
Halal is just another word for sharia compliant. If it is against islamic law (sharia), then it is not halal (haram). Halal certification is a different thing.
When you deposits money, bank might offer you annual interest of 1%. No matter what happened, whether the bank is at loss or not, you get the 1%. This is riba. If the purpose of the deposits is to be used as investment, then it must be clear from the beginning and there would be risk of loss.
When bank lend money to a person, bank asked for an interest of say 5%, bank does not care if the person is profiting or not, they will get their additional 5%. This is riba. Lending in islam is a social activity and no profits should occur from it. Would there be risk for lender? Yes. Would it means they can profits from it? In Islam, No.
I am not confident with the premise that you said a business is guaranteed to earn profits. I’ve seen business rise and fall, pre covid and after covid. I’ve started some of my own business and some got profitable and some doesn’t, some were profitable in the beginning, some started to see declines.
I don’t understand what is sneaky about sharia law for banking, it prevents anyone from being unfair and that anyone know the risk from a transaction, and that no one should profits from their partner loss and that loan shall not be profitable.
The argument is not from me, but from scholars and religious researcher and I am just forwarding it on HN. The money you put on your digital wallet should not magically increase. It should be like your physical one. When you put $100, that’s what you get. When you put $100 and you get $110 without trade is riba. When you buy $100 for $110 is riba. Riba is when money magically appears without any effort/business. When you put money into a wallet, the terms is that you just want to store it, you don’t want the wallet to somehow circulate your money into investment, that’s not wallet, thats bank. If it is the business you do the deal with that provides cashback (you buy meat and the meat store give you 10% discount or 10% cashback) then it is allowed as they are the first party who were part of the transaction, you don’t “lend” them money at all.
Credit card that charges interest/fee is already considered riba in Islam, no need to go into the cash back situation as it is already forbidden in the first place.
The Al Quran clearly answers your questions. “God forbids riba and permitted trade/business”. Riba had 0 risk for the lender, while investment/trade/business has risk. It is unfair to invest but only wanted profits, in business there’s a risk of loss, and there’s a chance of profits. Investing time and skills, or money for other business is allowed. No one would label it riba. When you starts being unfair by investing and you wanted only profits in return, without risk of loss - then that’s loan, not investment.
The etymology definition of riba is interest, but the actual ruling around it and the law is very complex.
I agree that some financial institutions are just using the label Sharia and Halal while in actualities it is just conventional banking.
I mean, irrespective of the reasons, banning cash back is good. It's a really parasitic part of the modern economic system. You make people play these games to increase their spending, and the end result is the people who don't play these games get punished the most by paying more.
It's sad that just as all the technology in smart phones is reaching people, so many places are clamping down and sacrificing all the benefits to keep control.
Makes sense , when ever ISLAM gets to a certain percentage of the population it replaces the ethnic native popuation, the goverment, the region, the courts and the LAW, banking is the next step
This is why if you dont want your nation to run by Zionist Jews or ISLAMIC mulsims, dont let them in to begin with
This piece uses snippets of real information to play to a pre-existing agenda thats pretty easy to spot. So please dont jump to conclusions. For example:
>> "New fintech startups must present themselves before the Indonesian Ulema Council .. composed of religious clerics"
But later we learn LinkAja "building the first Sharia mobile money product in Indonesia". So obviously thats not exactly true.
>> embedded in the DNA of the app was Fatwa No. 116 and the fingerprints of three Sharia clerics.
Well obviously. If you want to build a halal certified banking product it has to be implement syariah principles, thats the point.
==
For context the banking system here is dominated by conventional banking, with syariah banking assets tiny in comparison (Rp424 trillion Vs Rp7.4 quadrillion [0]). There is demand for Syariah products, Indonesia has the largest muslim population in the world, hence LinkAja and others looking at it as a way to service this demand. Some people build syariah products for a desire to see Syariah financing implemented as they believe its better, some as its core to their beliefs, some for money.
The VP supports syariah banking, of course. But for context in reality Its a bit of struggle for them (hence the big initiatives), ie not some secret agenda being forced from above.
As for the merits of syariah VS conventional you'll need to research yourself. And if you really want to -OMG- talk to an islamic scholar then fire ahead. You wont exactly get far ignoring one side of the debate. There is also an interesting discussion on whether "regular" syariah banking products are normal ones wrapped in a compliant way, as others have touched upon here. And of course a macro-discussion on the problems with financing & banking ethics by people of all & no faiths.
Are you familiar with how muslims in muslim minority countries do banking? Are there sayariah banks / credit unions that I am simply unaware of due to my ignorance? Or do they simply not use banks? Or do most just not care about the rule as I think would be implied by conventional banking being more prevalent even in a country with as many muslims as Indonesia?
Not very familiar, but I do know there are syariah banks in countries with muslim minorities. Eg Al Rayan Bank in UK.
Just opinion, but I think as with most beliefs people aim to adhear in general but maybe not to the letter where not practical. Eg. a bitcoin enthusiast who has a conventional mortgage :)
If given the choice, I think people would favor banking products that fit their beliefs, but weighed against other factors. One of the limits on growth of syariah financing here for example is that it sometimes tends to be more expensive than traditional.
I kind of assumed it was one of those religious rules that might get thumped around a lot by those who are very devout but conveniently ignored by most average folks, like some christians not eating meat on Fridays.
Unfortunate that rules that seemed to have been designed to be fairer to those borrowing ended up making them more expensive.
In the UK most of the banks offer a shariah compliant account to customers. I know LLyods TSB and HSBC do this. Your account basically does not include any interests and you are provided with a contract that explains how this is shariah compliant.
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[ 2.1 ms ] story [ 189 ms ] threadIt seems weird to pronounce that you detest it in general since it's not a monolithic thing and is more of a general concept encompassing a law tradition informed by a moral/religious framework.
https://bridge.georgetown.edu/research/factsheet-sharia/
https://ing.org/a-closer-look-at-sharia-in-the-united-states...
The exchange between Bill Maher, Sam Harris, and Ben Affleck[0] is a great example of hamfisting Islamophobia into completely legitimate criticisms of Islam, Islamism, Sharia over secular society, etc. Not every criticism of Islam (and truthfully, the vast majority of criticisms of Islam) are not racist of Islamophobic.
[0] https://www.youtube.com/watch?v=vln9D81eO60
Right or wrong I have always associated refusal to use traditional banking a more hard-line Muslim belief.
A closer example might be the MPAA (US film rating group). It's a voluntary certification, but it's become a de facto requirement such that the small, opaque, non-government group shapes the level of violence (high) and nudity (low) in all TV and films.
Edit:
For most Sharia fintech startups, MUI certificates are not only commercially advantageous but legally required by the Financial Services Authority of Indonesia (OJK), the state financial regulator. Other areas of the Sharia digital economy, like halal e-commerce and umrah sites, travel-booking platforms for Islamic pilgrimages, do not require this certificate.
So yes for fintech, maybe for ecommerce in general?
https://www.ojk.go.id/en/berita-dan-kegiatan/siaran-pers/Pag...
Participating in the Indonesian sharia finance economy would be more akin to something like organic certification on produce. Most farms are not organic but if you want to label your products as such then you have to undergo a certification process with an agency like the USDA. In this case to be certified Halal you have to gain the MUI certificate which is recognized by the OJK Financial Services Authority of Indonesian. However, an Indonesian person is likely better person to clarify this more precisely.
>>Well obviously. If you want to build a halal certified banking product it has to be implement syariah principles, thats the point.
Nowhere does it say that most fintech startups, let alone most finance, are are seeking that classification.
I'm not sure why he refuses to accept the fact that he might be wrong in this instance, though. I've seen him talk about other topics with Maher before and he's not nearly so bombastic or hard-headed.
I saw an interesting interview with Harris shortly after this where he said everyone was shocked that Affleck inserted himself into the conversation this way as well. I haven't seen many episodes of this show but apparently this segment is always a one-on-one between Maher and the guest in question, usually talking about whatever book or movie they're promoting, and given Ben's relative frequency on the show prior to this, he was aware of that.
Not surprising that their fanbases and communities loyal to them are going to jump on this far more than necessary. It doesn’t matter if Affleck didn’t do a horrible job in that scene, the reaction wasn’t going to be that much different from Harris’ fans.
Absolutely not.
It specifically applies only to Muslims, while excluding others (known as dhimmi, which translates to something like "protected people"). Others have protected rights to live, have property, and freedom of religion, and in exchange they're expected to respect the authority of the State and are subjected to different taxes (jizya tax). Everything else depends on the implementation.
It's basically how you get a vibrant expat community in places like Dubai.
Not really, there are no punitive consequences for merely being attracted to the same sex, but there are for acting upon it publicly. Furthermore the law doesn't interfere with what's private nor is it allowed to breach the individual's privacy. Someone who doesn't wilfully disrupt the social order should have no problems in that regard.
I think reductionist views can be slightly misleading sometimes.
That's describes a "moderate" Sharia regime.
https://en.wikipedia.org/wiki/LGBT_rights_in_Egypt#Living_co...
And here's a more typical conservative regime. I guess I'll leave it to the reader to decide whether it's you or me who are being absurd.
FWIW, I have no problem w/ Muslims practicing their faith as private citizens. When the government of a country becomes dominated by a religion, though, I have a problem with that. And that goes for Christian theocracies too, although those are much less common these days.
You seem to have wilfully ignored that part, since neither you nor the article you linked addressed or opposed that part.
Interesting change of rhetoric after being called out, since you formulated the bizarre question "where sodomy is allowed when it occurs in private?", before having the epiphany that "Of course the law can never punish anyone for a crime that isn't detected"
> But by that definition murder and rape are "legal" everywhere in the world, as long as they occur "in private."
You are really going out on a limb to make nonsensical statements. The law has quite naturally limits, one of them being: the inability to judge events that it can't detect or reach. “Covenants, without the sword, are but words and of no strength to secure a man at all.” ― Thomas Hobbes, Leviathan Law needs to be enforced by humans, who can only do so if they can perceive that event.
>Under that notion of privacy there has never been a time in history where sodomy or any other sexual act was forbidden.
Same point, limits of law.
> IMO this is not a useful way of thinking about legality or oppression.
What some consider 'oppression' today was the norm globally. The problem is moral realism/anti-realism, since you can't prove your moral value judgments with science they will remain subjective and thus naturally be opposed.
I'm afraid no amount of appeal to the evils of moral relativism are going to be enough to convince me that homosexuality is legal in most countries where the judgments of sharia courts are routinely enforced by the government.
That doesn't even make any sense. I am not trying to convince you of anything, all I did was educate you on the facts and I pointed out the inconsistencies in your arguments.
Or it's illegal, and it will be punished if discovered.
If the claim is that sodomy in private is legal, there's a simple test: What happens if (government or private) surveillance catches evidence of it, a third-party steals and publishes private letters discussing it, ...?
Nonsense, so it's illegal then, full stop. It doesn't become legal just because it's private, when by discovering it is punished. The law just can't enforce the ruling when it can't detect it in the first place.
>If the claim is that sodomy in private is legal
You failed to read properly, no where did I or the other guy state that it is legal in private. The argument was about the limits of the law about events it can't perceive.
Please quote the part where anyone of us made that alleged claim.
> You failed to read properly, no where did I or the other guy state that it is legal in private. The argument was about the limits of the law about events it can't perceive.
They said: "Furthermore the law doesn't interfere with what's private". If that indeed was to mean "it's fine as long as you do not get caught", that's a pretty pointless argument when discussing laws - because that is indeed true of pretty much all laws. E.g. "Someone who doesn't wilfully disrupt the social order should have no problems in that regard." suggests that's not what's meant though, but rather that indeed as long as you don't do anything public (which might "disrupt social order") you are fine. Which AFAIK is the case in some places re religious practice: you can be of the "wrong" or no religion, practice it in private circles, but don't do anything public.
Wrong again, I stated several times that it's about the limits of law, yet you still keep ignoring the answer and asking if I meant X or Y. It's not 'pointless' because the hyperbolic statement about being punished just for 'existing' was made. At least try to be more charitable in your biased interpretation for the sake of civility.
>Someone who doesn't wilfully disrupt the social order should have no problems in that regard." suggests that's not what's meant though
I don't even see the how your inference makes any sense here. AGAIN it is about the LIMITS of the law, if you keep something private no one can punish you, but if you wilfully disrupt the social order it will have consequences in any place of the world.
> but there are for acting upon it publicly.
So a discussion of acting on it non-publicly (=in private) is IMHO very well relevant, but you clearly interpreted the gist of jediminds argument differently than asdfasgasdgasdg and me, but that doesn't make the nuance bizarre.
You are really confused, it was "LatteLazy" who made the hyperbolic statement, not jedimind.
>So a discussion of acting on it non-publicly (=in private) is IMHO very well relevant, but you clearly interpreted the gist of jediminds argument differently than asdfasgasdgasdg and me, but that doesn't make the nuance bizarre.
There is nothing bizarre about it, what's bizarre tho is jumping into a discussion without having studied the root issue & the development of the discussion and in consequence failing to understand simple arguments.
> In response to that "hyperbolic statement" jedimind
Note the lack of a "by" before "jedimind".
I disagree, much confusion. I can't see any hyperbole in the statement you quoted.
Actually there is in many countries, including many claiming to run sharia law systems.
https://en.m.wikipedia.org/wiki/LGBT_rights_in_Saudi_Arabia
There are similar articles for dozens of other countries.
Can you cite one from your linked article that fits your classification and contradicts his argument? I couldn't find one fitting in your classification.
I think there are some dusty luxury cars at Dubai airport that beg to differ
The difference is, for example, that they don't charge interest. They can't indulge in some particularly risky or speculative transactions. There's actually a whole long list of requirements, such as not selling debt, that are derived from these basic prohibitions against interest taking and against excessive risk. So because of those specific rulings, they have to design the transactions in slightly different ways.
For example, rather than borrowing money to buy some goods, they'll have the bank buy the goods and then resell the goods to the customer, so the bank becomes involved as an owner at one stage of the transaction. That makes it lawful, from the Islamic perspective. Whereas if the bank lent the money to the customer, that's an interest-bearing loan, and that's not allowed. So they use slightly different routes, typically involving ownership of goods at some point, to achieve finance."
https://www.theguardian.com/commentisfree/michaeltomasky/201...
Although this comes in many different flavors. And, of course, despite everything sounding nicer ("partnership"), it is in fact a much worse position for the buyer to be in.
An example of islamic finance "without interest": you want to buy a house, and repay your "non-loan" over 30 years. You put down a 10% downpayment.
The bank purchases the home, immediately increases the price by the full interest (let's simplify that calculation to 30yearly interest rate/2, so let's call it 50% for 30 years at 4%) then leases it back to you, and if you run out the lease they promise to transfer (for an additional fee) the ownership of the property to you. This is called a "partnership". This is illegal in most of the world, because it's exploitative. Why?
It is similar to a seller buying some cars for $10k each, and sell them on their dealership for $15k each. They can provide installment payment for the buyer and sell it for $20k each and they can pay it per month for $500. The difference between price is not loan/interest, its their profits.
Then I assume 2 would no longer be a risk? Bank owned the property, if you failed to pay bank will sold it to someone else who can pay, bank will then return your money if it sold higher than the set price.
Point is 3 is a weak contract issue, when you made the purchase, the contract should be clear that bank can not seize the house unless you failed to pay. If the contract says bank can cancel the transaction however they want or whenever they have issue, no one would want to do business with them. Imagine accepting a project but we put the terms, we can cancel the project and not return your money if we have issues with it.
Again 4 is also a contract issue, we have to draft the contract to make it feasible for both parties. It is basically an installment, you buy $100k house for $100/month. That’s it, the values are clear, the monthly payment will not go higher or lower, you can even pay the remaining directly with hard cash on the next month if you want.
A lot of states are working to outlaw these deals, because for these reasons and others they are considered abusive.
Best of luck!
Stay very, very far away from these types of loans is the best financial advice here.
And, come on man, really, is it that amazing that financial advice from 1500 years ago is a little bit out of date ? Yes, the Jewish and Roman empires experimented a lot with interest rules and had some very bad experiences doing that, especially in the provinces, so yes, they considered it evil at the time Islam was created. Great. They also considered straight lines evil for a thousand years (not joking about the straight lines) ... And while both pieces of advice have some validity to them, they should be reevaluated when practical.
Sharia finance does use interest. They just call it something different. There is no difference between me buying a $100 product using a loan, and paying the bank $110 in total (Western banking), compared to the bank buying the product for $100, and charging me $110 for it (Sharia banking). The fact that it's different words doesn't mean it's not interest.
With loan, bank will use a court system to get back its money, and court can size your other property to return your debt, and by the power of small text your fines can unexpectedly outsize the price of the product by one or few orders of magnitude. With Sharia banking you will never pay more than these 110 dollars, and if you fail to pay them, the bank will size that product without using the court as it is legally a property of the bank unless you paid these 110 dollars.
(Warning: I am not a lawyer.)
reminds me of https://en.wikipedia.org/wiki/Eruv
If I loan you $50, and ask for 10% interest, you must pay be $55. That $5 comes from somewhere. In a physical money economy, that literally means it comes out of someone's pocket in some way (starting a business etc.). You can imagine that if we have many many loans overlapping, over long periods, we might begin to have a money deficit.
To be honest, I don't have the proper expertise to explain it perfectly. But I hope that it gives an intuition.
No. the interest is just a claim on part of real production. Creditors would buy some products or services from debtors and that is where $5 came from.
https://www.cato.org/policy-report/julyaugust-2011/deficits-...
(I realise limiting the money in circulation to $52 is an absurd formulation, but using these crazy limits helps understand the larger system)
The difference between real growth and the amount of currency is the "metabolism" I referred to earlier.
First, central banks usually send any profit they make to their governments. (See eg https://www.google.com/search?q=fed+profits+to+treasury for lots of examples.) The governments then spend the money. There's no endless accumulation.
Second, there were long stretches of time in the past when inflation was zero or even negative. Have a look at the so called 'Long Depression', a period of rapid productivity growth in the latter part of the 19th century. Just look electronics usually fall in price these days, almost everything slowly fell in price back then over long periods of time.
But banks were just as 'evil' as they are now, and people paid interest.
Third, money doesn't have to be based on debt, either.
Historically money based on commodities was common. But in Japan their central bank recently bought stocks in return for newly 'printed' money. There's no obligation on anyone to ever buy the stocks back from the central bank.
The implementation of it is opened for the interpretation of the experts based on the basis of this particular distinction.
Fun fact, Muhammad was a very successful businessman and has been doing international trading to Sham (modern Syria) since he was a very young boy. He managed to retire from business before he is 40 years old and it is due to his business success not because that he is married to his first wife Khadijah. Basically he is a business startup founder with Khadijah as one of his main VC partners.
Do normal credit cards there not have cash back benefits? Do credit cards exist or because naturally they would charge you interest, do they not exist? It's interesting how there's a whole different ecosystem of apps in the part of the world that most of the world lives in.
Digital wallets must not be something akin to the Discover or Charles Schwab app on your phone, I recall hearing about them because there was an MLM ponzi scheme in Vietnam recognized last month where users would receive 80% cashback on paying bills and you'd receive more depending on how many friends you onboarded (with the app having a $100 minimum deposit to open an account). I don't know how that doesn't instantly seem too good to be true, then again I guess MoviePass seemed too good to be true.
I'm not familiar with how credit cards work there, but from my point of view cash-back benefits aren't all that widespread. Aside from AmEx I'm not familiar with any such arrangement available in France. And even AmEx is pretty much a joke, you'd have to spend an enormous amount of money every year just so that cashback could reach the price of the card.
https://www.mastercard.co.uk/content/dam/mccom/en-gb/interch...
https://www.mastercard.us/content/dam/public/mastercardcom/n...
https://www.adyen.com/blog/all-you-need-to-know-about-the-eu...
> It was narrated that from 'Ata' bin As-Sa'ib, from Ash-Sha'bi who said: The Messenger of Allah [SAW] cursed the one who consumes Riba, the one who pays it, the one who writes it down, and the one who withholds Sadaqah (Zakah). And he used to forbid wailing (in mourning for the dead).
Sunan an-Nasa'i 5105
It is still forbidden if that card has a introductory 0% APR or you intend to pay the balance in full because you are signing a contract which can required you to pay riba.
https://islamqa.info/en/answers/13725/using-credit-cards-is-...
The digital wallets are stored value. So kind of like a very limited bank account. Without registering your ID you can put money in there and purchase things online or at point of sales. With extra KYC (Your ID etc) you can store more money in there and transfer it to friends. But the limits are small (<$300) even for the KYCd accounts.
The digital wallets themselves though are in general part of large "super" apps, kind of like uber + supermarket delivery + parcel delivery and a whole host of other services. Big players include Gojek & Grab, which started as ride-hailing.
The cashback is to attract new users, its pretty rare nowdays though as the wallets tighten their belts. You used to get cashback at point of sale, but it was never a huge amount (typically $2-3). The general idea was to use cashback to encourage daily usage, gradually weaning people off them as they started to become dependant on the other services I mentioned.
Digital wallet is recognized as such: 1. User “lend” money to the digital wallet provider when they top up, say $100 2. The money is used for any kind of things as it enters the circulation of the wallet provider, it could be invested, it could be loss 3. When wallet provider provides cashback, say they spent $100 then they obtained back $10 4. The $10 is considered as interest because now the user have $110 on their wallet (the $100 already spent though) - despite they only “lend” the wallet provider $100.
Conventional bank and conventional credit cards exist in Indonesia, some provides cash back and other kind of rewards. So yes, it does exist.
Does the Arabic word "riba" mean interest or excessive interest? Interest being 1-10% example and excessive one being upwards of 36%?
One question that no one is able to answer me, how does doing business, investing time and skill earn you "profit" while spending that same time and skill in investing your money and getting rewards is called "interest" and that gets shot down?
For someone who has spend some time trying to wrap my head around the Islamic banking concept, all I have come to understand is that this is just a feel good scheme to bring Muslims into the conventional banking fold by any means necessary.
The difference is profit/loss guarantee. If as OP said you invest your money, you are bound by risk of either losing your money or making a profit. On the other hand, your money sitting on the bank account earning interest while you are not at risk of losing, but only of profiting is considered haram.
https://www.livemint.com/news/india/just-how-safe-is-your-ba... https://www.telegraphindia.com/india/pmc-bank-crisis-money-s...
please tell me how do you see this as "only of profiting is considered haram"?
I wrote in the earlier comment, unless you have done work with banks, eveyone says there is 0 risk to lender but that is just false. why does the word foreclosure exists with banks? and debt collectors? the premise of halal banking is wrong. write it as shariah compliant banking and i will be happier, i will still NOT work with it though because it is just sneaky.
look dude, i am a professional who has to work with businesses as his day job and been doing that for years. let me tell you unless there is some tragedy or accident, a business is guaranteed to earn profits. its not speculation that you dont know if you will flip your money 2x or loose it all. that is gambling. real businesses is pushing profits up day in and out.
When you deposits money, bank might offer you annual interest of 1%. No matter what happened, whether the bank is at loss or not, you get the 1%. This is riba. If the purpose of the deposits is to be used as investment, then it must be clear from the beginning and there would be risk of loss.
When bank lend money to a person, bank asked for an interest of say 5%, bank does not care if the person is profiting or not, they will get their additional 5%. This is riba. Lending in islam is a social activity and no profits should occur from it. Would there be risk for lender? Yes. Would it means they can profits from it? In Islam, No.
I am not confident with the premise that you said a business is guaranteed to earn profits. I’ve seen business rise and fall, pre covid and after covid. I’ve started some of my own business and some got profitable and some doesn’t, some were profitable in the beginning, some started to see declines.
I don’t understand what is sneaky about sharia law for banking, it prevents anyone from being unfair and that anyone know the risk from a transaction, and that no one should profits from their partner loss and that loan shall not be profitable.
Credit card that charges interest/fee is already considered riba in Islam, no need to go into the cash back situation as it is already forbidden in the first place.
The Al Quran clearly answers your questions. “God forbids riba and permitted trade/business”. Riba had 0 risk for the lender, while investment/trade/business has risk. It is unfair to invest but only wanted profits, in business there’s a risk of loss, and there’s a chance of profits. Investing time and skills, or money for other business is allowed. No one would label it riba. When you starts being unfair by investing and you wanted only profits in return, without risk of loss - then that’s loan, not investment.
The etymology definition of riba is interest, but the actual ruling around it and the law is very complex.
I agree that some financial institutions are just using the label Sharia and Halal while in actualities it is just conventional banking.
This is why if you dont want your nation to run by Zionist Jews or ISLAMIC mulsims, dont let them in to begin with
>> "New fintech startups must present themselves before the Indonesian Ulema Council .. composed of religious clerics"
But later we learn LinkAja "building the first Sharia mobile money product in Indonesia". So obviously thats not exactly true.
>> embedded in the DNA of the app was Fatwa No. 116 and the fingerprints of three Sharia clerics.
Well obviously. If you want to build a halal certified banking product it has to be implement syariah principles, thats the point.
==
For context the banking system here is dominated by conventional banking, with syariah banking assets tiny in comparison (Rp424 trillion Vs Rp7.4 quadrillion [0]). There is demand for Syariah products, Indonesia has the largest muslim population in the world, hence LinkAja and others looking at it as a way to service this demand. Some people build syariah products for a desire to see Syariah financing implemented as they believe its better, some as its core to their beliefs, some for money.
The VP supports syariah banking, of course. But for context in reality Its a bit of struggle for them (hence the big initiatives), ie not some secret agenda being forced from above.
As for the merits of syariah VS conventional you'll need to research yourself. And if you really want to -OMG- talk to an islamic scholar then fire ahead. You wont exactly get far ignoring one side of the debate. There is also an interesting discussion on whether "regular" syariah banking products are normal ones wrapped in a compliant way, as others have touched upon here. And of course a macro-discussion on the problems with financing & banking ethics by people of all & no faiths.
[0] https://databoks.katadata.co.id/datapublish/2019/09/20/berap....
Just opinion, but I think as with most beliefs people aim to adhear in general but maybe not to the letter where not practical. Eg. a bitcoin enthusiast who has a conventional mortgage :)
If given the choice, I think people would favor banking products that fit their beliefs, but weighed against other factors. One of the limits on growth of syariah financing here for example is that it sometimes tends to be more expensive than traditional.
Unfortunate that rules that seemed to have been designed to be fairer to those borrowing ended up making them more expensive.