We now have over a century of modern banking history to show that interest simply does not work. In fact, not only does it not work, it creates new problems.
Dubai, UAE (PRWEB) September 30, 2014
While for many Muslims avoiding riba is simply part of life, some sections of the Muslim community remain open to a variety of modern – and unsubstantiated – interpretations. Ethica Institute of Islamic Finance, one of the world’s leading Islamic finance institutes, has launched a newsletter series highlighting a Supreme Court ruling to educate the Islamic finance community about the legal origins of the prohibitions on riba.
To do so, Ethica went back fifteen years to what is now appropriately termed the “Historic Judgment on Interest,” a Supreme Court ruling handed down on the 23rd of December in 1999 by the Shariah Appellate Bench of the Supreme Court of Pakistan. That judgment, spearheaded by then Justice Mufti Taqi Usmani, ruled against modern commercial interest as another form of the riba prohibited in Islam.
Common modernist arguments – for which the “Historic Judgment on Interest” handily provided rebuttals – figured prominently in the appeals: the definition of riba remains ambiguous; the word riba only refers to excessive interest, not modern commercial interest; modern commercial loans were not practiced during the time of the Prophet (Allah bless him and give him peace); the Koran only prohibits some kinds of interest; interest should be permitted on the basis of necessity. Refutations to each of these arguments used the Koran and authentic hadith as its basis. Access to the newsletter is available here.
“Opinions in favor of interest are a throwback from a post-colonial era in which non-Muslims – even some Muslims – actually believed in the virtues of interest to make this world a better place, whether through commercial loans or development loans. We now have over a century of modern banking history to show that interest simply does not work. In fact, not only does it not work, it creates new problems. Even non-Muslims now agree, evidenced by a burgeoning interest-free alternative finance sector. By distributing this ruling Ethica hopes to hammer the last nail on the coffin of baseless arguments that only confuse well-meaning Muslims,” said Ethica’s spokesperson.