{"id":15701,"date":"2020-06-20T20:36:27","date_gmt":"2020-06-20T20:36:27","guid":{"rendered":"http:\/\/daruliftabirmingham.co.uk\/?p=15701"},"modified":"2020-06-20T20:36:27","modified_gmt":"2020-06-20T20:36:27","slug":"the-difference-between-interest-and-investments","status":"publish","type":"post","link":"https:\/\/daruliftabirmingham.co.uk\/home\/the-difference-between-interest-and-investments\/","title":{"rendered":"The Difference Between Interest and Investments"},"content":{"rendered":"

\n\tFatwa ID: 03871<\/strong><\/span><\/span><\/span><\/span><\/span>\n<\/p>\n

\n\tAnswered by: Alimah Sabrina al-Faarsiyyah<\/span><\/span><\/strong><\/span><\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\tQuestion<\/u><\/strong><\/span><\/span>\n<\/p>\n

\n\tAssal\u0101mu `alaikum Warahmatull\u0101hi Wabarakatuh.<\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\tHazrat, can you please explain to me how the Shariah differentiates between investing in a business and accepting profits versus interest that the bank <\/span><\/span>used<\/span><\/span> to make more money.<\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\tThe latter is haram and the former is halal providing the funds are being invested in halal transactions.<\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\tI'm sorry if this sounds stupid, but they both sound the same to me. You're investing to make more money, so why are bank accounts where you accrue interest haram?<\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\t \n<\/p>\n

\n\t\u0628\u0650\u0633\u0652\u0645\u0650 \u0627\u0644\u0644\u0647\u0650 \u0627\u0644\u0631\u0651\u064e\u062d\u0652\u0645\u0646\u0650 \u0627\u0644\u0631\u0651\u064e\u062d\u0650\u064a\u0652\u0645<\/span><\/strong><\/span><\/span>\n<\/p>\n

\n\tIn the name of Allah, the Most Gracious, the Most Merciful<\/u><\/strong><\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\tAnswer:<\/u><\/strong><\/span><\/span>\n<\/p>\n

\n\tAssalamu Alaikum Warahmatullahi Wabarakatuh<\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\tOne of the wrong presumptions on which all theories of interest are based is that money has been treated as a commodity. Therefore, it is argued that just as a merchant can sell his commodity for a higher price than its cost, or a lessor can lease his property, he can also sell his money for a higher price than its face value.<\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\tHowever, Islamic principles do not subscribe to this presumption. Money and commodity have different characteristics and therefore are treated differently. For example (1) Money has no intrinsic utility whereas a commodity does have an intrinsic utility. (2) Commodities have different qualities whereas money has no quality except that it is a measure of value or a medium of exchange etc. Based on these differences, Islamic Shari’ah has treated money differently from commodities.<\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\tMoney should not be held to be the subject-matter of trade, like other commodities. If money does have to be exchanged for money (such as borrowing), the payment on both sides must be equal. Investing in business and accepting its profits is when, in a transaction, there is a commodity on one side at least, being sold in exchange for money. On the other hand, interest is when money is made the subject-matter of trade and there is money on both sides of the transaction, but one party earns more.[1]<\/sup><\/sup><\/a><\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\tImam Abubakr Al-Jassas, in his famous work, Ahkamul Qur’an, has explained Riba (interest) as the following: “The Riba which was known and <\/span><\/span>practised<\/span><\/span> by the Arabs (in the time of ignorance) was that they used to advance loan in the form of dirham or dinar for a certain period with an agreed increase in the amount of the principal advanced.”[2]<\/sup><\/sup><\/a><\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\tAllah Ta’ala says: “Those who consume interest cannot stand [on the Day of Resurrection] except as one stand who is being beaten by Satan into insanity. That is because they say, “Trade is [just] like interest." But Allah has permitted trade and has forbidden interest…”[3]<\/sup><\/sup><\/a><\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\tTo answer your question, when you put your money in the bank and thereby earn more, this is interest and impermissible, because of the reasons mentioned above. However, when you invest in a business, wherein the subject matter is anything but money itself, and earn profits, then this is permissible.<\/span><\/span>\n<\/p>\n

\n\t \n<\/p>\n

\n\t \n<\/p>\n

\n\tOnly All\u0101h knows best<\/span><\/span>\n<\/p>\n

\n\tWritten by Alimah Sabrina al-Faarsiyyah<\/span><\/span>\n<\/p>\n

\n\tChecked and approved by Mufti Mohammed Tosir Miah<\/span><\/span>\n<\/p>\n

\n\tD\u0101rul Ift\u0101 Birmingham<\/span><\/span>\n<\/p>\n

\n\t <\/p>\n

\n\t\t \n\t<\/p>\n

\n
\n

\n\t\t\t[1]<\/sup><\/sup><\/a> Mufti Taqi ‘Uthmani, The Historic Judgment on Interest, pp. 89-91, Maktabah Ma’ariful Qur’an<\/span><\/span>\n\t\t<\/p>\n

\n\t\t\t \n\t\t<\/p>\n<\/p><\/div>\n

\n

\n\t\t\t[2]<\/sup><\/sup><\/a>Ibid: pp.32-33,<\/span><\/span>\n\t\t<\/p>\n

\n\t\t\t \n\t\t<\/p>\n<\/p><\/div>\n

\n

\n\t\t\t[3]<\/sup><\/sup><\/a> Al-Qur’an 2\/275<\/span><\/span>\n\t\t<\/p>\n

\n\t\t\t \n\t\t<\/p>\n<\/p><\/div>\n<\/div>\n

\n\t <\/p>\n","protected":false},"excerpt":{"rendered":"

Fatwa ID: 03871 Answered by: Alimah Sabrina al-Faarsiyyah   Question Assal\u0101mu `alaikum Warahmatull\u0101hi Wabarakatuh.   Hazrat, can you please explain to me how the Shariah…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[17],"tags":[911,137,319],"_links":{"self":[{"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/posts\/15701"}],"collection":[{"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/comments?post=15701"}],"version-history":[{"count":2,"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/posts\/15701\/revisions"}],"predecessor-version":[{"id":15725,"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/posts\/15701\/revisions\/15725"}],"wp:attachment":[{"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/media?parent=15701"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/categories?post=15701"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/tags?post=15701"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}