Riba

[Ahmet]

http://muslimvilla.smfforfree.com/index.php?topic=1692.msg19417&boardseen=#new

Can u give a reason why bank investment is not same as "shylock the jew" kinda interest ?

[N. Truth Seeker]

Salam.   Sure.   Whatever percentage you get from a bank investment like a GIC for example, is something which the bank gives to you out of its share of overall business gain in lieu of you agreeing to pool in your money with them for a certain timeframe.  The bank calculates the percentage to be given to you very carefully to make sure it benefits from your money and does not lose by giving you a tiny percentage as incentive.  Thus neither you nor the bank are put under any sort of pressure.  If the economy is good, the bank willingly accepts your contribution and its timeframe and gives you a certain percentage.  If economy is slow, it says no, thank you to your money.  You cannot dictate your terms to the bank nor can the bank force you to invest with them.   

Let us focus on a few Verses of the Quran to prove how different riba or interest which Allah Almighty refers in the Quran (which is indeed Haram) is from the type of yield I've explained in the paragraph above. 

 "O you who believe!  Observe your duty to Allah, and give up what remains (due to you) from usury, if you are (in truth) believers.:  2:278.
"And if the debtor is in straitened circumstances, then (let there be) postponement to (the time of) ease; and that you remit the debt as almsgiving would be better for you if you did but know."  2:280.

In the Verses above, Allah Almighty clearly refers to the professional money lenders who not only charged interest on the principal lent but would also doubled and quadrupled the interest on the principle if the borrower wasn't able to return the principal on time.   Such a situation never arises with bank investments, neither with the bank nor with the customer. 

"O you who believe!  Devour not usury, doubling and quadrupling (the sum lent).  Observe your duty to Allah, that you may be successful."  3:130. 

In Verse 3:130 also Allah Almighty refers to the oppressive tactics as was common charging exorbitant interest rates that kept rising with every sum lent, if the borrower could not pay it back on the day and time decided.  This certainly doesn't happen in the case of bank investments.  It's typical of the dealings of pro money lenders and their interaction with helpless borrowers.


Please know, whatever I've explained above is in accordance to your query on bank investment.   But if we discuss the issue of interest involved in mortgages or credit cards, then yes, that could be compared with  "Shylock the Jew" (as you titled) sort of dealings because it's based on a very different ethical value compared to the bank investment as clarified.

  

[Ahmet]

WalaikumSalam.  Thankx.