In two previous articles we discussed how Islam is more than the acts of worship towards God, which Muslims undertake to profess their faith. Islam includes many fundamental values that help humans live a balanced and happy life, in harmony with the world around them. We discussed the Islamic values of honoring one’s parents, honoring women, honoring one’s neighbor, recognizing the equality of all humans, avoiding gossip and renouncing violence. This article will expand further on fundamental Islamic values relating to financial maters.
Forbidding the charging of interest (usury)
Islam forbids the act of usury, which is charging interest in exchange for any loan given to borrowers; usury is very common in our modern world, but not in Islamic communities. According to Islam, Muslims should offer to lend money to those in need out of goodwill, as an act of social solidarity, with no interest charges, although it is acceptable to exact some measure of guarantee from borrowers. Islamic teachings advises that the practice of charging interest creates imbalances that negatively impact society’s financial and social stability.
Much of the research undertaken since the recent world financial crisis, seeking to determine its cause and avoid a repeat incident, focuses on the practice of charging interest. Several researchers and economists agree that to restore stability to global financial markets interest rate should be eliminated, reflecting what the holy Quran stated 14 centuries ago.
those who charge usury are in the same position as those controlled by the devil’s influence. This is because they claim that usury is the same as commerce. However, GOD permits commerce, and prohibits usury. Thus, whoever heeds this commandment from his Lord, and refrains from usury, he may keep his past earnings, and his judgment rests with GOD. As for those who persist in usury, they incur Hell, wherein they abide forever.
(2:275)
GOD condemns usury, and blesses charities. GOD dislikes every disbeliever, guilty.
(2:276)
O you who believe, you shall observe GOD and refrain from all kinds of usury, if you are believers.
(2:278)
Giving to charity (Zakat)
Zakat is one of the five main pillars of Islam. Every Muslim who owns money/property exceeding his or her basic needs is required to give a percentage to the poor and needy. The amount of Zakat depends on the format of wealth. The amount of Zakat is calculated on the format of wealth within a one-year timeframe and is to be paid annually. Muslims performing Zakat should donate 2.5 per cent of their wealth every year to those in their community.
Recent studies on poverty and hunger suggest that we could eliminate global hunger and poverty if 2 per cent of the wealth of wealthy was distributed among the poor. Historical records document an era when Zakat was collected and distributed according to Islamic standards and poverty was eliminated in all Islamic countries, which stretched at that time from central Asia (east) to Morocco (west) and from Syria (North) to Yemen (South). This was during the era of Omar Bin Abdul Aziz, the Eighth Omayed Caliph between 717 -720AC.
You shall observe the Contact Prayers (Salat) and give the obligatory charity (Zakat), and bow down with those who bow down.
(2:43)
The usury that is practiced to increase some people’s wealth, does not gain anything from GOD. But if you give to charity, seeking God’s pleasure, these are the ones who receive their reward manifold.
(30:39)
Islamic teachings can help address many tragedies and minimize the suffering that is experienced by individuals around the world daily.
Thanks for taking the time to read this article and learn more about Islamic traditions and beliefs, your questions or comments are welcome.
By: Dr. Malek Yamani