Wednesday, October 08, 2008

Banking interests = rejecting blessing

Bank interest is one of the major features of conventional banking. Be it an investor, a loaner, or a depositor, everyone will receive or pay interest. In the case of deposits, one will receive an added amount of money without any effort. And in the case of borrowing, one must pay a certain amount, surplus to what he/she has borrowed.

People borrow money from modern banks for many purposes, from starting a business to buying a house. Even third world countries borrow from banks/or institutions such as the Asian Development Bank (ADB) and the International Monetary Fund (IMF). In many cases, the borrowers spend most of their lifetime and efforts to pay off the interest rather than paying the real loan.

Islam clearly prohibits interests in any form. Interest or riba or usury is said to bring more corruption than goodness, Islam prefers charity and fair trade, as mentioned in the Quran, surah Al Baqarah verse 276:

Which has approximate meaning:
“Allah will deprive usury of all blessing, but will give increase for deeds of charity: For He loveth not creatures ungrateful and wicked.”

Interests in Islam are viewed to be wicked and cruel. It also erases the blessings that our riches bring to us. Everything we buy which includes the usage of that interest is also deprived of His blessings. Charity and lending money out of good intention is valued as a much better option in Islam.

Unfortunately, even in majorly populated Muslim countries, the so called modern banking system that promotes interest (riba/usury) is still very much dominant. The top banks in Arab are dominated by semi conventional banks such as the National Commercial Bank and Al Rajhi. In Indonesia, the top banks are conventional banks such as Mandiri and Central Bank of Asia (BCA). Nowadays, there are even some banks who claim to take no interest (following the Islamic way), yet only change “interest” into something less intimidating for Muslims such as “benefit”. There is a glimpse of hope though, as there are several Shariah banks (Banks based on Islamic law) which are steadily growing, such as Shariah Mandiri in Indonesia.

I am no economy expert and am unable to dive deeper into the technical differences of conventional and Islamic banking. But the use of no interest is beginning to be partially implemented in several countries such as Japan. In Japan, deposits are not given any interest (0 interest rate), even though loans are still subjected to interest.

The persistency of using the services of these conventional banks might be one of the causes why these Muslim populated countries are in such a bad mess. When the guidance from the Quran and Hadeeth are neglected, Muslims should beware and introspect on all the misery that is given upon them.

May we all be people who have the heart to give in charity and kindness.

Keywords: interest, banking, bank, Islam, Shariah, riba, usury, al baqarah, 276

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