Article 01

[razi pahlavi abdul aziz]

Salam

Dear All,

Include here is my article that will appear in Smart Investors Magazine soon. Eventhough the version that will appear for public viewing is about 1000 words (as per the magazine requirement) . I like to share with you the full length version that is about 4000 words. The article focuses mainly on commodity murabahah financing arrangement but it also touches on few major financing contracts in Islamic finance. Enjoy your reading!

Thanks

Razi

[Zainor Nasrah Abdul Rahman]

Salam,

Just finish reading. I heard that we cannot gain more than 100% profit in selling.

Is that true? Why is it permissable to charge more if the sale in deferred term compare in cash price?

In my humble opinion, personal loan itself is not that Islamic. And the advertisement itself encourage spending when they offer cash back on every amount spend using card credit/debit card. The latest, turn the spending into charity. The more u spend, the more u donate.

Dont know. This is seem not a right action because the bank are encouraging public to spend.

Amar maaruf nahi munkar. Bank should promotes Islamic values in all their offerings not only profit seeking entities and escape by doing CSR and pay zakat.

Islamic banks should be a pious muslim, not only muslim in the identity card.

Because it use the banner of Islam.

 

With Warm Regards,
Zainor Nasrah binti Abdul Rahman
Universiti Teknologi MARA (UiTM) Shah Alam
Master in Accountancy (by Research)
+6013 998 0486

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From: razi pahlavi abdul aziz <rpabd...@gmail.com>
To: uitmci...@googlegroups.com
Sent: Mon, May 16, 2011 11:08:42 PM
Subject: Article 01

[razi pahlavi abdul aziz]

Salam

Dear Zainor,

Please find my answers below (in italic):-

On Mon, May 16, 2011 at 11:54 PM, Zainor Nasrah Abdul Rahman <zainor...@ymail.com> wrote:

Salam,

Just finish reading. I heard that we cannot gain more than 100% profit in selling.

The price is willing buyer or willing seller (means as long both parties agree), I never found any strong injunctions to limit any profit in a trading arrangement.

 Is that true? Why is it permissable to charge more if the sale in deferred term compare in cash price?

Taking into consideration of the credit risk (which may cause hardship to the seller) on deferred arrangement, the seller may charge more. The other consideration is that deferred payment can be deemed as a facility given to ease the hardship to the buyer (compared to purchase the item in cash). As such the facility given allows the seller to charge more in the selling price in a deferred arrangement.

 

In my humble opinion, personal loan itself is not that Islamic. And the advertisement itself encourage spending when they offer cash back on every amount spend using card credit/debit card. The latest, turn the spending into charity. The more u spend, the more u donate.

 

I tend to agree with you that a bank should not encourage public to spend exorbitantly, however you may want to draw the line between marketing activities and product structure. When a bank promote the public to spend, that is marketing and it has nothing to do with the product structure of personal loan. Yes I agree that current marketing strategies by most bank is very poor from Shariah/Islamic perspective and I dont know how to put more comment on that as it is not my area. However I do believe strongly that the current practice of personal loan using the commodity murabahah is shariah compliant.  

 

Dont know. This is seem not a right action because the bank are encouraging public to spend.

Amar maaruf nahi munkar.

I am not sure what do you meant by your statement above. Are you saying that spending is munkar? I thought spending is infaq (nafqah) and it is highly recommended in Islam. Imagine a country that all of its population only save but dont spend, what would happen to the economy? It will collapse; so does that mean now that saving is an act of evil? In this context you may want to refer to surah al A'raf 31 where it is clearly showing that only the act of extremism is prohibited. 

 Bank should promotes Islamic values in all their offerings not only profit seeking entities and escape by doing CSR and pay zakat. Islamic banks should be a pious muslim, not only muslim in the identity card.

Because it use the banner of Islam.

I agree with you that an Islamic bank should promote Islamic value. Seeking profit in this world is also a "highly" recommended value in Islam. For this you can refer to surah Al Baqarah 275. So once again I am afraid I am missing your point here. An Islamic Bank is an entity, usually by the virtue of the incorporation of a company. As such it is not a human and has no religion.The normal Islamic banks are commercial entities which means their sole purpose of incorporation is to gain profit on behalf of their shareholders. Gaining profit is not prohibited in Islam. In fact those who think that gaining profit is unlawful may end up likening trading to riba. This act is highly condemned in Islam as it was stated again in Al Baqarah 275. The current Islamic bank is not a charity organisation. It is purely a business unit for all intends and purposes. They are not the place for the poor but instead they are the place for the rich people (who can afford to pay their loan) to get more liquidity (financing or loan) in order to be richer or wealthy. By doing that, it doesnt make the Islamic bank less Islamic from my point of view.