Monday, July 17, 2006

How the Banks are Subverting Islam's Ban on Usury
By Tarek El Diwany
Financial Times July 14 2006

In about 1220 a canonist named Hispanus proposed that, although usury
was prohibited, a lender could charge a fee if his borrower was late in
making repayment. The period between the date on which the borrower
should have repaid and the date on which he did repay, Hispanus termed
"interesse", literally that which "in between is".

Soon, the money lenders of Europe were adding to the church's
theological dilemmas with the Contractum Trinius. Here, the lending
party would invest money with a merchant on a profit and loss sharing
basis, insure himself against a loss of capital and sell back to the
merchant any profit above a specified amount. In isolation each of these
contracts was viewed as permissible by the church scholars, but their
combination produced an interest-bearing loan in all but name.

Today, those who wish to make a living from lending money are adopting
the same approach to defeat the usury prohibition in Islam. Combining
Islamically permissible contracts to produce interest-bearing loans has
become the specialism that is "Islamic banking". The fact that some
leading Islamic scholars are being paid hundreds of thousands of dollars
to give religious judgments by the very institutions whose products they
are judging is, to say the least, a conflict of interest. But the
problems run deeper than this. Even if 98 out of 100 scholars judge that
a product is prohibited, an Islamic bank can employ the two who permit
it. In effect, the banks are able to choose the rules of the game while
telling everyone else that they are only following scholarly advice.

Overarching these issues of moral hazard and legal semantics, looms the
more fundamental question of whether Islamic finance can be practised
within an interest-based monetary framework.

Today's monetary system developed from the practices of European
goldsmiths in the 17th century who accepted deposits of gold coins for
safe-keeping. Receipts for such deposits would often be issued in
"bearer" form and, with growing public familiarity, these came to be
accepted in payment for goods and services. The receipts had become an
early form of "bank money".

The goldsmiths were now in a position to transform themselves into money
lenders, but when the public came to borrow money it was paper receipts
not gold coins that the goldsmiths loaned them. This policy had the
great advantage that receipts could be manufactured at almost no cost,
while gold itself could not be. William Paterson, a founding director of
the Bank of England, was well aware of the commercial implications. "The
Bank hath benefit of interest on all moneys which it creates out of
nothing", said Paterson of his new bank in 1694.

Why, if the banker truly had the power to manufacture money, did he not
simply print receipts and spend them on his own consumption? The answer
was largely one of commercial risk. Spent receipts would in due course
return to the bank for redemption in gold, gold which never existed in
the first place. By lending the receipts instead, the banker could
charge interest on the amount lent. Upon repayment, the receipts could
be destroyed as easily as they had been manufactured, but the interest
charge would remain as revenue. Thus, loans at interest and private
sector money creation became the two core components of commercial

The gestation of products within this very un-Islamic framework has
resulted in the ultimate mutant, an Islamic personal loan at 7.9 per
cent annual percentage rate courtesy of the Islamic Bank of Britain. How
different this is from the original vision of Muslim economists.

I propose that by segregating the payment transmission and money
creation functions, and by sharing profits and losses instead of seeking
interest payments come-what-may, bankers' motivations would be much more
closely aligned with those of their clients. A link would be
re-established between the financial sector and the real sector, with
beneficial consequences beyond the economic domain.

The resources and infrastructure of whole nations are increasingly being
sacrificed on the altar of interest-bearing debt. If Islamic banking
adopts a genuinely Islamic paradigm it can offer a solution to a world
hungry for alternatives. If it does not, it will enjoy a brief life as a
get rich quick bandwagon and then disappear into the relics of financial

The writer is author of The Problem With Interest

Thursday, July 13, 2006

Fending off one evil with another

Can wealth accrued through interest be used for paying taxes?

Wednesday, July 12, 2006

The Cost of Being Muslim as Predatory Lending

A look at signs of predatory lending and whether or not Islamic Finance institutions show any.

Monday, June 12, 2006

Islamic Goods Fair in Malaysia features 'Islamic' toothpastes to 'Islamic' Holidays to...

It pleases to see Muslim entrepreneurship blooming at a global level but something is evidently lacking.

The impetus behind this event is that "Muslims have the responsibility to help improve the world with whatever they can deliver," says the fair's organizing director, Sabariah Abdullah of Malaysia's Saba Islamic Media, a distribution and promotions group. But if all they can deliver is a neatly canvassed 'Islamic' package of virtually any item imaginable under the sun, then one begs to differ as to how exactly that will improve the world.

Although 'Halal' alternatives to food products are mainly on the agenda, what constitues 'Halal' has been subject to vague interpretations. One supplier of Islamic confectionary recently argued to a prospect client, a friend of mine, that what makes his products significantly 'Halaler' than others' is that he uses 'Halal' glue to seal the packaging. Amazing!

It can be imagined that as consumers become more aware of their religion, the demand for religiously certified products will increase. This is increasingly being viewed as a profiteering opportunity by sanctimonious entrepreneurs. Remember the recent 'al-Quds Jeans' issue. Now we can have 'Islamic' vitamin supplements, holiday packages to Turkey, Egypt & Morocco, pop bands etc.

However, genuine Islamic services - effeciently priced, of course - that focus on our real needs as Muslims need praise and our total support. On the other hand, we should be trying to organise a conference of Muslim entrepreneurs who have provided for the genuine necessities of wider society instead of exploiting the faith of their co-religionists. That will be more helpful in improving the world.

Sunday, June 11, 2006

Enron Scandal: Differentiating between letter & spirit of law

An enlightening report in the Business Week on the Enron affair: how Skiller and Co. skillfully abided by the letter of the law with total disregard towards its spirit. An eye-opener for some of the current Islamic Finance Advisors who are indulged in a similar practice, albeit with a higher law than man-made.

Mahmoud el-Gamal wrote in his analysis of this piece, 'In the area of Islamic jurisprudence of financial transactions, Abdul-Wahhab Khallaf said it best: the law is there to serve certain ends, and the ends are more important than the mechanics of the law.'

Saturday, June 10, 2006

Islamic Financial Services: a comprehensive guide to current Islamic Finance

This comprehensive book by Dr. Mohammad Obaidullah provides a basic-level introduction to current concepts and practices of the Islamic Finance market.

An ideal first-read for anyone interested in IF as it assumes no prior expertise in this field. The unique feature about it is that it illustrates the concept further by providing case studies of how that concept was implemented.

The author has a doctorate in Economics and is associate Professor in the Islamic Economics Research Center at King Abdul Aziz University, Jeddah.

Download the entire book in zipped format here, or read the book online in PDF format here

IBB launches house-financing product

Islamic Bank of Britain launched its 'own' home-financing product yesterday.

It was expected from them as the leading Islamic retail bank that this product would be signifanctly unique or at least an in-house facility. However, the financiers for this product are al-Buraq (subsidiary of ABC International Bank plc) and Bristol & West plc. Virtually the same package as offered by Lloyds TSB.

Not much of an 'own' product then. And sadly, not another real option for home-buyers.

Friday, June 09, 2006

Fatwa regarding the Ansar Housing Ltd. scheme - by Shaykh Haitham al-Haddad

All praise and thanks are due to Allah, the Lord of the worlds. Peace and blessings be upon our Prophet, Muhammad, his family and all his Companions.

Since the publication of the fatwa regarding the impermissibility of the Islamic mortgages offered by some interest-based banks in May 2004, I have received several questions relating to the various facets of Islamic home finance in the UK. Some of these questions are enquiring about the availability of a true Islamic model to purchase homes in the UK, while others are concerned with the permissibility of some other schemes proffered by conventional banks further to those mentioned in the original fatwa.

In this short fatwa, I would like to identify a scheme that I am confident provides a good model for true Islamic Finance. This scheme is provided by Ansar Housing Ltd. in Manchester ( and it is, so far, the best scheme that I have encountered. Given that Islamic guidelines concerning finance are fulfilled as far as is possible under present UK regulations, we can say confidently that it is an ideal scheme for Islamic home financing.

The scheme adopts a unique system of joint ownership that fulfils the aims and objectives of Islamic finance. I urge both Muslims and non-Muslims to study it objectively and thoroughly in order to realise how true Islamic finance deals fairly with all parties to a transaction, both the weaker and the stronger. It is also important to notice how such a scheme ensures that the customer does not bear financial burdens beyond his ability, which is a major factor encouraging the over-indebtedness of so many individuals today. Moreover, this scheme does not link together several contracts nor does it impose obligations upon the customer in such a way that the end result is indistinguishable from an interest-based loan secured on the customer’s home.

In conclusion, I would like to encourage Muslims and non-Muslims who dream of building a fair society, free from oppression by debt and its detrimental consequences, to try their best to ensure that schemes such as this are successful.

And with Allaah lies all success and may Allaah send prayers and salutations upon our Prophet (sall-Allaahu ‘alayhe wa sallam) and his family and his companions

Haitham Al-Haddad

12 Jamda al-Thani 1427

8th June 2006.

Thursday, June 08, 2006

FT: Islamic transactions have much in common with west

The central religious precept driving the Islamic finance industry is the idea that riba (a word that can be translated either as “interest” or “usury”) is haram (“forbidden” or “sinful”).

At first glance, this appears to rule out most aspects of modern finance. But although the Koran bans the creation of money, by money, it does allow money to be used for trading tangible assets and businesses – that can then generate a profit.

Consequently, what most Islamic financial products do is create “trading” or “business” arrangements that pay profits to investors (or lenders) from business transactions backed by tangible assets, ideally sharing risk and rewards.

Gillian Tett of FT draws on the similarities. The reality is that the difference between the two is not so much in the substance than in the concept and, importantly, purpose.

(The article is slightly old and was published on June,1.)


I just realized FT requires subscription to view the article, so I have pasted it below :

The central religious precept driving the Islamic finance industry is the idea that riba (a word that can be translated either as “interest” or “usury”) is haram (“forbidden” or “sinful”).

At first glance, this appears to rule out most aspects of modern finance. But although the Koran bans the creation of money, by money, it does allow money to be used for trading tangible assets and businesses – that can then generate a profit.

Consequently, what most Islamic financial products do is create “trading” or “business” arrangements that pay profits to investors (or lenders) from business transactions backed by tangible assets, ideally sharing risk and rewards.

Some of these financial schemes, such as those known as mudaraba and musharaka, look similar to western-style venture capital projects. In the murabaha scheme – which is widely used in Islamic banking – an exchange of tangible goods is used to provide profits. Another popular scheme is ijara, which is similar to western-style lease financing.

The details of these schemes are often complex, since they involve special-purpose vehicles. However, in practical terms, they produce products that can be similar to western banking products – aside from the fact that the margins charged by banks are often much higher.

Take sukuks (Islamic bonds). These have maturity dates, coupons and yields. However, what differentiates sukuks is that they are backed by cash flows from tangible assets. Last year, for example, the government of Pakistan issued a $600m (€468m, £321m), five-year sovereign bond, using the tolls from a motorway to provide payments.

Ironically, some of these structures and techniques echo those that flourished in Christendom in Europe between the 12th and 15th centuries. The Christian Council of Nicea (in 325) banned the practice of usury among the clergy and in 1140 this principle was extended to church members.

However, when trade expanded in Europe from the 12th century onwards, merchants at trade fairs became adept at constructing financial transactions that avoided religious censure. Loans were sometimes considered to be “rent charges”, or interest payments were classified as “damnum emergens” (opportunity loss) or “lucrum cessens” (forgone income), which were permitted by the church. Another popular scheme was the “contractus trinius”, a three-way “partnership scheme”.

Periodically, the church sought to tighten the rules. However, the merchants proved adept at developing schemes in response to this.

Meanwhile, Jews were permitted to continue money-lending since it was presumed that they were already excommunicated.

These practices eventually died out in the 16th century, when the church loosened its ban on usury payments.

The issue of Sukuk: Islamic 'debt finance'

The latest boom in the IF industry is that of 'Sukuk Issuance' - the 'Islamic' alternative to debt finance. Obviously, we can't neglect this important area that is at the very foundations of the modern financial system, since we are hopelessly trying to imitate every product that comes onto the conventional markets.

The issuance of Sukuk, in itself, is not a problem. It encourages entrepreneurship from the grass-roots level. But the structuring of the increasing multitude of Islamically-questionable Sukuks emerging on the market scene is what is lamentable.

An established principle is the Islamic Economic ethics is that a debt (dayn) cannot be sold. It can only be re-assigned at face value. We have, on the market, Sukuks on Bai' bi thaman 'Ajil (deferred payment sale), on Salam (wherein payment is made in cash at the point of contract but the delivery of the asset purchased is deferred to a pre-determined date), on Murabahah (cost plus mark-up agreement) etc. that are securitized receivables and cannot be traded in secondary markets.

However, issuance of Sukuks on tangible asset-backed portfolios is indeed permissible, with elaborate rulings, and are tradeable at variable rates.

The absence of secondary markets in the region necessiatates that these Sukuks are held until maturity. They have hitherto only appeared as a tool to mitigate excess liquidity at the subscriber level in favour of a fixed return at maturity. Its full implications have not yet been measured. Maybe these debt-based Sukuks will automatically be phased out with the emergence of secondary markets as their fixed value redemption becomes evident as less profitable than the variable asset-backed Sukuks.

Sunday, May 28, 2006

Two compulsory readers for introduction to Islamic Finance

Introduction to Islamic Finance - by the renown Mufti Muhammad Taqi Usmani
Meezan Bank's Guide to Islamic Banking - by Dr. Imran Usmani

You may buy a hard copy from Azhar Academy, London. The books are here and here.

Bankers: Islamic vs. Conventional

One major problem with the current IFIs is that the majority of its bankers and fund managers are either totally ignorant or equally indifferent to the spirit and purpose of Islamic Economic laws and ethics.

We find evidence of what can be broadly described as banking activity as early as the era of the Companions. It is recorded that Sayyiduna Zubair ibn al-Awwam (ra) would advise his depositors that it is better for them to consider what they give him for safe-keeping as loans instead of deposits in order for him to provide them with a guarantee of their funds. (al-Bukhari, Vol. 4, Pg. 52)

The modern banker, in contrast, survives on the back of avarice, exploitation, self-worship and arrogance - traits everyone likes to disassociate oneself with. Here is a rather amusing depiction of how bankers think and work (if you have 10 minutes to spare!).

So until the IFIs are not able to train their personnel in the spirit of Islamic Economics, as opposed to its principles, the world will not realize its true potential as the only viable alternative to the current economic order.

Wednesday, May 24, 2006

DIB's latest innovation: 'Islamic Capital Protected Fund'

Dubai Islamic Bank (DIB) has launched "Al Islami Capital Protected Note", an investment fund that will invest in the Sharia compliant equities in the US, European, and Japanese Stock Markets.

The fund has a 5-year maturity, and capital protection at maturity through Sharia compliant structure. For greater flexibility, investors can redeem their capital up to twice a month.

Capital protection on investments is generally, and almost unanimously, seen as alien to Islamic Investment ethics. In fiqhi terms, the ability to earn a profit on an investment (which inevitably has to be equity-backed in Islamic Finance) is solely due to exposure to market volatility, and subsequently, will be subject to the same. Therefore, this new Fund will raise some doubts in the minds of the informed reader.

Sadly, there is no detailed fatwa available on IDB's website. They have sufficed to state that the promised capitaal protection 'is a consequence of a complex technique employed by the Investment Manager and approved by the leading Islamic finance scholars.'

We are told, "Conformity with Sharia principles is ensured through issuance of fatwas from five of the world's top Sharia scholars, including Dr. Hussain Hamed Hassan, the Chairman of Dubai Islamic Bank's Fatwa & Sharia Supervisory Board."

I would definitely like to get hold of a script of their fatwa.

Meanwhile, the IDB has recently received a series of 'Best Islamic Bank' and 'New Product Innovation' awards nationally and internationally.

Saturday, May 20, 2006

'Shift to Shariah-Based Financial Products'

Saudi entrepreneur Saleh Kamil, president of the Dallah AlBaraka Group and one of the pioneers of Islamic banking, has called on the industry to go back to its basics and to shift from Shariah-compliant to Shariah-based financial products.

"What worries me in Islamic banking today," he said, "is that there are not many bankers or academics that understand the spirit and philosophy of fiqh al-muamalat. Our scholars tend to find tools in traditional banking. We think we are excellent. But what we want is to design instruments according to our Shariah and not the other way round."

Getting to the heart of the problem can be easy; daring to publicly admit it cannot. Especially if the problem is at the heart of what you are standing upon. And that precisely is what makes the difference!

"Those who started the Islamic banking movement did not try to train the traditional bankers in the spirit and philosophy of Islamic finance." Very well said, indeed!

At a practical level, cynics will, no doubt, be waiting for him to suggest his alternative strategies in order to determine how significantly different they are from the current market practice.

However, a majority of the scholars would express their reservation on his alleged suggestion that the Zakah fund may be 'harnessed for adding value in education, training and tourism.' I hope his position is studied in detail before a fatwa is issued.

'Islamic Finance Equally Viable for Non-Muslims'

It helps to hear these sort of statements from senior positions.

It helps because it paves the way for better understanding what Islamic Finance is all about.

In one of my experiences with an individual who saw the Islamic Finance industry merely as an obsession of Muslims with their belief when, according to him there was nothing ethically wrong with a large number of conventional finance solutions, I had to resort to explain 'Zakah' as a global fund created to abolish poverty from the world, which would require all individuals with annual savings of above a ceratin threshold to contribute 2.5% of their excess savings. Obviously, I wasn't trying to explain Zakah entirely; I only wanted to give a vague idea.

I don't know what his background or qualifications were, but he did some quick calculations and startled me by saying that if successful, this scheme could end world poverty in just 6.5 years.

So we agreed that while Islamic Economics also dealt with ethical concerns in individual transactions of the lender and borrower; the prime quality of this system was the perfectly balanced distribution of wealth among all humans.

Obviously, we only agreed on the obvious.

Banks seek Islamic scholars versed in finance

A talent war for financially-literate Islamic scholars has erupted as Western investment bankers rush to sell their services to devout Muslims, reveals Gillian Tett of the FT.

So its now official: FT admits it. And furthermore, Dar Al Istithmar shariah consultancy is (supposedly) launching the world’s first dedicated training programme to create financially qualfied Islamic scholars.

In reality, various training programmes of this nature have been organised previously. This blog was an outcome of one such 7-day course held last March. For those who excelled in that programme, arrangements are in place for a 3-month visit to the CIE, Pakistan.

However, this is enough impetus for those 'Ulama who have time and resources at hand to indulge deeper into this field, even only for the sake of preventing foreign ideals and ideologies creeping under the banner of 'Islamic Banking & Finance', which, sadly are becoming increasingly apparent in some recent Shari'ah-modelled instruments.

As they say, it is enough for falsehood to proliferate that the proponents of truth do nothing.

(I just realized I am lecturing! Apologies!!)

Monday, May 15, 2006

Financing for Islamic banks in the future

Looks like the 'market forces' themselves will provide the impetus for the transition from the current instruments to ideal Islamic financing options - Musharakah & Mudarabah, says Prof. Saiful Azhar Rosly - director of research with the Malaysian Institute of Economic Research (MIER)

"THE banking sector is poised to face new challenges from high interest rates environment in the coming years. With higher cost of borrowing, the public may postpone their purchases. Not only that, current concerns with inflation are making many banks worried about interest-rate risk. "

"Floating rate loans can easily absorb any increase in the overnight policy rate but fixed-rate loans such as car loans may not. The same applies to Islamic banks. Those offering fixed al-bai-bithaman ajil and al-ijarah thuma al-bay may soon face difficulties, unless they have a floating-rate option to work with... "

"...If an Islamic bank can take the economy to another level, it must come from musyarakah financing, a profit-sharing contract where parties contribute capital into the business. It is new to banking but not to general business. "

Read the article here...

Malaysia approves first Islamic REIT

KUALA LUMPUR - The Malaysian regulator has approved the quoting of the world’s first Islamic REIT. Finance Minister Tan Sri Nor Mohamed Yakcop says that the new company would be the first Islamic REIT in the world that was approved and issued under a set of clear and transparent Shariah guidelines. The trust, he added, will create a new Shariah-compliant asset class for investors seeking to diversify their investments.

"Islamic REITs will allow foreign investors, in particular Middle East investors, to invest in Malaysia's property market without the hassle and responsibilities associated with the direct ownership of company," he says, adding that there is a large pool of capital for investment in the Middle East totalling some $1 trillion.

The Al-’Aqar KPJ REIT, launched by KPJ Healthcare Bhd, will have an initial size of 205 million units and will focus on hospitals. The REIT will buy the buildings from the Johor Corp group for RM300.2 million. KPJ is the healthcare arm of JCorp, a diversified group owned by the state government. KPJ, in a statement to the stock exchange yesterday, said the SC had approved the REIT with an initial fund size of 205 million units.

"Notwithstanding this, and due to high demand for KPJ REIT from Islamic funds, KPJ plans to increase the size of the REIT and will submit relevant application to the SC on this matter soon," the statement said. Earlier this month Dr. Ting Kien Hwa told a property conference that the introduction of an Islamic REIT in the country would give Malaysia the chance to expand its market capitalization and the sizes of its REITs. He added that Malaysia’s REIT market was capitalized at US$543 million.


Thursday, April 20, 2006

Inheritance, Islamic Law, and State probate laws I-IV

This is a series of short posts about the Inheritance and its application in the United States. I would be interested to know how inheritance is handled in light of the legal systems of some of the other western countries, such as U.K. or Canada.
Looking forward to your comments and criticisms.

"Inheritance, Islamic Law, and State probate laws (Part I: Relevant texts)"
"Inheritance, Islamic Law, and State probate laws (Part II: Analysis)"
"Inheritance, Islamic Law, and State probate laws (Part III: American Inheritance Law)"
"Inheritance, Islamic Law, and State probate laws (Part IV: Special circumstances)"

Thursday, March 30, 2006

With sincere apologies!

Assalamu Alaikum!

Yes, I'm aware that some of the readers are quite upset that this blog has not been updated for days; days that seem years in cyberspace. And they are right in feeling so.

I have been extremely caught up with other things over the last few days. Also, the debates and issues posted here are also debated and deliberated upon in a private group forum (I don't run that!) as well as on Abu Eesa's blog. I just about managed to find some time to respond to the issues raised there. But these are just plain excuses. Simply, I am sorry!

The private forum is about as old (or as young) as this blog. It was created on the same basis as this one. But due to convenience's sake, i.e. contributors can just respond to their emails for discussion instead of coming onto a blog and commenting etc, we all agreed to continue with that group.

However, what I have thought to do, to keep this forum running, is to paste here the current issues undergoing debate and scrutiny that may be relevant to this blog. And I'll try my best to keep up my promise. I have requested all scholars to subscribe as contributing members, but as I mentioned it is not always conveneient for them with their punishing schedules.

What I would urge the readers to do is to make positive contributions also to this forum, keeping in mind the purpose behind it - which is to raise the awareness of and try to understand the nature of contemporary Islamic Finance.

Mutual respect and criticism etiquettes are valuable assets in Islamic Academia and should be maintained to the highest standards in the comments.

So, I am updating the previous topics now to begin fulfilling the promise.


Ibrahim Amin

Tuesday, March 21, 2006

The Use of Certain Weak Hadīth in Promoting a Ribā-Free Society

The use of weak hadīth in the issues of Targhīb wa Tarhīb is well known and generally accepted as long as one sticks to the three conditions laid down by the Muhaddithīn.

Yet sometimes, maybe due to an overriding maslahah, it would be more befitting or possibly wiser to refrain from using such weak ahādith that do not credit the Prophet (sallallāhu ‘alayhi wa sallam), not only because they are weak but notwithstanding their weakness, attribute strange words to the most blessed and pure of Creation.

This is not to say that the Prophet (sallallāhu ‘alayhi wa sallam) did not make ‘strange’ statements or occasionally use extreme or harsh statements to make a point – but surely if we have evidence from the angle of a weak isnād as well as weakness in the matn or ma‘nah, then it is best to avoid it altogether?

Maybe this is to be emphasized even more so with the current drive towards ‘ribā-free banking’ with all numbers of publications printing the well-known verses of Qur’ān and then unfortunately not sufficing with that or authentic hadīth but then utilizing weak hadīth as well, such as below, so much so that it is becoming the norm amongst the Muslims and non-Muslims that our Prophet was meant to have said these statements.

Indeed, many scholars will be against the above suggested principle, arguing that if a hadīth is hasan in its chain, then that is enough for us at all times. Yet it should be known that this was not the case with the early Mutaqaddimīn of this field, those who not only had mastered the field of Jarh wa Ta‘dīl, but were blessed with a deep level of Fiqh and Usūl and hence were able to note problems (and or ‘ilal) within the text and meaning of narrations that might have asānīd that look sound on the outside.

Unfortunately, this is skill and a reality greatly lacking amongst the contemporary scholars and highlights to us the danger of just relying on people who examine asānīd only when making a hadīth acceptable or not.

In any case, an example of the different ahādīth in question:

حدثنا حسين بن محمد حدثنا جرير ابن حازم عن أيوب عن ابن أبى مليكة عن عبدالله بن حنظلة غسيل الملائكة قال قال رسول الله صلى الله عليه وسلم : درهم ربا يأكله الرجل وهو يعلم أشد من ستة وثلاثين زنية

On the authority of ‘Abd Allah b. Handhalah, the one washed by the Angels, who said that the Messenger of Allah (sallallāhu ‘alayhi wa sallam) said, “That a man eats one dirham of Ribā knowingly is worse than thirty six acts of fornication.” (Ahmad, 21957).

Shaykh Shu‘ayb al-Arna‘ūt mentioned in his tahqīq of the “Musnad” (36:288) that this hadith is dha‘īf, rather it is only authentic as a statement of Ka‘b b. al-Ahbār. In fact he mentions that every single chain and variation of this hadith is dha‘īf and this can be seen in the quotations below from ibn al-Jawzī, al-Suyūti and others. In summary:

- the version of ibn ‘Abbās, collected by Tabarāni in “al-Kabīr” (11216) and by al-Bayhaqi in “al-Shu‘ab” (5518). Their asānīd are weak.
- the version of ‘Abd Allah b. Salām, collected by ‘Abd al-Razzāq (19706), Tabarāni in “al-Kabīr” (13:411) and al-Bayhaqi in “al-Shu‘ab” (5514). Its isnād is weak.
- The version of ‘Ā’ishah collected al-‘Uqaylī in “al-Dhu‘afā’” (3:296) is also weak.
- The version of Anas found with al-Bayhaqi in “al-Shu‘ab” (5523) is also weak.

The very following narration collected by Ahmad (21958) who said: Wakī‘ narrated to us that: narrated Sufyan (al-Thawrī) on the authority of ‘Abd al-‘Azīz b. Rufay‘ on the authority of ibn Abi Mulaykah on the authority of ibn Handhalah b. Rāhib on the authority of Ka‘b who said, “That I perform thirty six acts of fornication is more beloved to me than that I eat one dirham of Ribā and Allah knows that I ate it, and I knew it was Ribā.”

Al-‘Arna‘ūt said, “This chain is authentic up to Ka‘b.”

Hence this is not the statement of the Prophet (sallallāhu ‘alayhi wa sallam). Indeed, after collecting all the chains, Dāraqutni (3:16) said, “This is more correct as a statement of Ka‘b.”

The other famous hadīth (which has numerous slight variations in wording), has also been collected by ibn al-Jawzi in “al-Maudhū‘āt” (2:245), where he said:

أنبأنا أبو الحسن أحمد بن محمد أنبأنا يوسف بن أحمد حدثنا العقيلى حدثنا محمد بن العباس المؤدب حدثنا سعيد بن عبدالحميد بن جعفر حدثنا عبدالله بن زياد حدثنا عكرمة عن عمار بن يحيى بن أبى كثير عن أبى سلمة عن أبى هربرة عن النبي صلى الله عليه وسلم قال : الربا سبعون بابا أصغرها كالزاني ينكح أمه

On the authority of Abu Hurayrah, that on the authority of the Prophet (sallallāhu ‘alayhi wa sallam) that he said, “Ribā has seventy gates, the least of which is like a fornicator who copulates with his mother.

Again, all the chains that narrate this hadīth have fatal problems, criticized by the Muhaddithīn, as summarized in the quotes below.

Shaykh Abu Ishāq al-Huwayni said in his book “Ghawth al-Makdūd bi-Takhrīj Muntaqā Ibn al-Jārūd” (p. 225) in conclusion:

“It is simply not possible to attribute such hadīth to the Prophet (sallallāhu ‘alayhi wa sallam), neither as a Sahīh narration or a Hasan narration; the very best they can ever be is Dha‘īf whereas personally I hold them to be Bātil. The narration has much idhtirāb (problems/doubt) in its text: sometimes it says, ‘seventy gates’, another time it says, ‘seventy-odd’, another time ‘seventy two’, another time ‘seventy three’. Also it is found to be, ‘worse than thirty three acts of fornication’ and another time, ‘thirty five’ and then another time, ‘thirty six’, and another time, ‘thirty seven’ and then another time, ‘thirty nine’…”

Ibn al-Jawzi sums it up in “al-Maudhu‘āt” (2:248) when he said,

قال المصنف قلت : واعلم أن مما يرد صحة هذه الاحاديث أن المعاصي إنما يعلم مقاديرها بتأثيراتها والزنا يفسد الانساب ، ويصرف الميراث إلى غير مستحقيه ، ويؤثر من القبائح ما لا يوثر أكل لفمة لا تتعدى ارتكاب نهى ، فلا وجه لصحة هذا .

“Know that what refutes the authenticity of such ahādīth (other than their chains being weak) is that sin can be known by its level and its effects; adultery destroys lineage, diverts the inheritance to those undeserving of it, and has disgusting effects which eating a morsel of ribā doesn’t, indeed nothing more than its prohibition. So there is no possibility of authentication (of such ahādīth).”

Concerning the last sentence of ibn al-Jawzi, we could argue that Ribā has indeed caused much rampant damage in society, none more so than in today’s debt-ridden times, yet just one dirham being equivalent to that?? This is the point being made by the early Muhaddithīn.

It is amazing to find that every single chain of this narration and similar narrations have inherent problems and it is this fact which such scholars utilize to find problems with the meaning or matn of the hadīth. It is known that this is a very delicate and dangerous area of skill, and hence should never be utilised except by the well known masters of this art, and only then after clear indications with the problems from the chains.

If one considers the prohibition of the major sins such as shirk, zinā and the taking of innocent life, it is clear that the relatively late prohibition of ribā gives indication of its unsuitability with respect to the above claimed statements of our beloved Messenger (sallallāhu ‘alayhi wa sallam). These statements should only be related as statements of the companions or their followers as what is correct such as ibn Mas‘ūd and Ka‘b b. Ahbar (radhy Allāhu ‘anhum).

Hence, we should refrain as a community from using all of these types of ahādīth concerning extreme sexual acts etc in comparison to morsels of ribā, and at the very least stop attributing them to the blessed Prophet (sallallāhu ‘alayhi wa sallam) due to the overwhelming evidence as can be found in the books of Jarh wa Ta‘dil.

Indeed, the authentic narrations and verses of Qur’ān are clear and sufficient, and one doesn’t need such weak and indeed offensive claims, to establish the Muslims and non-Muslims that usury is a war on God and indeed humanity itself.

And Allah knows best.


قال ابن الجوزي في الموضوعات الجزء الثاني 2:248

باب تعظيم أمر الربا على الزنا

فيه عن أبى هريرة وأنس وابن حنظلة وعائشة رضى الله عنهم : فأما حديث أبى هريرة فله طريقان : الطريق الاول : أنبأنا عبد الوهاب الحافظ أنبأنا محمد بن المظفر أنبأنا / صفحة 245 / أبو الحسن أحمد بن محمد أنبأنا يوسف بن أحمد حدثنا العقيلى حدثنا محمد بن العباس المؤدب حدثنا سعيد بن عبدالحميد بن جعفر حدثنا عبدالله بن زياد حدثنا عكرمة عن عمار بن يحيى بن أبى كثير عن أبى سلمة عن أبى هربرة عن النبي صلى الله عليه وسلم قال : " الربا سبعون بابا أصغرها كالزاني ينكح أمه " . الطريق الثاني : أنبأنا زاهر بن طاهر أنبأنا أبو بكر البيهقى أنبأنا أبو عبدالله محمد بن عبدالله الحاكم أنبأنا أبو جعفر محمد بن أحمد بن إسماعيل حدثنا أبويحيى البزاز حدثنا محمد بن الحسن الحيرى حدثنا حفص بن عبدالرحمن حدثنا عبدالله بن زياد حدثنا عكرمة بن عمار عن يحيى بن أبى كثير عن أبى سلمة عن أبى هريرة قال قال رسول الله صلى الله عليه وسلم : " الربا سبعون بابا أصغرها عند الله كالذى ينكح أمه " . وأما حديث ابن عباس فأنبأنا محمد بن عبدالملك أنبأنا الجوهرى عن الدار قطني عن أبى حاتم بن حبان أنبأنا الحسين بن عبدالله القطان حدثنا الوليد ابن عتبة حدثنا محمد بن خمير حدثنا إسماعيل عن حنش عن عكرمة عن ابن عباس عن رسول الله صلى الله عليه وسلم أنه قال : " من أكل درهما ربا فهو مثل ستة وثلاثين زنية ومن نبت لحمه من السحت فالنار أولى به " . وأما حديث أنس فله طريقان : الطريق الاول : أنبأنا محمد بن عبدالملك أنبأنا ابن مسعدة أنبأنا حمزة أنبأنا ابن عدى حدثنا أحمد بن محمد بن الهيثم حدثنا محمد بن على بن الحسن بن شقيق قال سمعت أبى يقول أخبرني أبو مجاهد عن ثابت عن أنس قال : " خطبنا رسول الله صلى الله عليه وسلم فذكر الربا وعظيم شأنه وقال : إن الدرهم يصيب الرجل من الربا أعظم عند الله في الخطيئة من سنة وثلاثين زنية يزنيها الرجل ، وإن أربى الربى عرض الرجل المسلم " . / صفحة 246 / الطريق الثاني : أنبأنا عبد الوهاب أنبأنا المبارك بن عبد الجبار حدثنا عبدالله ابن الحسين الهمداني حدثنا الدار قطني حدثنا أحمد بن محمد بن إبراهيم الصلحى حدثنا أبو فروة يزيد بن محمد حدثنا أبى حدثنا طلحة بن زيد عن الاوزاعي عن يحيى بن أبى كثير عن يحيى بن مالك قال قال رسول الله صلى الله عليه وسلم : " الربا سبعون بابا أهون باب منه الذى يأتي أمه في الاسلام وهو يعرفها ، وإن من أربا الربا خرق المرء عرض أخيه ، وخرق عرض أخيه أن يقول فيه ما يكره من مساويه ، والبهتان أن يقول فيه ما ليس فيه " . وأما حديث ابن حنظلة فله طريقان : الطريق الاول : أنبأنا ابن الحصين أنبأنا ابن المذهب أنبأنا القطيعى حدثنا عبدالله بن أحمد بن حنبل حدثنى أبى ح . وأنبأنا عبد الحق بن أحمد أنبأنا عبدالرحمن بن أحمد حدثنا أبو بكر بن بشران حدثنا على بن عمر حدثنا أحمد بن العباس البغوي حدثنا يحيى بن يزداد أبو الصفر حدثنا حسين بن محمد حدثنا جرير ابن حازم عن أيوب عن ابن أبى مليكة عن عبدالله بن حنظلة - عسل - [ غسيل ] الملائكة قال قال رسول الله صلى الله عليه وسلم : " درهم ربا يأكله الرجل وهو يعلم أشد من ستة وثلاثين زنية " . الطريق الثاني : أنبأنا عبد الحق أنبأنا عبدالرحمن بن أحمد أنبأنا أبو بكر ابن بشران حدثنا الدار قطني حدثنا البغوي حدثنا هاشم بن الحرث حدثنا عبيد الله بن عمرو عن ليث عن عبدالله بن أبى مليكة عن عبدالله بن حنظلة أن رسول الله صلى الله عليه وسلم قال : " لدرهم ربا أشد عند الله تعالى من ستة وثلاثين زنية في الحطيم " . وأما حديث عائشة رضى الله عنها فله طريقان : الطريق الاول : أنبأنا محمد بن أبى القاسم البغدادي أنبأنا حمد بن أحمد / صفحة 247 / الحداد أنبأنا أبو نعيم الحافظ حدثنا أبو إسحاق بن حمزة حدثنا أبو على محمد بن أحمد بن سعيد حدثنا عبدالله بن محمد بن عيشون حدثنا عبد الغفار بن الحكم حدثنا سوار بن مصعب عن ليث وخلف بن حوشب عن مجاهد عن عائشة رضى الله عنها قالت : قال رسول الله صلى الله عليه وسلم : " إن الربا بضع وسبعون بابا ، أصغرها كالواقع على أمه ، والدرهم الواحد من الربا أعظم عند الله من ستة وثلاثين زنية " . الطريق الثاني : أنبأنا عبد الوهاب أنبأنا ابن بكران حدثنا العتيقي حدثنا يوسف حدثنا العقيلى حدثنا إبراهيم بن عبدالله بن سعيد بن محمد الجرمى حدثنا أبو ثميلة حدثنا عمران بن أنس أبو أنس عن ابن أبى مليكة عن عائشة أن النبي صلى الله عليه وسلم قال : الدرهم ربا أعظم عند الله من سبعة وثلاثين زنية

ليس في هذه الاحاديث شئ صحيح

أما حديث أبى هريرة ففى طريقيه عبدالله بن زياد وقد كذبوه ، وقال البخاري : إنما روى هذا الحديث أبو سلمة عن عبدالله بن سلام نفسه . وأما حديث أنس ففى طريقه الاول أبو مجاهد واسمه عبدالله بن كيسان المروزى . قال البخاري : هو منكر الحديث . والطريق الثاني تفرد به طلحة ابن زيد . قال البخاري : منكر الحديث ، وقال النسائي : متروك الحديث

وأما حديث ابن حنظلة ففى الطريق الاول حسين بن محمد وهو حسين بن محمد بن بهرام أبو محمد المروزى . قال أبو حاتم الرازي : رأيته ولم أسمع منه ، وسئل أبو حاتم عن حديث يرويه حسين فقال خطأ ، فقيل له : الوهم ممن ؟ فقال : من حسين ينبغى أن يكون . وفى الطريق الثاني ليث . قال أبو حاتم الرازي : لا يشتغل به ، وهو مضطرب الحديث . قال المصنف قال : وإنما يروى هذا عن كعب . أنبأنا ابن الحصين أنبأنا / صفحة 248 / ابن المذهب أنبأنا أحمد بن جعفر حدثنا عبدالله بن أحمد حدثنى أبى حدثنا وكيع حدثنا سفيان عن عبد العزيز بن رفيع عن ابن أبى مليكة عن ابن حنظلة عن كعب أنه قال : " لان أزنى أحب إلى من أن آكل درهما من ربا " . قال الدار قطني : وهذا أصح من المرفوع

وأما حديث عائشة ففى طريقه الاول سوار بن مصعب . قال أحمد ويحيى والنسائي : متروك الحديث ، وقال أبو داود : ليس بثقة . وفى طريقه الثاني عمران بن أنس . قال العقيلى : لا يتابع على حديثه . قال وهذا يروى من غير هذا الوجه مرسلا عن ابن أبى مليكة . قال وحدثنا محمد بن موسى البلخى حدثنا مكى بن إبراهيم حدثنا ابن جريج قال حدثنى ابن أبى مليكة أنه سمع عبدالله بن حنظلة الراهب يحدث عن كعب الاحبار أنه قال : " ربا درهم يأكله الانسان وهو يعلم أعز عليه في الاثم من ستة وثلاثين زنية "

قال المصنف قلت : واعلم أن مما يرد صحة هذه الاحاديث أن المعاصي إنما يعلم مقاديرها بتأثيراتها والزنا يفسد الانساب ، ويصرف الميراث إلى غير مستحقيه ، ويؤثر من القبائح ما لا يوثر أكل لفمة لا تتعدى ارتكاب نهى ، فلا وجه لصحة هذا .

علل ابن أبي حاتم ج: 1 ص: 391

1170 سئل ابو زرعة عن حديث رواه محمد بن رافع النيسابوري عن ابراهيم بن عمر الصنعاني عن النعمان يعنى ابن الزبير عن طاوس عن ابن عباس عن النبي صلى الله عليه وسلم قال الربا نيف وسبعون بابا أهو باب من الربا مثل من أتى أمه في الاسلام ودرهم ربا أشد من خمس وثلاثين زنية وأشد الربا أو أربى الربا أو أخبث الربا انتهاك عرض المسلم أو انتهاك حرمته قال أبو زرعة هذا حديث منكر

قال الكناني في تنزيه الشريعة ج:2 ص:195

(22)حديث الربا سبعون بابا أصغرها كالذي ينكح أمه (عق) من حديث أبي هريرة وفيه عبد الله بن زياد وهو ابن سمعان من حديث ابن عباس بلفظ من أكل درهم ربا فهو مثل ستة وثلاثين زنية ومن نبت لحمه من السحت فالنار أولى به وفيه حنش الصنعاني ضعيف (عد) من حديث أنس بلفظ إن الدرهم يصيبه الرجل من الربا أعظم عند الله في الخطيئة من ست وثلاثين زنية وإن أربى الربا عرض الرجل المسلم وفيه عبد الله بن كيسان متروك من حديث أنس أيضا بلفظ الربا سبعون بابا أهون باب الذي يأتي أمه في الإسلام وهو يعرفها وإن من أربى الربا خرق المرء عرض أخيه المسلم وخرق عرض أخيه أن يقول فيه ما يكره من مساويه والبهتان أن يقول فيه ما ليس فيه تفرد به طلحة بن زيد وهو متروك من حديث عائشة بلفظ إن الربا بضع وسبعون بابا أصغرها كالواقع على أمه والدرهم الواحد من الربا أعظم عند الله من ستة وثلاثين زنية وفي سنده سوار بن مصعب (عق) من حديثها أيضا وفيه عمران بن أنس لا يتابع على حديثه (أحمد) في مسنده من حديث عبد الله بن حنظلة غسيل الملائكة ولفظه درهم ربا يأكله الرجل وهو يعلم أشد من ستة وثلاثين زنية وفيه حسين بن محمد بن بهرام المروزي ضعفه أبو حاتم وتابعه ليث أخرجه والداقطني وليث مضطرب الحديث ورواه ابن حنظلة عن كعب موقوفا أخرجه أحمد والدارقطني وقال هذا أصح من المرفوع (تعقب) بأن هذا مجازفة قال الحافظ ابن حجر في القول المسدد في الكلام على حديث عبد الله بن حنظلة حسين أخرج له الشيخان ووثقه الناس كيف ولم ينفرد بل تابعه ليث وهو وإن ضعف فإنما ضعف من قبل حفظه فهو متابع قوي وقول الدارقطني إن الموقوف أصح من المرفوع لا يلزم منه أن يكون المرفوع موضوعا ولا مانع من أن يكون الحديث عند عبد الله بن حنظلة مرفوعا وموقوفا وحديث ابن عباس شاهد له قوي وهو عند البيهقي في الشعب والطبراني في أثناء حديث انتهى كلام ابن حجر ملخصا وحديث أبي هريرة لم ينفرد به عبد الله بن زياد بل تابعه النضر أخرجه البخاري في تاريخه وابن المنذر في تفسيره وتابعه أيضا عفيف بن سالم أخرجه البيهقي في الشعب وأخرجه أيضا من طريق عبد الله بن زياد ومن وجه آخر عن أبي هريرة (قلت) ورواه ابن ماجه بسند رجاله ثقات إلا أبا معشر فقد ضعفه الأكثرون وقال ابن عدي هو مع ضعفه يكتب حديثه ولفظه الربا سبعون حوبا أيسرها أن ينكح الرجل أمه ورأيت بخط الحافظ ابن حجر على هامش نسخة من الموضوعات عبد الله بن زياد المذكور ليس هو ابن سمعان الذي كذبوه إنما هو السحيمي ولم أر لأحد فيه تكذيبا والله تعالى أعلم ولحديث ابن عباس طريق آخر أخرجه الطبراني في الأوسط وقد ورد من حديث ابن مسعود أخرجه الحاكم وقال صحيح على شرط الشيخين قلت) رواه البيهقي من طريق الحاكم وقال هذا إسناد صحيح والمتن منكر بهذا الإسناد ولا أعلمه إلا وهما وكأنه دخل لبعض رواته إسناد في إسناد والله تعالى أعلم وجاء أيضا من حديث البراء بن عازب أخرجه الطبراني في الأوسط

قلت) في سنده عمر بن راشد وثقه العجلي وضعفه الجمهور والله أعلم ومن حديث عبد الله بن سلام أخرجه الطبراني في الكبير وفيه انقطاع لأنه من رواية عطاء الخراساني عنه ولم يسمع منه

وقال السيوطي في اللآلىء المصنوعة ج:2 ص:127

العقيلي( حدثنا محمد بن العباس المؤدب حدثنا سعيد بن عبد الحميد بن جعفر حدثنا عبد الله بن زياد حدثنا عكرمة بن عمار عن يحيى بن أبي كثير عن أبي سلمة عن أبي هريرة عن النبي قال الربا سبعون بابا أصغرها كالذي ينكح أمه
عبد الله بن زياد كذبوه (قلت) قال العقيلي رواه عفيف بن سالم عن عكرمة هكذا وحدثنا محمد بن إسماعيل حدثنا أحمد بن إسحاق الحضرمي حدثنا عكرمة بن عمار عن يحيى بن أبي كثير عن أبي سلمة عن عبد الله بن سلام قالالربا سبعون بابا أصغرها كالذي ينكح أمه والله أعلم
ابن حبان( أنبأنا الحسين بن عبد الله القطان حدثنا الوليد بن عتبة حدثنا محمد بن حمير حدثنا إسماعيل بن خنيس عن عكرمة عن ابن عباس عن رسول الله قال من أكل درهما ربا فهو مثل ستة وثلاثين زنية ومن نبت لحمه من السحت فالنار أولى به
ابن عدي( حدثنا أحمد بن محمد بن الهيثم حدثنا محمد بن علي بن الحسن بن شقيق سمعت أبي يقول أخبرني أبو مجاهد عن ثابت عن أنس قال خطبنا رسول الله فذكر الربا وعظم شأنه فقال إن الدرهم يصيبه الرجل من الربا أعظم عند الله في الخطيئة من ستة وثلاثين زنية وإن أربى الربا تمرض الرجل المسلم أبو مجاهد عبد الله بن كيسان المروزي متروك والله أعلم
الدارقطني( حدثنا أحمد بن محمد بن إبراهيم الطلحي حدثنا أبو فروة يزيد بن محمد حدثنا أبي حدثنا طلحة بن رعيد عن الأوزاعي عن يحيى بن أبي كثير عن أنس بن مالك قال قال رسول الله الربا سبعون بابا أهون باب منه الذي يأتي أمه في الإسلام وهو يعرفها وإن من أربى الربا خرق المرء عرض أخيه وخرق عرض أخيه أن يقول فيه ما يكره من مساويه والبهتان أن يقول فيه ما ليس فيه (أبو نعيم) حدثنا أبو إسحاق بن حمزة حدثنا أبو محمد علي بن أحمد بن سعيد حدثنا عبد الله بن محمد بن عيشوس حدثنا عبد الغفار بن الحكم حدثنا سوار بن مصعب عن ليث وخلف بن حوشب عن مجاهد عن عائشة (مرفوعا) الربا بضع وسبعون بابا أصغرها كالواقع على أمه والدرهم الواحد من الربا أعظم عند الله من ستة وثلاثين زنية سوار متروك
العقيلي( حدثنا إبراهيم بن عبد بن سعيد بن محمد الجرمي حدثنا أبو ثميلة حدثنا عمران بن أنس أبو أنس عن ابن أبي مليكة عن عائشة مرفوعا الدرهم ربا أعظم عند الله من سبعة وثلاثين زنية قال العقيلي عمران لا يتابع على حديثه
أحمد( في مسنده حدثنا حسين بن محمد حدثنا جرير بن حازم عن أيوب عن ابن أبي مليكة عن عبد الله بن حنظلة غسيل الملائكة قال قال رسول الله درهم الربا يأكله الرجل وهو يعلم أشد من ستة وثلاثين زنية حسين بن محمد هو ابن بهرام المروزي قال أبو حاتم رأيته ولم أسمع منه وسئل أبو حاتم عن حديث يرويه حسين فقال خطأ فقيل له الوهم ممن قال ينبغي أن يكون من حسين
الدارقطني( حدثنا البغوي حدثنا هاشم بن الحارث حدثنا عبيد الله بن عمرو عن ليث عن عبد الله بن أبي سبيكة عن عبد الله بن حنظلة أن رسول الله قال الدرهم ربا أشد عند الله من ستة وثلاثين زنية في الحطيم ليث مضطرب الحديث وإنما يروي هذا عن كعب قال أحمد حدثنا وكيع حدثنا سفيان عن عبد العزيز بن رفيع عن ابن أبي مليكة عن ابن حنظلة عن كعب لأن أزني أحب إلي من أكل درهم من ربا قال الدارقطني وهذا أصح من المرفوع
قلت( قال الحافظ ابن حجر في القول المسدد حين احتج به الشيخان ولم يترك ابو حاتم السماع منه باختيار أبي حاتم فقد نقل ابنه عنه أنه قال أتيته مرات بعد فراغه من تفسير شيبان وسألته أن يعيد علي بعض المخلفين فقال تكرير ولم أسمع منه شيئا وقال معاوية بن صالح قال لي أحمد بن حنبل اكتبوا عنه ووثقه العجلي وابن سعد والنسائب وابن قانع ومحمد بن مسعود العجمي وآخرون ثم إن كان كل امرئ وهم في حديث سري في جميع حديثه حتى يحكم على أحاديثه كلها بالوهم لم يسلم أحد ولو كان ذلك كذلك لم يلزم منه الحكم على حديثه بالوضع ولا سيما مع كونه لم ينفرد به بل توبع ووجدت للحديث شواهد فقد أورده الدارقطني عن البغوي عن هاشم بن الحارث عن عبيد الله بن عمرو الرقي عن ليث بن أبي سليم عن ابن أبي مليكة به وليث وإن كان ضعيفا فأيهما ضعف من قبل حفظه فهو متابع قوي وشاهده حديث ابن عباس
أخرجه ابن عدي من طريق علي بن الحسن بن شقيق عن ليث عن مجاهد عن ابن عباس نحوه وأخرجه الطبراني من وجه آخر عن ابن عباس في أثناء حديث وأخرجه الطبراني أيضا من طريق عطاء الخراساني عن عبد الله بن سلام مرفوعا وعطاء لم يسمع من ابن سلام وهو شاهد قوي وقال ابن الجوزي إنما يعرف هذا من كلام كعب رواه عنه عبد الله بن حنظلة أيضا ونقل عن الدارقطني أن هذا أصح من المرفوع ولا يلزم من كونه أصح أن يكون مقابله موضوعا ولا مانع أن يكون الحديث عند عبد الله مرفوعا وموقوفا انتهى كلام الحافظ ابن حجر
ومن شواهد الحديث قال الطبراني في الأوسط حدثنا محمد بن عبد الرحيم الديباجي التستري حدثنا عثمان بن أبي شيبة حدثنا معاوية بن هشام حدثنا عمر بن راشد عن يحيى بن أبي كثير عن إسحاق بن عبد الله بن أبي طلحة عن البراء بن عازب قال قال رسول الله الربا اثنان وسبعون بابا أدناها مثل إتيان الرجل أمه وإن أربى الربا استطالة الرجل في عرض أخيه

Sunday, March 19, 2006

A study of the Mobile Cashback Controversy

Assalamu Alaikum,

Alhamdulillah, we are steadily moving forward. To those who have accepted the invitation, Jazakumullahu Khaira!

The mobile phone cashback issue being one of the topics that came under scrutiny and debate during our union, I thought I should put forward my humble understanding on this forum. What I have understood is from what our revered Shaykh Taqi Usmani has said regarding the issue during this visit and also in a previous fatwa.

This issue, to the best of my knowledge, was first raised by Shaykh Haitham al-Haddad who concluded that this type of contracts involve some element of Riba or Rishwah.

Before we delve into further detail, some clarifications need to be made: In cases where the Service Provider itself offers half price line rental for an initial period of service, that is beyond the scope of this debate, as that is effectively hatt-uth-thaman min qibal-il-bayi’. Secondly, this contract seems to be not that of ijarah (although we call the payments Line ‘Rentals’), but that of bai’-al-istijrar for various reasons which can be deliberated upon, if needed, some other time. The following arguments are based on this precept.

My first thought at reading Shaykh Haytham's fatwa was that the parties invloved in the transaction had not been aptly identified. Hence, I've tried to illustrate this in a diagram.

The different stages of this transaction are as follows (please look at the diagram):

  1. A makes an agency agreement with B, on the basis of which A will provide B with cheap handsets with SIMs or give him a commission if B is able to introduce a number of customers on a particular tariff. Usually, a group of high street shops form a company and get these deals through the company, thus receiving a greater commission. In our diagram, this transaction would be A1.
  2. B analyzes the commission amount, and after keeping a portion for himself, promotes the deal with the extra amount to be given as cash back as an incentive to attract customers.
  3. D contacts B and shows his consent to enter into a contract with A. B concludes the contract between A and D as an agent on behalf of A either by obtaining D’s signature or through a verbal/online agreement. In our diagram, this transaction would be the dotted arrows in C2. At this point, B ceases to be the agent for A for this contract as all future correspondence and payments for the service will go directly to A. This is the complete line of C2 in our diagram.
  4. C his initial promotion offer to D either instantly (very rare!) or conditional to continuation of the service with the same provider for a period of time. This would be P1.

There are certain other points to be kept in mind:

  • The promised cash-back is never given by the service provider. The service provider only provides the service to the customer and a commission to the agent for fulfilling his agency agreement. So, the benefits given by the service provider to the two parties are very distinct to each other. Also, this shows that the cash back is not coming from the same jihah (direction) as the airtime service.
  • The contract between the SP (service provider) and the customer does not have any mention of the cash back, as SPs have no connection to it. These contract forms are standard application forms requiring personal data of the customer, choice of tariff and payment details. The agent only writes his Agent ID provided by the SP for identification purposes.
  • The customer pays line rentals to the SP and the cashback comes from the agent, not in his capacity as the agent (as the agency for this particular contract has ended with the application), but as a now third party to the contract.
  • The SP advances the commission to the agent as soon as the application is successful. That is why some retailers advance the full cashback amount to the customer in the first month of service. The only reason why most retailers don’t do so is not because they haven’t received the commission, but only because if the customer fails to submit the required documents within the specified time period, his entitlement to the cashback is forfeited due to his negligence; which gives the retailer the advantage of promoting an attractive offer and restricting the customer’s entitlement to benefit from this offer.
  • To understand this better, the customer, on application, agrees to enter into a 12 month or 18 month binding contract and cannot cancel the contract after the 14-day guarantee period. So whether or not the customer uses the service provided to him, he is still liable to pay the monthly line rental amount to the SP. The payments for the SP are secured by the contract, so there is no reason for them to withhold the commission to the agent.
  • Also if the customer decides to terminate a 12 month contract, say after 4 months, the SP will oblige him to pay the remainder of the instalments upfront to release him from the contractual agreement. If he does so, his contract has terminated in 4 months. If the first cash back instalment was due, say on providing the sixth monthly bill, he will be unable to do so. In this case, the retailer will not provide him with any cash back at all. (I have confirmed this!) This shows that this promise is not a contractual agreement.
  • Traditional fuqaha have differed on the legal enforceability of a promissory undertaking, although they all agree that is enforceable diyaanatan. But the contemporary scholars all agree that if an individual has undertaken a risk based on a promise given to him, this promise will be enforceable qadha’an too. Therefore, we can’t argue that if something is legally enforceable, it automatically assumes the nature of a contract.
  • Since it is a promise, and not a contract, all attributes of a promise can be mentioned in its documentation. The retailer may stipulate that he’ll only reimburse the customer provided he produces certain set number of monthly bills within a specified time period or that he stays with the same tariff for a specified period of time or even that he’ll not sell his phone to someone else or transfer the contract to someone else’s name. These conditions have no connection with the SP. (Apart from the ‘same tariff for a time period’ condition apparently, but that agreement with the SP is in the actual contract – so these are two separate agreements.) Some of these conditions are ghair mulaaimah lil-aqd but are enforceable because this is not a contract, but a promise. Its like saying, “I’ll give you £100 if you jump that hurdle.” – which is okay; what’s not okay is to say, “I’ll pay you for your item only if you jump that hurdle.” The first is a promise and the second a contract of sale.

The conclusion is that, generally, these are two separate transactions in fiqhi terms, and there is no element of Riba involved.

But, what we’ve got to discuss is, if the customer also signs on the redemption agreement, does mujarrad signing on the paper take this agreement out of the nature of a promise into that of a contract, even if the above mentioned differences are still found in this agreement?

This is because I was told that some agents do take a signature from the customer on the redemption agreement too. Although I’ve never witnessed this and have not found this to be the case in general after consulting some friends who are in the business. However, they say that even if this happens, it will just be a measure undertaken for customer satisfaction.

My humble opinion is that this would not change the legal aspect of this agreement. Please deliberate on this issue.

Wal ‘Ilmu ‘indallah al-Latif al-Khabeer

Ibrahim Amin

Thursday, March 16, 2006

Welcome to the new Islamic Finance portal

Assalamu Alaikum Warahmatullahi Wabarakatuh

This portal is the outcome of an idea initially suggested by the scholars who attended the landmark AAOIFI Shariah Standards course at the Islamic Foundation in Markfield last week. It was aimed at familiarizing the 'Ulama and Talabat-al-Ilm with the key features and operational spheres of contemporary Islamic Finance.

The course was organised by 1st Ethical Charitable Trust - a body of Muslim professional experts in tax planning and Shariah-compliant investment and finance, in co-operation with the Centre for Islamic Economics, a branch of Darul Uloom, Karachi and Meezan Bank.

About 30 scholars, including two 'aalimahs, sat the week-long intensive course from 7th - 13th March after passing an initial entrance test.

It was thought that it would be commendable to open a forum of this nature for these scholars (who came from various parts of the country) enabling them to interact amongst themselves on issues relating to the topic, suggest and explore new ideas or simply keep in touch.

Hence, we are here.

It is important that some points are clear from the outset:

1) Since the idea of this forum has emerged from the need to provide a forum only for scholars who have had formal instruction in this field, its membership will be limited to those who have actually attended the course - for the sake of 'quality control'. Membership outside of this circle will only be given upon recommndation from at least two active members of the forum.

2) It can be suggested that only that amount of discussions may be open at a certain time that may allow the participants to fully contribute alongside their other commitments. Further topics can be started once the previous one has come to a satisfactory conclusion.

3) We, the talabat-al-Ilm, are but endeavouring to raise our awareness on the subjects, so our discussions should never lose the spirit of a true knowledge-seeker. The final say will be of our teachers (the Mashaa'ikh from Pakistan and the brothers from Meezan Bank) who are being requested to allocate some of their invaluable time to this circle.

I apologize for the length of this post. Hopefully the following ones will be much shorter.

If any of the brothers has any more suggestions to make as to the running of this forum, please mention this in the comments so that we are all agreed on that from the beginning.


Ibrahim Amin