The Islamic view is that the
creditor and debtor can lend or borrow but must do so ethically and fairly.
This means the creditor is not obliged to lend to the debtor but does so
at his own free will. If the debtor is struggling or unable to repay then
the creditor must be willing to allow more time or in the worst case write off
the debt; this is the risk he takes. Of course the debtor must make every
effort to repay the debt as no doubt he would be accountable in this life or
the next.
Unfortunately these values have been
forgotten and instead replaced with the notion that the creditor must benefit
from this transaction and secure his risk and profit before lending.
Should the debtor default or refuse to pay, the creditor would have a
right of recovery and be able to charge for late payment. This practice is what
we call usury or riba and is strictly prohibited in Islam for reasons which we
will discuss further below.
If we consider some of the most
leading and developed nations in today’s world; UK, USA, Japan, China, Russia, France
and Germany, we will find that all these countries, regardless of their
economic standing, are heavily indebted and all because of riba.
They have borrowed huge loans from
the banking system with extortionate repayment terms and high interest charges
which they cannot possibly repay.
As a result they have defaulted and
been forced to take out further loans from the banks. Inevitably this has
led to a nation in debt and enslavement for the masses. This is why today
the US dollar has collapsed and the pound has lost its strength whereas the
price of oil and gold has sky rocketed. This issue is not affecting only
Developed Nations as mentioned above, it is the death killing the
Underdeveloped or the so call developing Nation like Nigeria. In the 60s
Nigeria Naira has more value than the America Dollar and two naira is
equivalent to one pound. Now a dollar is over N160 naira and a pound is over
N250 naira because we are heavily indebted and all because of Riba (Interest on
loan).
By accepting such unreasonable
loans, every government has made its people pay by way of increased taxes,
bills and living costs. While most economists would argue that only the
principal portion of the debt should be repaid and not the interest portion,
which should be written off, the banks insist on full repayment and have taken
measures to safeguard their returns.
So while the bankers take home huge
bonuses for a job well done, elderly people are having to choose between a good
meal or keeping warm in the winter, families are having to work extra hard in
order to meet their living costs and young people are having to graduate with
huge debts. The end result is an increase in petty crime and
unemployment. All this because of interest based lending or riba.
The Holy Quran prohibits riba in the
following verse: ‘O ye who believe! Fear Allah, and give up what remains
of your demand for interest, if you are indeed believers. If you do not, take
notice of war from Allah and his Messenger, But if ye turn back, ye shall have
your capital sums; deal not unjustly and ye shall not be dealt with
unjustly’ (Qur’an 2:278-279).
So severe is the warning not to deal
in riba that Allah and His Messenger (pbuh) have declared war on us and now we
know why. Aisha (RA) narrated that Allah’s Apostle (pbuh) used to invoke
Allah in the prayer saying, ‘O Allah, I seek refuge with you from all
sins, and from being in debt.’ Someone said, O Allah’s Apostle! (I see you)
very often you seek refuge with Allah from being in debt. He replied, ‘if a
person is in debt, he tells lies when he speaks, and breaks his promises when
he promises.’ (Sahih Bukhari Volume 3, Book 41, Number 582).
Debt has destroyed many lives,
forced some to steal while others have had to sell their body to make ends
meet, it has caused undue financial hardship and breakdown in marriages, it has
led to stress, anxiety, misery, lies, deceit, high crime, unemployment the list
is endless.
The banking system has led the way
on riba based lending and made ‘halal’ what Allah and His Messenger (pbuh)
declared haram. Today almost every loan is encumbered with interest and
extortionate repayment terms and penalty fees making it difficult for us to
tell the difference between riba and trade as if we are looking at a black ant
on a black stone on a black night. It is high time we wake up and stamped
out riba.
We should therefore take all
immediate steps to get out of riba and debt and there are many ways in which we
can do this. To begin with, we can choose to review our existing loans
and really ask whether we need them. For example, if we have a mortgage
we can ask for the terms to be changed from interest payments only to capital and
repayment which is the principal debt.
We could also consider whether
having additional homes on buy to let mortgages is a necessity, after all we
are all accountable for how we earn our living. Do we really need a high end
luxury vehicle which requires more maintenance and high insurance or can we do
with a cheaper alternative.
Where we cannot make changes to our
existing loans or way of life, then perhaps we can look to consolidate all
debts and freeze the interest so that we are only paying the actual debt as
opposed to the compounded interest portion.
If the situation is rather
grave then perhaps we may want to consider bankruptcy rather than suffering in
silence.
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