Opposing the fatwa which approves of riba

The fatwa of Al-Azhar which approves of paying interest (riba) by banks, is unacceptable.

That news is in (external link to islamonline.com): Al Azhar University fatwa allows for interest on Bank deposits

The fatwa is referring to a bank's accountability by its pledge to the helpless people (who would not otherwise know how to track the profits or losses turning around their money). To protect the individual (especially the less able), is good for having a true law-and-order, normally. But ignoring how the rest of the case violates the Islamic logic (so far as we know), is not acceptable for lots of people who would not like to offend Allah. For example, what is that transaction type?

Renting money (to obtain a constant rate of return)? If so, how is that not riba? Furthermore, if the bank in question is, in turn, getting interest in return for that capital they hold, then that is similar to investing in sin businesses (like production of alcohol).

Otherwise, if investing that money in that bank (a "partnership"), then how is the return amount fixable(in contrast to fixing the shares)? The fatwa sounds like some "Robin Hood" logic (or, riba-hood), which points out the bigness of a bank, having lots of transactions -- with the worst case being the total failure of the bank, and then they relate that to the losses in business. But that is not the normal sort of business losses, rather, failure of estimates, which were especially worsened by the inflexibility of fixing the rate of returns. The Quran, telling of zero percent interest (that is, interest-free debt), acknowledges that the debtor might sometimes not be capable of paying that back. But a bank which pledges a constant rate, would be in trouble even in cases when they could pay half of the rate of return they had been estimating as payable. In turn, that could cause trouble for all of the people even when the investments of a bank make some profit.

...

If to find some solution in the bigness of banks (or, corporations), then accountability (public-accountability, with data open to all who would like to investigate, or auditing by trustable (non-bribable) third-party controllers), is a key acceptable to Islam. Satisfactory, for pooling of funds.

Otherwise, in cases of banks/projects providing individual project-finance options (mudaraba, etc), the individual might need to have some understanding of the issue (or,hire third-party advisor) if willing to investigate whether the bank officials might be fooling himself/herself with the numbers. Or else, sticking to the widely visible funds.

firmaze

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Last-Revised (text) on Jan. 21, 2010 -- Safer 6, 1430
Written by: Ahmed Ferzan/Ferzen R Midyat-Zila (or, Earth)
Copyright (c) 2010 Ferzan Midyat. All rights reserved.
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