Islamic loans turn profit for banks in USA (http://www.usatoday.com/money/industries/banking/2008-03-26-islamic-finance-sharia_N.htm)

A customer showed up at little Devon Bank on Chicago's North Side, asking for a loan to open a neighbourhood shop. But there was a hitch, the would-be borrower explained: "We can't pay any interest. Can you help?"


At the time, seven years ago, the answer was: "Nope," recalls David Loundy, Devon's vice president and legal counsel.


That was then. Since fielding that first request, Devon Bank has transformed itself into a specialist in the kind of no-interest Islamic financing the customer was seeking. Islamic financing now accounts for more than 75% of the bank's mortgage portfolio, and Devon has made mortgages compliant with Islam's sharia law in 36 U.S. states, Loundy says.


In a report last month, credit-rating agency Moody's Investors Service said that the global Islamic finance market has grown about 15% in each of the past three years and is now worth about $700 billion worldwide. The heavyweights of global finance have taken notice: Citigroup, HSBC, Deutsche Bank and others have affiliates devoted to Islamic finance.

"It's here to stay," Loundy says of Islamic finance. "You're talking about one-fifth of the planet's population."
--------------------------------------------------------------
Some might argue that there are "hidden" interests in such loans

But no doubt that many prefer dealing with Islamic banks or Islamic transactions

I would only deal with Islamic loand.

I understand that many argue that Islamic loans are not "intrest free" but the method used is what makes the difference. Yes, Islamic banks have to make profit. That reality have to be understod by people seeking Islamic loans. No one would enter into a venture without seeking profit. But the way they make profit what makes the difference.

Although having a bank that have both deals (islamic and non islamic) is not the best option if we are thinking Islamic wise. But its a step ahead. I wish they would allow the current bank to provide loans in Oman that deals islamicly. I heard Al Ahli bank does that, but I have my own reservation with Al Ahli bank, thier customer service.

I think it's very interesting and a nice idea.

We Christians have long understood that interest isn't necessarily usury.

But we seem to have forgotten that usury is possible and that interest CAN be usury. So it's very good for us to have you guys around to remind us.

You can always call it Islamic Loans .. though instead of calling it Interest .. call it "Service Charge" .. :hyper:

AB, it depends on the methodology. If they charge a percentage over the loan, then no matter what they call it .. its interest. However there are many other Islamic dealings that are considered halal. One example which is widely used is house loans. Instead of giving you the amount of money, they purchase or build the house for you and resell it with a higher price. Yes, they are making a profit out of it but this is how business works. However, the amount is fixed when they resell it. It is not based on time.


Jeff, is usury prohibited in christianity? what is defined as "usury" in chrsitianity?

AB, it depends on the methodology. If they charge a percentage over the loan, then no matter what they call it .. its interest. However there are many other Islamic dealings that are considered halal. One example which is widely used is house loans. Instead of giving you the amount of money, they purchase or build the house for you and resell it with a higher price. Yes, they are making a profit out of it but this is how business works. However, the amount is fixed when they resell it. It is not based on time.


Jeff, is usury prohibited in christianity? what is defined as "usury" in chrsitianity?

Usury is defined as EXCESSIVE INTEREST.

That usually means taking advantage of someone's need for gain.

For example, suppose you lose your money and you need to get an airplane ticket home. And I take advantage of your need and say I will lend you the money but you must pay me interest.

That is usury.

But...money is sometimes fertile and a person can use it to get GAIN and not for need. So, if you invest your money in a new business, I might loan you the money and insist that you pay me interest because of the gain and subsidize my risk.

That would not be usury unless I were somehow taking advantage of you, say, by charging you a rate of interest that exploited you by ruining your business for example.

But there is a big gray area in between. Personally, I think people are too relaxed about it in capitalistic societies and that's a bad thing...

So I am glad for the Muslim witness! :)

Good question AP, I was going to ask the same question when Jeff mentionied usury.

Anyway, I've always seen Islamic loans the same as normal commercil loans since they take profit but in another way. But maybe since the time is fixed and so is the sum of money, this may not make it like usury.

Usury is defined as EXCESSIVE INTEREST.

That usually means taking advantage of someone's need for gain.

For example, suppose you lose your money and you need to get an airplane ticket home. And I take advantage of your need and say I will lend you the money but you must pay me interest.

That is usury.

But...money is sometimes fertile and a person can use it to get GAIN and not for need. So, if you invest your money in a new business, I might loan you the money and insist that you pay me interest because of the gain and subsidize my risk.

That would not be usury unless I were somehow taking advantage of you, say, by charging you a rate of interest that exploited you by ruining your business for example.

But there is a big gray area in between. Personally, I think people are too relaxed about it in capitalistic societies and that's a bad thing...

So I am glad for the Muslim witness! :)

So what do commercial banks mean in christianity ? Are they practising usury or not since they don't question client if he's in need of these money or not.

For example, suppose you lose your money and you need to get an airplane ticket home. And I take advantage of your need and say I will lend you the money but you must pay me interest.

That is usury.

But...money is sometimes fertile and a person can use it to get GAIN and not for need. So, if you invest your money in a new business, I might loan you the money and insist that you pay me interest because of the gain and subsidize my risk.

That would not be usury unless I were somehow taking advantage of you, say, by charging you a rate of interest that exploited you by ruining your business for example.



In islam, the concept is that you cant buy and sell something with the same nature. Money with money, dates with dates, or gold with gold. The reason is because the risk of exploitation is veryhight. But when you exchange a sum of money with another commodity it get transferred to a value.
Therefore, all sort of "interest" based loans are haram even if it used to gain something not to loose.


Anyway, I've always seen Islamic loans the same as normal commercil loans since they take profit but in another way. But maybe since the time is fixed and so is the sum of money, this may not make it like usury.

I look at it this way, there is a verst in the Quran that says that Riba (usury) is simmiler to trade .. but Allah made Riba haram and trade halal. It means the simmilarity is big, but we need to be careful on what makes it riba and what makes it halal trade.

I look at it this way, there is a verst in the Quran that says that Riba (usury) is simmiler to trade .. but Allah made Riba haram and trade halal. It means the simmilarity is big, but we need to be careful on what makes it riba and what makes it halal trade.

But in trade there is a possibility of losing or gaining. In the Islamic loans there is no possibility of losing. The gaining is 100% sure and besides they sell you something you know it costs less. For example, you want to buy an OR 8.000 car. They buy it and sell it to you with OR 11.000. So they took their profit but in a different way from commercial banks.

I always felt that commercial banks are somehow better than Islamic banking as in say you took a loan of 10,000 R.O. In Islamic banking, you agreed to pay a fixed amount of 13 thousands. While in commercial banking, you pay an interest of say 9% on a yearly basis. If it happens that you wanted to return the loan after a year, in
Commercial banking you will just pay 10,900 but in Islamic banking you still have to pay 13,000.

And some people happen to take loans for investment like buying a house then selling it with a profit after few months. The profit that would be made if they took their loans from a commercial bank would be higher than from an Islamic bank.

The world would have been a better place if loans had not had interests attached to them :). Poor would have been able to get a bit richer, while the rich would have got richer anyhow, perhaps a bit slower.

But in trade there is a possibility of losing or gaining. In the Islamic loans there is no possibility of losing. The gaining is 100% sure and besides they sell you something you know it costs less. For example, you want to buy an OR 8.000 car. They buy it and sell it to you with OR 11.000. So they took their profit but in a different way from commercial banks.

In the concept of Islamic finance, as long as you are not trading somethign with the same nature, its halal. you cant buy money with money, but you can always buy a car with money. Yes, the price might be higher but then thats whats offered. If we had several companies providing those kind of finances there will be competition and you will be able to get better deals. At the end, the company that is buying the car for you need to make a profit, you cant expect them to buy you a car for the same price otherwise where would they benefit?

I always felt that commercial banks are somehow better than Islamic banking as in say you took a loan of 10,000 R.O. In Islamic banking, you agreed to pay a fixed amount of 13 thousands. While in commercial banking, you pay an interest of say 9% on a yearly basis. If it happens that you wanted to return the loan after a year, in
Commercial banking you will just pay 10,900 but in Islamic banking you still have to pay 13,000.


what if you couldnt pay in 3 years? and paid in 10 years? the amount will grow bigger .. thats the point thats haram in commercial loans.

How does one define 'nature'?

Can you trade an apple for a pear? Or is that trading fruit for fruit?

Can you trade a used car for a new car? Or a car for a truck? Or a gas powered car for an electric one?

Can you trade money for shares of stock? Or are shares of stock money?

If we are two students and your Mom packed an apple in your lunch box and mine packed a pear in mine, can we switch? What is yours packed a big apple and mine packed a small and I am hungry for apples and you are not so hungry?

It sounds very confusing, but maybe there are rules....

Yes for a long term, Islamic banking is better but for the short term i think commercial banking is much better.

In terms of it being halal/haram, I feel they are both haram since they both charge you for the money in regards to whether it is called interest or any Islamic related names.

regardless of the halal/haram issue....how are banks supposed to pay the employees/ support the buildings they are housed and pay the electricity/water and the maintenance...?
i think my bank with which i have the houseloan (hsbc) is the most haram of all. i borrowed 17,000 maltese liri (around 50 usd) and i'll end up paying back around 40,000 maltese liri (120,000 usd).

Just because you need to cover expense doesn’t mean you can convert something from haram to halal.

Its either you lend your money to someone and let them return you the exact amount from the goodness of your heart or don’t give out any money.

The whole concept of Islamic banking is just to make people feel better and not guilty for borrowing money by using different type of terms other than interest.


and again

;1058207']You can always call it Islamic Loans .. though instead of calling it Interest .. call it "Service Charge" .. :hyper:

Anyway I am not saying that the method used by Islamic banking is totally wrong. It could be beneficial in some way and obviously has its own up side but that may not necessary make it halal.

In terms of it being halal/haram, I feel they are both haram since they both charge you for the money in regards to whether it is called interest or any Islamic related names.

Islamic banks use various ways to finance others. Some are islamicly acceptable (even if they make profit) others are not. Islam was never against business and weneed financing companies these days and they are very benefitial to the economy. Its how those banks do thier business is what differentiate betweek riba and not riba.

These threads might help:
http://www.englishsabla.com/forum/showthread.php?t=32543
http://www.englishsabla.com/forum/showthread.php?t=5152

There are different types of riba also.

In the Quran it is stated that whoever deals with riba agrees for a war from Allah and his prophet against him.

Thanks AB, I will go through the threads and maybe my views on it will change by having a deeper understanding of how they operate.

Kreemy .. There are many ways to get a big amount of money!
Organizations (jam3iya) like .. with friends or family .. that doesn't take any interest ..

There are some real estates companies that can build you a house of your choice .. and than you pay the company the money .. that is not considered haram and has been asked about ..


Okay .. maybe not many ways .. but there are some ways to avoid the bank loans ..

Plus .. if you have some nice rich friends .. they can lend you money and pay them back by interest .. they must be really rich I guess .. :bored: .. :p