A Muslim Convert Once Before

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ The following is my answer to a Quora question: “ Is the principle of Islamic banking possible? ”   Islamic banking has two primary principles: the equitable sharing of profit and loss in any venture, and the prohibition of riba’ , usury.   In principle, these are equitable considerations, and praiseworthy.   The contentions of Islamic banking is not the principles, per se, but the reinterpretation of their application within the context of conventional financial practices, and the creation of near equivalent financial instruments.   This is where is falls short.   Islamic banks make a profit through equity participation, which requires a borrower to give the bank a share in their profits rather than paying interest.   For example, we consider mudharabah , where one party, the bank, provides the capital, and the other party, the business owner, provides the expertise and labour.   The problem with most su...

The following is my answer to a Quora question: “ Is cryptocurrency haram in Islam ? ”   A cryptocurrency is merely a form of digital asset based on a distributed network.   This means the system is decentralised, outside the control of any regulatory authority, except at the points of exchange.   None of this makes cryptocurrency inherently haram .   The contention is that there is no underlying physical asset to give it value.   Islamic finance has no basis to characterise this, and the fiqh , jurisprudence, has not caught up with developments.   However, if we view cryptocurrency as a means of exchange, and not an inherent asset by themselves, this contention can be addressed.   In the same vein, cheques and currency developed as means of exchange, not assets in and of themselves.   Their value lies in what they represent.   A second objection raised is that cryptocurrencies are inherently volatile.   This is a weak argument. ...

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ   The following is my answer to a Quora question: “ Is working at an insurance company haram or halal ? ” To claim anything is haram in fiqh al-mu’amalah , there has to be a good reason.   Insurance is a means to mitigate risk by pooling risk.   A contract is created, represented by the individual policies, where legal persons attain financial reimbursement for losses incurred that are covered within the schedule of the policy.   In what manner would that be contrary to the shari’ah ?   Some people make the claim there this is riba’ , but riba’ entails an element of zhulm , oppression, to create wealth out of nothing, through some form of financial manipulation or creating an undue advantage through a skewed system or unfair contract.   Unless the insurance contract was made in bad faith and involved some form of undue advantage, and people are defrauded, there is no claim to it being haram .

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ Consider this scenario: a person who has children from a previous marriage, who then converts and marries a Muslim, and those children are still young; if this person, the parent passes away, the children, even if below the age of majority, inherit nothing according to “ shari’ah ”.   Whatever is left over after distribution, and whatever is not claimed will go to the Bayt al-Mal .   This needs to be addressed.   It would have been nice if MUIS or even Darul Arqam Singapore, would have taken this as something urgent.   But since it is obvious we cannot depend on these organisations, we have to come up with creative ways to help ourselves.   The following are four methods to be used to secure an inheritance for your non-Muslim family upon your death.   Part VII of the Administration of Muslim Law Act, 1966 governs the distribution of Muslim estates.   Essentially, non-Muslims cannot inherit from Muslims accordin...

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ   The following is my answer to a Quora question: “ According to shari’ah , is it acceptable to invest in information technology stocks because they provide services to banks and other financial institutions? ”   If we go by that logic, you will have almost nothing to invest in, because the economy is interconnected.   You cannot invest in companies that deliver food to the people who work there.   You cannot invest in utilities because they provide electricity and other utility services to the bank.   You cannot invest in estate management companies because they manage their properties.   You cannot invest in public transportation because people take it to work there or go there as clients.   Fiqh does not even have an ijma’ on what constitutes riba’ , and there is a plethora of fatawa .   You cannot even say this is “according to shari’ah ”, since shari’ah is our interpretation of the Divine Intent....

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ   The following is my answer to a Quora question: “ My bank charged me interest and fee, but I do not want to pay the interest because of my religion Islam.  In this case, is it halal to pay? ”   It is haram for you not to pay, since you used the services of the bank.  By using those services, you have agreed to the terms of use, and part of those terms includes fees and interest.  If you do not want to pay that interest, you should not have used those facilities.  The secular world does not care about your interpretation of the jurisprudence of a personal faith.  That is not the bank’s problem.   In any case, it is not a definitive position that absolutely all forms of interest is haram .  Personally, I think that is illogical.  There is an inherent infrastructure and upkeep cost for the bank.  For interest to be considered riba’ , usury, there has to be an element of zhulm , op...

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ   The problem with being a Muslim in Singapore is that according to the Administration of Muslim Law Act (AMLA), my wealth must be distributed according to the fara’idh .   I am a convert.   The implication for me is that only my wife inherits some portion of my estate, not my non-Muslim family, and the rest goes to the Bayt al-Mal .   This means, also, that for converts to Islam who have children or other possible heirs who are not Muslims, they do not inherit automatically.   The option is giving hibah , a gift when the person is still alive.   Gifts designated post-mortem still come under estate and are subject to fara’idh .   There is an option to give out up to a third of the estate only, as per our familial requirements.   Joint tenancy property reverts to the surviving owners.   CPF is nominated, and insurance policies are paid out according to the nomination forms, or to the policy owners. ...

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ The following is my answer to a Quora question: “ How do swak , Islamic bonds, comply with shari’ah , given that Islam forbids paying interest? ”   It is simplistic to believe that Islamic finance forbids the paying of interest, since it equates any form of payment labelled as interest with riba’ .  But that is a different discussion.  Swak , the plural of swukuk , are not real debt instruments, and thus, do not pay interest on lending.  Bonds are debt instruments, and the interest is upon the debt.   Swak are not bonds since it is priced based on an underlying asset, not a debt.  The dividend is based on future cash flow.  This means that the swukuk value may vary over a period depending on the appreciation or depreciation of the underlying asset.  A bond’s value is not upon the underlying asset, and the value does not change except through demand in the secondary market.

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ The following is my answer to a Quora question: “ Does Islam see moneylending as wrong or only taking interest on loans?   What is the rationale behind it? ”   Islam does not proscribe lending.   If lending were made haram, it would burden the people because they would have no options when there is a liquidity problem.   If the Qur’an and ahadits speak of the virtues of forgiving debts, it implies that lending is perfectly acceptable.   As for lending with interest, I do not hold the view that all interest is necessarily haram .   Interest is not riba’ , usury.   There is interest on lending because there is an opportunity cost that has to be factored into the loan.   Also, for lending institutions, there is the cost of the infrastructure to administer the loan, and that is factored into the loan.   Interest becomes riba’ when there is the element of zhulm , oppression.   In this case, it mea...

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ   The following is my answer to a Quora question: “ According to shari’ah , is it riba’ if I purchase long term care insurance? ”   Life insurance may be treated as a financial instrument, but it is not necessarily an investment.   You are putting money into a product that pays out in the event of an untimely tragedy, whether death, disability or critical illness.   It is a hedge against the cost of adjusting to the loss of a family member, particularly a bread winner.   Riba’ , usury, pertains to an unjust financial relationship, where there is an element of zhulm , oppression.   An example would be borrowing from someone or an institution, where the structure of the interest makes it impossible for you to ever pay the debt.   Another example would be to sell you a derivative where the value of the underlying asset is essentially speculation.   Insurance is not riba’ .

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ   The following is my answer to a Quora question: “ According to shari’ah , is it permissible for Muslims to work in audit companies such as PriceWaterhouseCoopers, Ernst & Young, and KPMG? ”   Audit companies objectively examine, evaluate and verify the financial statements of the audited entity to ensure that the records are an accurate representation of the transactions, and that said transactions are in compliance with all legal requirements.   In what way would that be contrary to shari’ah ?   If the claim is that they are witnesses to riba’ , usury, then I contend that this is nonsense.   The auditor is not party to the transactions.   This is before we even contend on whether this is actually riba’ .   There has to be a sense of perspective and logic.

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ   The following is my answer to a Quora question: “ According to shari’ah , if I deposit money in a bank as a small customer, and the bank pays me interest on my deposit, would that be haram ? ”   Firstly, it is illogical to consider any and all forms of interest to be riba’ .   Interest should be charged on a loan to cover infrastructure cost, and opportunity cost.   The bank buildings, the systems that track transactions, the security cost of holding deposits, all that staff - that is a cost.   We are not talking about the village money changer sitting at the corner of the bazaar somewhere in a distant oasis.   For there to be riba’ , usury, there has to be an element of zhulm , oppression.   That means an interest rate far in excess of the principal such that the rate of increase far outstrips the borrower’s ability to pay, and other forms of predatory lending.   Secondly, the bank takes in deposits, ...

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ   The following is my answer to a Quora question: “ Why do people find Islamic finance attractive? ”   It is an overstatement that people find Islamic finance attractive.   Islamic finance is projected to grow to around US$2.05 trillion by the end of 2019.   This is after two years of stagnation.   The global financial markets is estimated at US$80 trillion with a 6% growth for most of those years.   This means that even as the Islamic financial market grows every few years, growth in global finance itself outstrips it by a lot.   At that rate, Islamic finance is actually losing market share.   It is a niche system for a niche market.   The people who do find Islamic finance attractive generally come from the segment of the Muslim population that falls for the so-called “Islamic” branding, and its promise of no riba’ , usury, which is not the reality.   As long as banks are leveraged and lend m...

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ   The following is my answer to a Quora question: “ If Interest is haram in Islam, how do Islamic banks operate? ”   Firstly, it is not interest that is haram , but riba’ .   Depending on the opinion of the scholar and the understanding of banking, interest may or may not be riba’ .   For something to be considered riba’ , usury, there has to be an element of zhulm , oppression.   One of the forms of zhulm is creating wealth from nothing though systematic advantage.   If you deposit money in the bank, and the bank uses it and grows its value, and grants you a return in the form of interest, it may not necessarily be haram.   Some would argue that the fact that the bank guarantees a fixed return on something that is not fixed is itself haram .   But we must consider that the bank has already factored in its projections and return on investment.   Whatever the bank pays out in interest is miniscule co...

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ   The following is my answer to a Quora question: “ Is investment banking halal or haram ? ”   Investment banking is a huge area of finance. Investment banking is related to the creation of capital for companies, governments and other entities, from trust to foundations.   Investment banks are involved in the underwriting of new debt and equity securities for companies, manage the sale of these securities, and are involved in everything from mergers and acquisitions, to trades, to futures contracts.   If we make investment banking haram , then the process of business is itself haram .   Since trading is a sunnah , are we now going to make a sunnah haram ?   For example, if a group of farmers got together to pool their harvest, and started a cooperative to manage the sale to another group of traders, and negotiated a contract based on future harvests so that they can manage the costs of buying seeds, fertilisers...

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ   The following is my answer to a Quora question: “ What do you think about the Islamic Finance? ”   We have to make a distinction between the jurisprudence of transactions and assets in finance, and the branding that people call “Islamic Finance”.   They are not always the same thing.   When we consider the fiqh , the jurisprudence, there are many contentions that need to be unpacked, to be considered, to be updated.   There are very few true ahkam , rulings, and a lot of fatawa , legal opinions.   Even at a fundamental level, a great many contentions and foundational principles of modern finance have not been defined in terms of their relationship with fiqhi principles.   The primary problem we have is that many of the so-called experts on shari’ah are not actually experts in finance.   They are often ruling on transactions, protocols, and even modern economics, they do not fully understand, and avai...