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"Our Lord! Punish us not if we forget or fall into error, our Lord! Lay not on us a burden like that which You did lay on those before us; our Lord! Put not on us a burden greater than we have strength to bear. Pardon us and grant us Forgiveness. Have mercy on us. You are our Maula(Patron, Supporter and Protector, etc.) and give us victory over the disbelieving people." [Al-Qur'an 2:286]

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    • An Introduction to Islamic Finance

      Over the last few decades, the Muslims have been trying to restructure their lives on the basis of Islamic principles. They strongly feel that the political and economic dominance of the West, during past centuries, has deprived them of the divine guidance, especially in the socio-economic fields. Therefore, after acquiring political freedom, the masses are striving for the revival of their Islamic identity to organise their collective life in accordance with the Islamic teachings.  In the economic field, it was the biggest challenge for such Muslims to reform their financial institutions to bring them in harmony with the dictates of Shari‘ah. In an environment where the entire financial system was based on interest, it was a formidable task to structure the financial institutions on an interest free basis.  The people not conversant withthe principles of Shari‘ah and its economic philosophy sometimes believe that abolishing interest from the banks and financial  institutions would make them charitable, rather than commercial, concerns which offer financial services without a return.  Obviously, this is totally a wrong assumption. According to Shari‘ah, interest free loans are meant for cooperative and charitable activities, and not normally for commercial transactions, except in a very limited range. So far as commercial financing is concerned, the Islamic Shari‘ah has a different set-up for that purpose. The principle is that the person extending money to another person must decide whether he wishes tohelp the opposite party or he wants to share his profits. If he wants to help the borrower, he must rescind from any claim to any additional amount. His principal will be secured and guaranteed, but no return over and above the principal amount is legitimate. But if he is advancing money to share the profits earned by the other party, he can claim a stipulated proportion of profit actually earned by him, and must share his loss also, if he suffers a loss.  It is thus obvious that exclusion of interest from financial ctivities does not necessarily mean that the financier cannot earn a profit. If financing is meant for a commercial purpose, it can be based on the concept of profit and loss sharing, for which musharakahand mudarabahhave been designed since the very inception of the Islamic commercial law.  There are, however, some sectors where financing on the basis of musharakahor mudarabahis not workable or feasible for one reason or another. For such sectors the contemporary scholars have suggested some other instruments which can be used for the purpose of financing, like murabahah, ijarah, salamor istisna.  Since last two decades, these modes of financing are being used by the Islamic banks and financial institutions. But all these instruments are not the substitutes of interest in the strict sense, and it will be wrong to presume that they may be used exactly in the same fashion as interest is used. They have their own set of principles, philosophy and conditions without which it is not allowed in Shari‘ah to use them as modes of financing. Therefore the ignorance of their basic concept and relevant details may lead to confusing the Islamic financing with the conventional system based on interest.  The present book is a revised collection of my different articles that aimed at providing basic information about the principles and precepts of Islamic finance, with special reference to the modes of financing used by the Islamic banks and non-banking financial institutions. I have tried to explain the basic concept underlying these instruments, the necessary requirements for their acceptability from the Shari‘ah standpoint, and the correct method of their application. I have also dealt with the practical issues involved in the application of these instruments and their possible solutions in the light of Shari‘ah.  In my capacity as chairman  / member of the Shari‘ah Supervisory Boards of a number of Islamic banks in different parts of the world, I came across the points of weakness in their operations caused mainly by the lack of clear perception of the relevant rules and principles of Shari‘ah. This experience emphasized the need for the presentbook in which I have tried to discuss the relevant subject in a simple way which may be easily understood by a common reader whohad no opportunities to study the Islamic financial principles in depth.  This humble effort, I hope, will facilitate to understand the basic principles of Islamic finance and the main points of difference between conventional and Islamic banking. May Allah Ta‘ala accept this humble effort, honour it with His pleasure and make it beneficial for the readers.  Muhammad Taqi Usmani  Karachi  04.03.1419 A.H.  29.06.1998 A.D. 

Wednesday, 24 September 2014

THE PATH OF SUNNAT

CHAPTER ONE

The discussion on the proofs and evidences in the Shariah 

Many, many thanks and appreciations are expressed unto Allaah Ta`ala that He has made us amongst mankind. After having created us amongst mankind, He has further endowed us with the blessing of being Muslims. Further to this, He has granted us the everlasting favour of being amongst the Ummat of the Greatest of all creation, Hadhrat Muhammad Mustafa ρ. If we ever contemplate expressing our Shukr (gratefulness) for the innumerable bounties bestowed upon us by Allaah Rabbul Izzat, then not only will this be impossible, it is something beyond our capabilities. In fact, we are truly unable to even count the favours bestowed upon us. Allaah Ta`ala states in the Qur`aan Majeed,

“If you (try to) count the blessings of Allaah (bestowed upon you o man!), you will never be able to enumerate them.”

The Qur`aan Kareem is an everlasting statute, fully encompassing way of life and a complete guide for practice 


The Ulama of Jurisprudence have stated four sources of principle, proof and evidences in the Shariah: The Qur`aan Majeed, Sunnat, Ijma and Qiyaas. In fact, Ijma and Qiyaas are directly related to and derived from the Qur`aan Majeed and Sunnat. 

Insofar as the principles for the guidance of this universe are concerned, there are two parts. The first part comprises an all-encompassing principle, that which is immutable, unchanging, which has obligatory laws and practices, which is free from the contamination of man, whose words are protected, and which is an everlasting source of guidance for all creation. The name of this fountainhead and source of guidance is -- Wahi Matloo or the Qur`aan Majeed. 

The true Math-hab or Deen (religion) is that one whose basis and foundation stems from truth. It is that whereby a differentiation can be made between good and evil beliefs, actions and character. It is also that whereby internal and external reformation can be effected thereby saving one from the punishment. It is that whose principles, together with being definitive are so complete and concise that they suffice for all worldly and Deeni needs. Allaah Ta`ala, The Creator of Fitrat (inherent qualities) has kept the foundation and basis of Islaam on Fitrat. Regarding this, Allaah Ta`ala mentions in the Qur`aan Majeed: 



The true Deen (religion) is that one which operates on a definitive path chalked out by Allaah Ta`ala, and every true and proper Fitrat bows its head in acceptance to it. It is not something which is formulated (by man) and man has no intervention therein. A trait of a false and incorrect religion is that its basis is the results of whims, fancies and opinions. It has no truck or relation with Fitrat. It projects outer façade of attraction, whereas it is devoid of guidance. 

Who occupies the mantle of formulating laws and what are its qualifications? 

In proportion to how much knowledge a person has with regard to the future, to that level will he be in a position to make the most correct and applicable laws and constitution. Insofar as the means, experience, Qiyaas, hawaas (sensory perceptions), etc. of man attaining the knowledge of the future, is limited, incomplete and deficient. This is the reason why man will never be able to effectively formulate and prescribe laws and rules (whereby to live properly). Man’s weak efforts in this regard, where governments etc. are formulating constitutions and the like, need to be altered ever so often to accommodate many things, and it needs constant patching. This fact is being witnessed all the time, and will be until the Day of Qiyaamah. The formulation of every set of laws and constitution has some or other motive. The lawmaker, if he has any compassion and feelings for the subjects, who are going to follow this law, and if he is their true benefactor and places their needs before his own, then he has to formulate such laws, whereby the adherents will be benefited. In order to achieve such a feat, how much of reflection and research will have to be made! Only such a person will be able to formulate such laws which are beneficial and not in need of changing, who encompasses perfect knowledge and is most knowledgeable. He must be a genuine benefactor and merciful, who is free from any motive and not in need of anything. It is apparent that besides the Creator of the creation none other has this complete and total knowledge. None is more merciful than Ar-Rahmaan and it is no hidden matter that none is more independent than As-Samad. 
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