Question
I was approached by two Muslim businessmen to join up with them and others in a partnership to offer genuine Islamic finance and Islamic loans. The plan works like this: The two gentlemen will offer finance and loans on a private basis to Muslims by advancing a loan/ finance in rands and taking some asset as a security. The debtor is required to pay back in a mutually agreed upon number of dollars which significantly exceed the market value of the rands loaned. The amount is specified at the time of the deal. At the time of payment if the debtor is not able to acquire dollars he is free to pay back the market rate in rands on the date of payment.
Answer
The deal described by you is plain Riba. It is stupid, to say the very least, to describe this plan as 'Islamic finace'. One currency may be sold for another currency, but it must be a cash deal and both parties must compulsorily take possession. Any mutually arranged rate may be fixed. There is no incumbency to accept the bank rate.
- Source
- themajlis.co.za
- Published in
- The Majlis Vol 25 No 09
- PDF page
- 9
Appears under Na Na Nal Nal Nas N55 Wa Wa Wat (approximate).