Understanding Islamic Finance - Doha Academy of Tertiary Studies

160 Understanding Islamic Financeof all such commodities that can be sold except human beings. 26 However, the amount andvalue of loan should be known without any doubt. 27According to the Maliki school, Qard is a loan of something “valuable” granted onlyas a favour and not by way of ‘Āriyah 28 or Hibah (gift) but to recover it in the form inwhich it was granted. The word “valuable” is specifically used to exclude that which isnot valuable from the definition of Qard, and the word “favour” to show that the benefit isfor the borrower alone and not for the lender. Under this definition, Qard may consist ofanything that is valuable, be it merchandise, animals or similars of weight and that can bethe subject of Salam. 297.7 REPAYMENT OF THE PRINCIPAL ONLYLending/borrowing is, indeed, unavoidable in human life, and, therefore, is permissible inIslam. Had it not been permissible, the holy Prophet would never have set an example ofa borrower both for the Islamic State and for private purposes. However, borrowing shouldnot be taken as a means for lavish consumption. In that sense, Islam discourages the actof borrowing. 30 Besides, it has to be borne in mind that a loan must be paid. Debt is notforgiven, even for martyrs. Further, a loan whereby something in excess of the principal isexacted becomes unlawful, as it amounts to Riba. There is no exemption on the basis thata Qard transaction has taken place between a Muslim and a non-Muslim, an employer andan employee or a State and the people. 31 Prohibition of Riba means that money can be lentwithout any expectation of return over the amount of the principal, and as such, every loanthat draws forth or stipulates profit is unlawful.The holy Prophet (pbuh) has said that after making a loan, the creditor must even refrainfrom accepting a present from the borrower unless exchange of such presents was in practicebetween the borrower and the lender before the advancement of the loan. 32 However, someindirect benefits that have become customary that do not involve any cost for the borrowerhave been considered permissible. For example, jurists see no harm if it is agreed betweenthe parties that the debt will be paid in some other country if it is in the interests of bothparties. Ibn Zubair, for instance, used to accept sums of money from the inhabitants ofMakkah to be paid in Iraq through drafts drawn upon his brother Mus‘ab, who lived in Iraq.To this, Ibn Abbas and Ali (Gbpwth) did not make any objection. 337.8 TIME VALUE OF MONEY IN LOANS AND DEBTSWhile in trading of goods it is permitted that the credit price of a commodity be differentfrom its cash price, no value can be assigned to the time given for payment of a receivable26 Muslim with annotation by Nawavi, 1981/1401, 11, pp. 36–38. For details see also Zuhayli, 1985, 4, p. 723.27 Ibn Hazm, 1988, No. 1203, p. 356; Al Jaziri, 1973, pp. 680–692.28 ‘Āriyah means gratuitous loan of nonconsumable goods, exactly the same commodity has to be returned after using for the timegiven.29 Al Jaziri, 1973, p. 678; Ibn Hazm, 1988, 6, pp. 355–357.30 The holy Prophet used to pray to Allah Almighty not to be suppressed under debt. (Ibn Hajar, 5, p. 60). See also Waliullah,1353 H, p. 56.31 Ibn Hazm, 1988, 7, p. 467, No. 1506.32 Ibn Qudama, 1367 AH, 4, pp. 319–321.33 Ibid.