Muslim Australians - Religion Cultural Diversity Resource Manual
http://www.islamicglobe.com
http://www.islamicglobe.com
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
ISLAMIC BANKING<br />
In the time of the Prophet, the Arabs used to engage in a practice called<br />
riba, which involved lending a person some goods or money. If they<br />
could not repay the loan after a certain amount of time, then they would<br />
end up having to repay much more, sometimes double the amount or over.<br />
The Qur’an prohibited the practice of riba saying: ‘O ye who believe! Devour<br />
not riba (usury), doubled and multiplied; but fear God; that ye may [really]<br />
prosper’ (3:130). Because of the prohibition of riba, many <strong>Muslim</strong>s view<br />
Western banking practices involving interest as being riba-based and therefore<br />
forbidden to <strong>Muslim</strong>s. However, some <strong>Muslim</strong>s argue that interest and riba are<br />
two different things and that riba was prohibited because it was unjust. As such,<br />
in their view, if interest is not unjust it does not need to be prohibited.<br />
Rather than taking and paying<br />
interest, Islamic banks offer a<br />
partnership arrangement so that<br />
customers share in profits made<br />
For those <strong>Muslim</strong>s who do not wish<br />
to take or pay interest, an alternative,<br />
Islamic banking, has been set up<br />
in many places around the world,<br />
including in Australia, which is home<br />
to the <strong>Muslim</strong> Community<br />
Co-operative Australia (MCCA). 32<br />
The principles of Islamic banking are<br />
as follows: 33<br />
» Only ethical investments must<br />
be made. Islamic banks will not<br />
invest in companies that trade in<br />
products such as pork, alcohol,<br />
gambling, and pornography.<br />
» Rather than taking and paying<br />
interest, Islamic banks offer a<br />
partnership arrangement so that<br />
customers share in profits made,<br />
but also take a share of the risk if<br />
there is no profit or an investment<br />
fails. This is a bit like having<br />
shares in a company.<br />
» Customers can arrange with the<br />
bank to receive finance for buying<br />
major things like cars and houses.<br />
Both the customer and bank agree<br />
to a fixed amount which will be<br />
paid over time including a known<br />
amount of profit for the bank.<br />
» The bank and its partners have<br />
a responsibility to contribute<br />
to social development through<br />
Islamic investments and the<br />
paying of zakat.<br />
» The bank usually has a<br />
supervisory person or board to<br />
ensure that the bank is acting<br />
in accordance with Islamic<br />
principles and ethics.<br />
32<br />
See http://www.mcca.com.au/<br />
33<br />
See http://www.islamicbankingonline.com/ovrv3.htm<br />
58 <strong>Muslim</strong> <strong>Australians</strong>:THEIR BELIEFS, PRACTICES AND INSTITUTIONS