BY PMA RASHEED August 13, 2011
Dubai: People’s greed to amass wealth and resorting to Ribaa (transactions with usury/interest) are the root causes of the current global credit crunch, according an eminent Muslim scholar and community leader from India.
Referring to the second world financial crisis, All India Sunni Jam’iathul Ulama General Secretary, Sheikh Aboobacker Ahmed says the crisis can be resolved by implementing Islamic finance principles.
He also points out that the non-distribution of wealth for social welfare is the spark that has caused waves of violence, political unrest, riots and racist movements across Western countries.
Sheikh Aboobacker, who led India’s contemporary Muslim multitude from a chaotic and apprehensive stage to one with confidence and hope, is currently in town as the guest of Dubai Islamic Affairs Department during the Holy Month of Ramadan.
“We should take efforts to bring followers of different cultures and religions together, and alleviate the suffering of the people around the world,” he said, noting that the “fiscal firestorm” that the world has been witnessing is something that has already been mentioned in religious texts, including the Holy Quran.
“The main cause of this global financial crisis has been usury or interest. The Holy Quran guided us to stay away from Riba (interest), a curse that is enough to jeopardise domestic, national and international peace and financial stability.”
“Living beyond our means, taking loans on interest, and excessive or irresponsible expansion of credit over a long period as well as gambling are the significant causes of this crisis, according to Islamic perspectives. Islam discourages living beyond means that leads to excessive borrowing,” he explained.
“Islam promotes loans and other banking tools, but without any interest. Selling or buying goods and services based on a mechanism that is supported by interest is not permitted in Islam. Islamic finance concepts, however, still have less presence in the global scenario.”
He also noted, “Islamic banking and insurance are still in their infancy and command a very small proportion of international finance, albeit many international banks have launched Islamic banking sections.”
“The Islamic banking system should be genuine, reflecting the ethics of Islamic teachings for welfare of the society. The Islamic banking system should focus on productive investment, not for speculation and gambling.”
“The Islamic financial system is gradually gaining momentum in Muslim countries, as visionary leaders initiate solid programmes to realise Islamic principles in the new world and enable stability of the global system,” Sheikh Abooobacker added.
According to him, society has progressed in every walk of life, as much as the religious values that are practiced. “Allah will destroy Riba (usury) and will give increase for Sadaqat (deeds of charity and social welfare),” he said, citing the Quaran.
Islamic principles are against unnecessary and wasteful spending to increase saving and investment. The Prophet (peace be upon him) discouraged borrowing as it can be a cause of concern for individuals throughout their lives.