Bait-ul-Maal. Creation, Functions and Resources of Bait-ul-Maal - Essay Example

?Running Head: Bait-ul-Maal Bait-ul-Maal [Institute’s Bait-ul-Maal Introduction In specific, Bait-ul-Maal is the branch that handles the profits along with all other economical issues of the country (World Bank, pp. 11-13, 2003), to be in the power of the caliph or the viceroy, who is in charge for putting them in their authorized approaches of using for the advantage of the Muslim nation both in peace as well as during battle. The Islamic financial system is among the most autonomous and righteous systems in our society. The Holy Qur'an states this truth in Surah al-Hashr [59:7], "In order that it may not (merely) make a circuit between the wealthy among you." For that reason, the Islamic society focuses on the required circulation of wealth among all citizens and not just those who are affluent, as this may carets humiliation to the Muslim society and raise social class culture (Tamer, p. 102, 2005). Definition of Bait-ul-Maal Bait-ul-Maal is an Arabic expression, which means ‘House of wealth’ or ‘House of money’ (Ayub, pp. 23-25, 2008). Traditionally, it was a financial institution in charge for the management of taxes in Islamic nations, mainly during the early Islamic Caliphate. It provided as a noble reserve for the Caliphs and Sultans, controlling personal finances as well as government expenses. Additionally, it managed circulations of Zakat revenues for community efforts. Contemporary Islamic economists believe the institutional structure suitable for modern Islamic nations (USA International Business Publications, p. 187, 2009). Creation of Bait-ul-Maal The Muslims began establishing Bayt al-Mal from the time of Prophet Muhammad (PBUH). He (PBUH) is accustomed to choose the administrators as well as the commanders for the different areas. Each commander was in charge for gathering Zakah, Jizyah in addition to the fifths of the booty and Kharaj. Every now and then, the Prophet Muhammad (peace be upon him) inured to employ somebody in charge just for the financial dealings to gather the owing cash for the State together with, Kharaj, Jizyah, Tenths (Zakat on lands, assets and the fruits) and donations and give them to Bait-ul-Maal (Ayub, pp. 31-37, 2008). The Prophet Muhammad (peace be upon him) did the same with Mu`adh ibn Jabal (may Allah be pleased with him) when he sent him to Yemen to gather the funds of Zakat from its representatives and with `Ubaydah ibn al-Jarrah (may Allah be pleased with him) (Kettell, pp. 56-60, 2010) when he sent him to al-Bahrain to gather the Jizyah. The beginning of Bayt al-Mal from the time of Prophet Muhammad’s (PBUH) reign is an obvious proof on the accuracy of the Islamic financial structures since this early time. As a result, it is usual that Bayt al-Mal extends in accordance with the different ages (USA International Business Publications, p. 76, 2009). Functions of Bait-ul-Maal The authority of Bait-ul-Maal consists of the wealth due for Muslims as a group not possessed by one of them and the wealth used for the gain of Muslims. For that reason, Bait-ul-Maal is among the key establishments of the Islamic society as it is the single power entitled to paying money on the different Muslim benefit. It has the influence of a Ministry of Finance and a Central Bank during the present days (Tamer, p. 76, 2005).  Divisions in other Countries of Bait-ul-Maal During the reign of the Umayyad Caliphate, finances get better. The sum of money was very big without doubt, as it came from just one Muslim state, that is Egypt, let alone other finances that made their way to the Bayt al-Mal from other Islamic states (Kettell, pp. 56-60, 2010). There is no uncertainty that such enormous sum of funds accentuated the significance of the Bait-ul-Maal during the period of the Umayyads, and consequently the prominence of this caliphate. It is obvious from the report of Ibn `Abdul-Hakam that there was a middle management for the Bait-ul-Maal in the Islamic caliphate's centre of Damascus as well as sub-managements in every state independently. The finances collected in the Bait-ul-Maal were faultlessly spent on the services of every region. The additional funds sent to the central management in the caliphate centre (Iqbal et al, p. 99, 2010). It was the right of Muslims in various states under their law to point to the funds sent to the centre of operations of the caliphate. This took place in Egypt in the supremacy of Caliph Mu`awiyah (may Allah be pleased with him) (McKee, p. 76, 1999). Resources of the Bait-ul-Maal The resources of "Bait ul Maal" in Islamic State are divided into a variety of resources under the general Osoli rule: All monies are impermissible unless otherwise is mentioned by a Shari'e Article or text. This rule is concluded from the Hadith of Prophet Mohammad "PBUH" in his farewell speech, The last speech of Prophet Mohammad before he passed away [your bloods, your honour and monies are sacred to you ...]]. These resources are as follows: Zakat: It is one of the pillars of Islam and due until doomsday. Zakat is a known amount of money from rich people that shall be paid to poor people, which represents the finest image of social interdependence and Compassion and which is not found in previous or subsequent society. The monies which are subject to Zakat are divided into four sections: [1] Money Zakat "in cash" [2] Al-Saemah and cattles (Al-Saemah means the castles fed by natural Pasture which is not cultivated by human). [3] Zakat on crops and fruits [4] Zakat on ores and metals. This resource from the resources of "The Treasury" is distinct from the rest of the resources by identifying the way by which it is spent, which are mentioned in verse 60 of Al-Tawbah Surat. Khiraj: When the Muslims conquered the country of Iraq and defeated the Magi Persian State, as they also conquered Al-Sham (the area including Jordan, Palestine, Syria, and Lebanon) and Arabian Peninsula and expelled the Romans, many of the senior companions requested Caliph Omar Bin al-Khattab to divide the conquered lands on the conquerors as he divided the movable Spoils such as weapons and goods, but Omar decided that such lands shall be the propriety of all Muslims depending on the verses of Al-Fae'a in Holy Quran (Al-Fae'a = Monies taken from enemy without war). Al-Fae'a verse in Holy Quran is applied on all Muslims even in ages to come. The companions urged him to divide the lands but he refused. Abdul Rahman bin Auf supported him by the opinion, whereas Omar Rest assured for his opinion, which was the best idea for Islamic Nation, and he imposed a percentage of money that such lands shall pay each year what is known as Khiraj. Khiraj lands are divided into two types: 1- Lands which were forcibly conquered and their people stayed on such lands without entering in Islam, whereas they cultivate them for the State's need for their experience, so they pay the percentage of money imposed on them and they benefit the rest for their work in the ground. 2- Lands which were entered by Muslims amicably and without war, whereas Muslims agreed with its people to pay the amount of money and such lands shall stay under their possession and cannot be lost or taken by any third party. Khiraj is sometimes in the form of money or agricultural crops which was collected after the harvest every solar year, because agriculture is linked to Solar System and the Four Seasons. It is worth mentioning that there was an idea to ensure the continuity of Khiraj as an important resource in Islamic State that Khiraj should not be cancelled even if the owner entered in Islam. The book of "Al-Khiraj" written by "Judge Abu-Yousef" is considered as an important source about funds in the Islamic State which was written upon the request of Abbasid Khalifah (Harun al-Rashid), who wanted to adjust and manage the financial matters in his reign. Al-Oshoor (which means one tenth): Not all lands of the Islamic State are subject to (Khiraj percentage) but there was another type of lands that are not subject to Khiraj but only one tenth of its harvest is subject to be collected .This land is called "Ashria" that means "the lands of one tenth,” and which are divided into three types: A- Lands whose owners entered in Islam and remained in their lands without fighting or war. B- The lands that did not belong to any owner "its owner is not known" and distributed to the conquerors with the permission of the Imam. C – Wild lands conquered by the Muslims and they Reclaimed them. It is noted that it is not permissible to transfer the lands of one tenth “Oshoor lands” to a land of "Khiraj" and vice versa. Jizyah (Tribute): In Islam, and according to Islamic value, if Muslims desire to invade a country, they shall call its people to enter in Islam. If the people of that country did not desire to enter in Islam and desired to stay belonging to their religion they shall pay an amount of money known as " Jizyah" which means Tribute" to be protected by Muslims and to protect the State against any foreign enemy, whereas those people shall stay in their country and enjoy all their freedoms. This amount of money corresponds to Zakat imposed on Muslims. It is worth mentioning that this Tribute is not imposed on boys and women but only collected and imposed on men unless those men are poor, blind, poor disable, monks, old men who cannot work nor the patients who suffer Chronic diseases." Islamic State shall not impose any tribute on "Ahluthemmah" who entered in Islam. (Ahluthemmah= People of other religions live under the authority of Islamic State, when they enter in Islam, they shall not pay Tribute). The amount of such Tribute differs according to the case or the financial situation of the person. Abu Yousef, in his book mentioned that "Khiraj" is divided into three categories: 58 Dirham imposed on rich people, 24 imposed on Debtors and 12 imposed on the workers."Ahluthemma shall not be exempted from tribute unless they entered in Islam. The tribute is not of the innovations of Islam where it has been known in previous nations, whereas, Ancient Greeks imposed on the population of the coast of Asia in the fifth century BC a tax like Jizyah for protection from attacks by the Phoenicians, as it was also imposed by the Romans on the peoples under their authority followed by the Persians, and the tribute in the era of Prophet Muhammad and Abu Bakr was imposed on Jews and Christians. In the reign of Omar Bin Al-Khattab, he imposed the tribute on Magi pursuant to Abdul Rahman bin Auf, and in the reign of Abbasid Khalifah "Al-Ma'moun) he imposed the same on ‘Sabean’. Aoshoor Al-Tijarah (one tenth imposed on trade): This amount of money was not a resource of fund mentioned in Holy Quran, but it was brought in the era of Omar Bin al-Khattab "may Allah be pleased with him”. The reason was that Abu Musa al-Ash'ari wrote to him that the Muslim merchants came to the lands of the war whereas the people of that country imposed one tenth on their trades-lands of war means the lands occupied by non-Muslims, thus, Omar said: Take one tenth from them as they took from Muslim merchants. It was narrated that the people of the City 'Lampung' were Christians in the north Arabian Peninsula, they wrote to Omar a letter: Let us enter to your country to trade, whereas we will pay you one tenth of our profits. Omar consulted his companions in that and they all agreed. And if the merchant who enters the lands of the Islamic State was a Muslim, he shall be asked if he paid the "Zakat" or not. And his oath shall be accepted. "Aoshoor" differs from "Customs" where the tax is imposed on the goods whether the merchant is Muslim or not. These are the resources of fund of the treasury of Islamic State or what are called today as “Revenues. The way by which the funds were spent was as follows: First: the livelihood of governors, judges, state employees and workers in the public service including the Khalifah himself. Second: the salaries of soldiers, whereas in the era of prophet there were no specified salaries and there was no regular army, where they took their shares from the four fifth of "Ghana'em" and Khiraj. When the era of Abu Bakr began, he made all people equal, and then came Omar who divided the monies according to the priority. The classes or categories were as follows: 12000 Dirham for the wives of the Prophet "peace be upon him" and his uncle Abbas / 5000 for the people of Badr and Hassan and Hussein, 4000 for those who entered in Islam of Badr people but did not witness the Battle of Badr and Osama bin Zaid / 3000 for Abdullah bin Omar and some of "Muhajereen" immigrants and "Ansar" such as Umar ibn Abi Salamah / 2000 for "Muhajereen" and "Ansar" and / 800 dirham for the people of Mecca 400/300 to other people / 600 to 200 for the women of "Muhajereen" and "Ansar / 9000 for the Princes of the armies and readers, and so was the case, when many people left the need for the invasion and jihad, and they work in other occupations and professions, whereas, the State established the regular army who gained salaries at the beginning of every year. Third: Preparation of armies, the fighting equipments such as the weapons, ammunition, and horses and the like. Fourth: the establishment of public projects of bridges, dams, paving roads and public buildings, motels and mosques. Fifth: The expenses of social institutions such as hospitals, prisons and other facilities of the state. Sixth: Distribution of livelihood for the poor, orphans, widows and who has not a family supports him. From the a foregoing , we find that the accurate economic system of the Islamic State in its primary steps has a significant role in managing the sources of funds in Islamic State, whereas such amounts were collected and protected for emergency cases such as disasters , Disaster or famine, drought or severe and deadly epidemic. All rich Muslims were motivated to spend their monies against these cases and disasters without being forced to do so as Othman Bin Affan did in the time of famine in the era of Abu Bakr when he put his monies to serve and help Muslims, and another example when Abdulrahman Bin Auf did the same in the time of Omar Bin Al-Khattab and other examples through Islamic History. Comparison of Bait-ul-Maal and Islamic Financial System During the time of the Holy Prophet (PBUH), among Muslims, global trade was mainly encouraged by the pilgrimage to the Holy places of Arabia, in which a huge number of individuals used to gather every year from all over the world. A lot of these pilgrims performed their religious duties and simultaneously, marketed their local products along the way, coming back home with foreign merchandise on which they wished to have a fine revenue. This growth of trade used to result in the progress of banking functions, therefore, functions such as , borrowing, lending, safeguarding, guaranteeing, transferring and so on, were all utilized broadly in Arabia. Bait-ul-Maal was same as the state bank for the Muslims. This does not imply that it had all the tasks of the current day central bank, but that any of these tasks did exist in their initial types were carried out by Bait-ul-Maal. Management of Bait-ul-Maal was constantly under the control of one person. At the regional level, the supreme head of the Bait-ul-Maal was the governor of the region. He was in command of collecting and administrating the income. The central Bait-ul-Maal was located at the capital of the state so that it could be in the direct power of the Caliph (Qureshi, pp. 30-59, 1979). The Bait-ul-Maal is an Islamic notion was built on three key factors: 1. Wealth 2. Trust 3. Socio-economic fairness It is obvious that realization of socio-economic fairness is a direct aim of the Bait-ul-Maal. The Bait-ul-Maal accepts the task of the undertaking of the fiscal system, as well as welfare provisions of the society. As a result, the Bait-ul-Maal operates as a bank account matched with the job of scheduling, as well as allocating society's riches in the entire socio-economic and political arrangement of the state. For this reason, it is the economic pulse to the growth process of the state. During the early middle ages, the Islamic realm took an immense part in setting up the base of a financial golden era. The viewpoint of the Bait-ul-Maal is to create the foundation of public financing. The Bait-ul-Maal can as well handle national trading actions, organization of foreign exchange and global trade deals. In the modern framework, this function is done by the banking system that need not essentially be a separate unit of the financial system. Each person in the Islamic state is allowed to have a realistic level of comfort and the Islamic state must assure its civilians' clothing, accommodation, health amenities, learning prospects, and access to foodstuff at practical prices. Although the Bait-ul-Maal may not be directly engaged in the management of these beneficial provisions, its finances may add towards the provisions of this sort of issues (USA International Business Publications, p. 289, 2009). Conclusion In conclusion, the paper has discussed some of the major components of Bait-ul-Maal while relating it with the Islamic financial system. Particularly, the paper included deliberation on Bait-ul-Maal that is one of the imperative branches in the Islamic financial system concerned with dealing of profits in the system. The researcher put efforts to discuss the historical background of the same while including its key functions, as well as its existence in different countries around the globe. Furthermore, the researcher endeavored to discuss resources of Bait-ul-Maal. Additionally, in order to validate abovementioned discussion on Bait-ul-Maal, the paper will now include different Quranic verses to conclude the paper: “And if you do not do it. If you do not give up your demand for the interest due to you) then take notice of (a declaration of) war from Allah and His Messenger” (2: 279). “And whatever ye lay out as Riba, so that it may increase in the property of (other) people, it shall not increase with Allah; and whatever you give in charity, desiring Allah’s pleasure—it is these (persons) that shall get manifold” (30: 39). “Because of oppression the Jews inflicted, we made unlawful for them certain goods and wholesome (foods) which had been lawful for them, and because of their hindering many people from the way of God, And of their taking Riba though indeed they were forbidden it” (160: 161). “O ye who believe! Devour not Riba, doubled and multiplied, and be careful of (your duty to) Allah that ye may prosper” (3: 130). “O ye who believe! Be careful of (your duty to) Allah, and quit what remains of your practice of Riba, if ye are indeed believers” (2: 277). “And if ye do it not, take notice of war from Allah and His Messenger” (2: 278). “That they took riba, though they were forbidden and that they devoured men’s substance wrongfully – We have prepared for those among men who reject faith a grievous punishment” (4: 161). “The People of the Book ask you to bring down upon them a Book from the heaven” [Surah an-Nisaa 4: 153]. “Those who believe; fear Allah and give up what still remains of the riba if you are believers. But if you do not, then listen to the declaration of war from Allah and His Messenger. And if you repent, yours is your principal. Neither you wrong, nor be wronged” [Surah Al Baqarah 2: 278 - 279]. “And be fearful of a day when you shall be returned to Allah, then everybody shall be paid, in full, what he has earned. And they shall not be wronged" [Surah Al Baqarah 2: 281]. It is an understanding that the paper will be very beneficial in comprehensive understanding of the topic. References Abdul Rehman, Y. 2010. The Art of Islamic Banking and Finance: Tools and Techniques for Community-Based Banking. Wiley-Blackwell. Ayub, M. 2008. Understanding Islamic Finance. Wiley-Blackwell. Iqbal, Z. and Mirakhor A. 2006. An Introduction to Islamic Finance: Theory and Practice. Wiley-Blackwell. Iqbal, Z. Mirakhor, A. Krichenne, N. and Askari, H. 2010. The Stability of Islamic Finance: Creating a Resilient Financial Environment for a Secure Future. Wiley-Blackwell. Kettell, B. 2010. Frequently Asked Questions in Islamic Finance. Wiley. McKee, D. L. Garner, D. E. and AbuAmara, Y. 1999. Accounting Services, the Islamic Middle East, and the Global Economy. Quorum Books. Qureshi, Anwar Iqbal. 1979. The Economic and Social System of Islam. Islamic Book Service. Schaffer, Richard, Agusti, Filiberto, Earle, Bevereley. 2008. International Business Law and its Environment. Cengage Learning. Tamer, S. 2005. The Islamic Financial System: A Critical Analysis and Suggestions for Improving Its Efficiency. Peter Lang Publishing. USA International Business Publications. 2009. Islamic Financial System Handbook. USA International Business Publications. Venardos, A. M. 2010. Current Issues in Islamic Banking and Finance: Resilience and Stability in the Present System. World Scientific Publishing Company. World Bank. 2003. The World Bank Legal Review. World Bank Publications. Written paragraphs for your use: Money Lending in the Islamic Financial System Islamic banks lend their wealth to businesses by setting floating rate interest loans. The floating rate of interest is attached to the business's individual rate of return. As a result, the bank's revenue on the loan is equal to a particular percentage of the business's revenues. As soon as the principal total of the loan is paid back, the revenue sharing agreement is finished. This approach is called Musharaka (USA International Business Publications, p. 121, 2009). Further, Mudaraba is ‘venture capital funding of an entrepreneur’ (World Bank, pp. 56-69, 2003) who offers labour at the same time as financing is offered by the bank so that both revenue and risk are shared. This sort of participatory agreement between investment and labour is a sign of the Islamic vision that the user of loan should not tolerate all the threat of a collapse, resulting in form of an impartial circulation of revenue and not permitting provider of loan to take over the financial system. Islamically, Islamic banking is limited to satisfactory business deals, which eliminate those linking alcohol, red meat, betting, and so on. The main objective of this is to take part in only moral investing, and ethical buying. Theoretically, Islamic banking is a model of full reserve banking, with banks attaining a 100 percent reserve percentage. On the other hand, when it comes down to it, this is not the case, and no illustrations of 100 percent reserve banking are viewed (Abdul Rehman, p. 302, 2010). Islamic banks have developed lately within the Muslim world; although they are a very small share of the universal banking system. Micro lending organizations established by Muslims, particularly Grameen Bank, make use of usual lending traditions and are accepted by a number of Muslim states, particularly Bangladesh; however, some do not regard them as factual Islamic banking. Nonetheless, Muhammad Yunus, the creator of Grameen Bank (Kettell, pp. 79-88, 2010), as well as microfinance banking, along with other followers of microfinance, argue that the insufficiency of security and lack of too much interest within micro lending is steady with the Islamic ban of usury or riba (USA International Business Publications, p. 220, 2009). Money Instruments (Mudarabah Contract) In view of the surge of educational interest and study into the Islamic financial system from the mid of twentieth century - in general referred to as ‘Islamic economics’ - there seems to have been an agreement regarding which financial instrument should be implemented in the modernized Islamic financial system. For the most part, Islamic economists supported the utilization of partnership based financial instruments similar to Mudarabah and Musharaka agreements. Mudarabah is a type of Islamic equity based partnership agreement, usually identified as a revenue sharing agreement (Kettell, pp. 90-95, 2010). It is a partnership agreement where the capital supplier gives the capital as the administrator offers professional abilities to deal with the Mudarabah capital for that reason. In actual fact, the Mudarabah agreement could be classified into unlimited and limited Mudarabah agreements. It could entail a single tier or multi tiered Mudarabah agreements. The concerned parties in a Mudarabah agreement distribute the profit among them. On the other hand, only the funds provider will tolerate the failure in the situation of bad behaviour, abandon, or violate the partnership terms and circumstances by the administrator. For this reason, the factor of faith based on the fiduciary association among the parties is the groundwork of this agreement (Venardos, p. 287, 2010). The considerable application of a Mudarabah agreement could be attained in the arrangement of financial as well as administrative resources among the parties. Mudarabah is practically adaptive in the region of common or particular venture, project financing, bridge financing, working capital as well as small and medium enterprise financing, interbank venture, planned products, venture deposits, and so on. The capital as wealth assigned to the administrator encourages shared helpfulness between the partners and uses capital to dynamic use (USA International Business Publications, p. 291, 2009). The administrator in the position of trustee have to act in full reliability and is accepted to execute in the most excellent approach to attain the required plan of the capital supplier who has invested his wealth devoid of having any power in the management of the project. Interest Free Banking Interest free banking is an essential idea obtained from the Islamic type of banking. It functions with the primitive specialized as well as moral principles that rule out the “Muslims” from giving or receiving any type of interest. This surely does not indicate that the income producing actions or money rampant companies are not encouraged. All of these business types are significantly respected as far as they do not engage interest in any sort. There are a number of financial tools launched by the Islamic financial bodies to accomplish these company or revenue making constraints. For a clear understanding, they sort out equity financing rather than shedding light on debt financing. In addition, as a substitute of fixed interest rates on the savings account, these interest free banks offer a small fraction of return on deposits on a yearly basis (Kettell, p. 322, 2010). Evidence related to Interest from Quranic Verses & Islamic Scholars The paper will now include few verses from the Holy Quran, as well as statements of Islamic scholars regarding Interest & its rates that will enhance the understanding of abovementioned discussion. “And if you do not do it. If you do not give up your demand for the interest due to you) then take notice of (a declaration of) war from Allah and His Messenger” (2: 279). “And whatever ye lay out as Riba, so that it may increase in the property of (other) people, it shall not increase with Allah; and whatever you give in charity, desiring Allah’s pleasure—it is these (persons) that shall get manifold” (30: 39). “Because of oppression the Jews inflicted, we made unlawful for them certain goods and wholesome (foods) which had been lawful for them, and because of their hindering many people from the way of God, And of their taking Riba though indeed they were forbidden it” (160: 161). “O ye who believe! Devour not Riba, doubled and multiplied, and be careful of (your duty to) Allah that ye may prosper” (3: 130). “Those who eat Riba (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitan (Satan) leading him to insanity. That is because they say: ‘Trading is only like Riba (usury)’, whereas Allah has permitted trading and forbidden Riba (usury). So whosoever receives an admonition from his Lord and stops eating Riba (usury) shall not be punished for the past; his case is for Allah (to judge); but whoever returns (to Riba (usury)), such are the dwellers of the Fire - they will abide therein” (2: 275). “Allah will destroy (demolish) Riba, but will give increase for acts of charity” (2: 276). “O ye who believe! Be careful of (your duty to) Allah, and quit what remains of your practice of Riba, if ye are indeed believers” (2: 277). “And if ye do it not, take notice of war from Allah and His Messenger” (2: 278). “That they took riba, though they were forbidden and that they devoured men’s substance wrongfully – We have prepared for those among men who reject faith a grievous punishment” (4: 161). “The People of the Book ask you to bring down upon them a Book from the heaven” [Surah an-Nisaa 4: 153]. “Those who believe; fear Allah and give up what still remains of the riba if you are believers. But if you do not, then listen to the declaration of war from Allah and His Messenger. And if you repent, yours is your principal. Neither you wrong, nor be wronged” [Surah Al Baqarah 2: 278 - 279]. “And be fearful of a day when you shall be returned to Allah, then everybody shall be paid, in full, what he has earned. And they shall not be wronged" [Surah Al Baqarah 2: 281]. “And the riba known to and practiced by the Arabs was that they used to advance loan in the form of Dirham (silver coin) or Dinar (gold coin) for a certain term with an agreed increase on the amount of the principal advanced” (Schaffer et al, pp. 79, 2008) Imam Fakhruddin Al Razi stated, “As for the riba An-Nasiah, it was a transaction well-known and recognized in the days of Jahiliyya i.e. they used to give money with a condition that they will charge a particular amount monthly and the principal will remain due as it is. Then on the maturity date they demanded the debtor to pay the principal. If he could not pay, they would increase the term and the payable amount. So it was the riba practiced by the people of Jahiliyya” (Qureshi, pp. 79-85, 1979). “Gold for gold, silver for silver, wheat for wheat, barley for barley, date for date, salt for salt, must be equal on both sides and hand to hand. Whoever pays more or demands more (on either side) indulges in Riba” (World Bank, pp. 405, 2003). Read More