02-20-2009, 06:18 PM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by GHK</i>
<br />AOA all those r out there n those who ain't...
one aspect that I know, which I know that is not comprehensive, is that as per Islamic guidlines one shud accept all risks n rewards. now, in lending the money one takes back original amount plus premium called interest. that interest covers risk for currency devaluation but not solely that risk it also covers time premium. so the lender is not accepting risks of lending the money i.e. in the interst rate (s)he is covering him/herself from every risk. now if one lets out his property on rent, although he takes premium in the form of rentals but he receives his property at market value.
i would like some1... ne1 correcting me where i m wrong but thats my opinion, hey evry1 has right to xprss opinion, rite
"Do not confuse excellence withh perfection. Excellence, I can work for, perfection..., it's God's business."
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Aoa
You are mixing two un-related concepts in quite an interesting way.
Let me answer your query by using your own 'aspect which you know'.
The lender and the debtor, both should accept all risks and rewards.
Lenders Risk is that he may not recieve his money back, this will be due to the fact that the debtor may suffer a loss in his business and go bankrupt. The possible attraction for lender is that the debtor may use his money and derive some income by combining borrowed money with his efforts. There are two choices for the Lender
1. To leave the risk and reward of profit/loss to the debtor and get his money back at stipulated time. (which he will certainly get back in a Pure Islamic Society).
2. He may choose to strike an agreement with lender and share profit/loss to him, thus he will be contributing to loss and getting benefit from the profit in the correct way.
The debtor's risk is that he may suffer a loss but he will still have to pay back the debt. His reward is that when he combines his efforts with the borrowed money, he may get profit.
The risk/reward being covered by Interest is not based on "Adal". Suppose the creditor is charging 10% interest rate and the debtor gets only 5% profit out of his business. Whats the excess 5% for?
Similarly if creditor is charging 10% interest rate and the inflation is only 6%. Whas the excess 4% for?
In order to cover devaluation of currency. Loans should be forwarded based on "Value of a commodity" e.g. Money worth 1,000 Litres of Petrol or 10 KG of Gold can be lent and on the payment date the amount which can buy 1,000 Lites of Petrol/ 10 KG of Gold as at the return date should be paid back.
The risk/reward being covered by Interest is a pure capitalistic phenomenon. You are talking about this because the economics which you have been tought has its foundation laid upon this concept.
Hope This answers your question )
<br />AOA all those r out there n those who ain't...
one aspect that I know, which I know that is not comprehensive, is that as per Islamic guidlines one shud accept all risks n rewards. now, in lending the money one takes back original amount plus premium called interest. that interest covers risk for currency devaluation but not solely that risk it also covers time premium. so the lender is not accepting risks of lending the money i.e. in the interst rate (s)he is covering him/herself from every risk. now if one lets out his property on rent, although he takes premium in the form of rentals but he receives his property at market value.
i would like some1... ne1 correcting me where i m wrong but thats my opinion, hey evry1 has right to xprss opinion, rite
"Do not confuse excellence withh perfection. Excellence, I can work for, perfection..., it's God's business."
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Aoa
You are mixing two un-related concepts in quite an interesting way.
Let me answer your query by using your own 'aspect which you know'.
The lender and the debtor, both should accept all risks and rewards.
Lenders Risk is that he may not recieve his money back, this will be due to the fact that the debtor may suffer a loss in his business and go bankrupt. The possible attraction for lender is that the debtor may use his money and derive some income by combining borrowed money with his efforts. There are two choices for the Lender
1. To leave the risk and reward of profit/loss to the debtor and get his money back at stipulated time. (which he will certainly get back in a Pure Islamic Society).
2. He may choose to strike an agreement with lender and share profit/loss to him, thus he will be contributing to loss and getting benefit from the profit in the correct way.
The debtor's risk is that he may suffer a loss but he will still have to pay back the debt. His reward is that when he combines his efforts with the borrowed money, he may get profit.
The risk/reward being covered by Interest is not based on "Adal". Suppose the creditor is charging 10% interest rate and the debtor gets only 5% profit out of his business. Whats the excess 5% for?
Similarly if creditor is charging 10% interest rate and the inflation is only 6%. Whas the excess 4% for?
In order to cover devaluation of currency. Loans should be forwarded based on "Value of a commodity" e.g. Money worth 1,000 Litres of Petrol or 10 KG of Gold can be lent and on the payment date the amount which can buy 1,000 Lites of Petrol/ 10 KG of Gold as at the return date should be paid back.
The risk/reward being covered by Interest is a pure capitalistic phenomenon. You are talking about this because the economics which you have been tought has its foundation laid upon this concept.
Hope This answers your question )