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Islamic credit cards and loans ?
12-08-2005, 05:48 PM
Post: #1
Islamic credit cards and loans ?
I live in saudi arabia. some of banks here are issuing islamic credit cards and loans. I am not convinced so far about the legitimacy of these cards & loans therefore i want to raise this question here to figure out if transaction done by these procedures are really islamic or not.



down are some links to borrowing procedures


http//www.alahli.com/pb/borrowing/tayseer.jsp

http//www.anb.com.sa/almubarak_card.asp
http//www.anb.com.sa/loan_mubarak.asp
http//www.anb.com.sa/loan_tawaruq.asp

http//www.alahli.com/pb/borrowing/yatiek.htm
http//www.alahli.com/pb/borrowing/murabaha.jsp


Can anyone have a look on these links and give your openion


Jaza'k Allah
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12-09-2005, 05:45 AM
Post: #2
 
Based on my understanding, the Alahli card, any purchase that you make on the card from the market, will in substance be purchased by the Bank say for $50, the bank will then sell it back to you for a higher price of say $55 (based on the fact that it is to be paid on so and so date). That in essence would be a purchase and sell agreement between you and the bank and presumebly Islamic.

But what it does not say is how the profit element would work if you do not make a payment at the designated date, since this could kick in an interest element.

There is as to my knowledge an incomplete consensus on this form of sharia products.

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12-09-2005, 04:48 PM
Post: #3
 
Pracs you are correct the profit elemnet due to non payment shall be credited to an oter account called as Account for Charitable purposes. This amount should not be used by the bank and shall not form part of bank's income. Can be used only for charitable purpose.

As per First Islamic Financial Accounting Standard issued by SECP and ICAP.
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12-27-2005, 08:32 PM
Post: #4
 
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Alahli card, any purchase that you make on the card from the market, will in substance be purchased by the Bank say for $50, the bank will then sell it back to you for a higher price of say $55 (based on the fact that it is to be paid on so and so date). That in essence would be a purchase and sell agreement between you and the bank and presumebly Islamic.

I have also seen products being sold this way. I believe this is incorrect application of Islamic loans/cr.cards

What is being said in reference to ICAP standard (interest is kept in trust of charitable purposes) is in line with the solutions provided by many scholars, but

One can apply whatever solution naming it to be Sharia compliant to suit the needs of market but the reality is that these solutions cannot be applied in Pakistan and certainly not in UK. Attempts to apply piece meal islamic solutions in itself is non islamic. If anybody is interested in understanding my viewpoint here is an example (precis only)

A woman named Fatima from an influential tribe was brought to Hazoor (PBUH) charged with theft. Hazoor PBUH resolved to punishment. People around him asked for diplomacy due to the influence her tribe had but Hazoor PBUH ignored the call. Years later another woman, incidently named Fatima again, was brought to Hazrat Umer charged with theft. Theft was proven but Hazrat Umer decided not to punish her and let her go free. People around him criticised his actions and referred to the case by Hazoor PBUH.

Huzrar umer replied to the criticism by saying that in the time of Hazoor PBUH, state had fulfilled its duties towards the masses and in so doing if someone carried out theft, islamic regulations (of punishment) applied to him. In contrast I have failed in my duties towards the people as there is food shortage and people dont have enough to eat and in so happening if someone has carried out theft, islamic regulations of punishment does not apply as the state has failed in its duty so she is to go free. This case is good in understanding the interactions of social needs and economic pressures, but ends to tell us that islamic economic system is not a one way street where people are exptected to comply only. Its a dual carriage way, people are expected to comply when their social and economic needs are addressed and guranteed in accordance to the provisions of the same system. Whats happening now is that we are trying to find the solution for the part which hurts the financial instutions profitability most.

This is just one example out of many but my limited knowledge and understanding guides me to the conclusion that we need to make informed decisions on the basis of changing needs of our society but with in the framework of Islam. The introduction of so called islamic mortgages and islamic credit cards does not appear to me to be in line with Islams economic model.
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