Is Lending Money for Profit Compliant with Sharia Finance?

One of biggest population of OFW’s are in the Middle East and other Islamic countries. That’s why our heroes should at least be familiar with Islam not only as a religion but as a way of life that embraces various social, economic, and political subjects.

Muslims live in accordance with the Islamic Law called sharia which is taken from Quran. Every detail and matters addressed by sharia is linked with different issues which means anything about money is related to religion, morals, politics, and culture.

Islamic finance, therefore, runs in accordance with sharia. Islamic finance is not new. It’s as old as Islam itself. It is similar to conventional financial systems as they also have banks, stock market, mutual funds, investment firms, and insurance companies but they are governed both by Islamic laws and by the existing conventional finance industry regulations.

The main concept of Islamic finance is the fact that Allah is the owner of all wealth in the world and the human beings are just entrusted with such.

Basically, that concept is also present in the Christian and Jewish beliefs. However, in Islam, a Muslim is forbidden to lend money or receive money from someone with interest (called riba).

One can not make money from money. He can only do such through acceptable and legal trade and investments. Profits from these must also be used in a productive way.

Becoming a Loan Shark is Forbidden in Sharia Finance

It is common to see some OFW’s lending money to fellow OFW’s to earn money. They impose mostly 20% interest and gets paid in installment basis.

If you are caught by a religious police in Saudi Arabia or other Middle Eastern states with strict sharia imposition doing this, you might see yourself spending sometime in jail coupled with some daily whips on your fragile body.

One of the key purposes for imposing these laws and ethics is to promote social justice. One can not separate Islam and social justice as this is the main concept of the Islamic finance industry.

OFW’s must be aware that although most of them are non-Muslims, they should always respect the customs and beliefs of the people and the society that gave them their source of living by following simple rules and regulations.

There are many other creative and legitimate ways to earn money while you are abroad. Not only through 5/6 schemes and becoming loan sharks even to fellow OFW’s.

Let’s hear from a respected Islamic religious speaker about Riba or interest.

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P.S. 1.The OFW UsapangPiso Forum in partnership with Colayco Foundation for Education will be conducting a webinar featuring Mr. Armand Bengco who will talk about proper money management – spending, saving, planning & investing entitled “Pisobilities: Wealth Within Your Reach” on April 19, 2013 at 6PM (Philippine time). Register here now! 

P.S. 2. For those who will not make it to the Money By The Book event of OFW UsapangPiso group, you may attend the Personal Finance for Every Juan seminar sponsored by The Global Filipino Investors Singapore. You may visit their Facebook event page for more details.

P.S. 3. Bro. Bo Sanchez has appointed me as a coach for our young and new investors at the TrulyRichClub social site. It’s a fun, learning family with the purpose of “helping good people become rich”. I’m inviting you to join the TrulyRichClub too and email me at burngutierrezblog@yahoo.com.ph if you have any questions. Click here to join!

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Photo credit: smonkingmonkey1