Law of Borrowing Money at Banks in Islam
Who does never borrow money? Of course, this is a normal thing for people who are less material or not. Treasure in Islam is an important part of lives because human can do activities, charity and carry out the purpose of their lives with their treasure. Sometimes every living person needs a loan and help to provide his needs. Needs can be primary, secondary or tertiary.
Of course, The upper class are very often borrow money that could be for tertiary needs or develop their business and capital. While the lower class borrow money to provide their primary needs, start from food, health needs, education or other household needs. For that, every person is needed to help each other and away from the arrogant that is not care with anything. (Allah SWT hates arrogant).
Islam does not prohibit the borrowing money (debt). Even Islam allow it, as long as it is not usury and contradictory with the Islamic foundations in the pillars of Islam and the pillars of faith. The rule of Islam is no harmful thing or even plunge us. For that the benefits of faith in Allah SWT, Islam arranges the details of economic issues. In this case, for the example are mawaris problem in Islam (Family property) and interest bank in Islam.
However, the development in this era is growing a discussion about the law of borrowing money through banks. Some opinions said that that thing is haram because it is usury.
To more understand it, here are two opinions that crossed about the law of borrowing money in the bank.
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Types of Bank
Before knowing more about the different opinions of borrowing money in the bank, we should know first about the existing bank types. Commonly, Muslims divide it into two types, they are sharia banks and conventional banks.
- Conventional Bank
Conventional bank is a bank that use general economic process as its service system. Commonly, conventional banks use interest systems and prioritize profits. The determination of interest and another terms are made when the agreement were mare with a profit basic. The percentage base on the amount of money or capital that was lent. The existence of bank interest, must be paid without looking the profit or loss of that customer. However, interest payments do not increase even the amount of profit doubled (interest fixed).
- Sharia Bank
Sharia bank is a bank that use the rules or sharia of Islam in its application. Sharia banks do not use interest as conventional banks. The system of sharia bank is a partner or corporation, while the amount is made at the time of contract by referring to the possibility of profit and loss. If there is a loss, then that loss will be shared together by both parties. While profit sharing will be increase according to income increase.
Here is an explanation about the law of borrowing money at banks :
The opinions that allowed to borrow money in the conventional banks
- Rasyid Ridha
Rasyid Ridha is one of ulama that brought the spirit of Islamic renewal in modern era. He expressed his opinion about the bank interest in Conventional Banks. He said that the word Al-Riba in Q.S. Ali Imran verse 130 is an usury or additional multiplied or adh’afan mudha’afah.
Riba in the period of decline Quran is an excess that was collected with the amount of debt and it contains the elements of persecution and oppression. It is not just an excess or increase the amount of debt that was charged to the debtor.
- M Quraish Shihab
Quraish Shihab is one of ulama that supported the mind of Rasyid Ridha. He said that the bank interest in Conventional Banks is not same as Riba. For that, he explained that this thing related to Q.S. Al-Baqarah verse 278 along with the historical context when that verse id descended.
The sociological background can become causes the down of usury prohibition in Quran. One of those is the habit of jahiliyyah people. They redefined the repayment of principal that was lent to the debtor.
- Umar Shihab
Prof. Dr. H. Umar Shihab in his book The law of Islam and The Mind Transformation explained, the bank interest that was collected and given to customers is much smaller than the amount of interest or riba at jahiliyyah period. Whereas, in the time of the Prophet, The person who gave a loan and levied usury to earn much profits because he has doubled the payment.
If it was viewed in this time, we do not see the same thing, but the profits happen on both sides, between the borrower and the lender or the creditor and the debtor. Because of that, the bank interest can not be forbidden because it is different with the praxis of riba in the jahilliyah era. While Umar Shihab suggests that the ban interest is analogized as trading.
From that thing, some ulama agreed that the bank interest at this time is not same as riba. They also did ijtihad that the bank interest in Conventional Banks is a normal excess and it is according to the current economic law.
- According to General Opinions
We can see an interest that was charged to customers, has function for payment services such as ATM card, ATM machines, other banking services, banking teller services, the flow of inflation, and other conditions. So, if there was a bank interest, a bank will lose money.
And even if there was an inflation, then our money will be safe because there are interests that accompany our savings. This becomes a consequence of technology development, so Islam in the legal side will surely follow it.
For that, according to some ulama, the bank interest is not riba and borrowing in the bank is not forbidden. Including the law of working in a conventional bank for Muslims is not prohibited, while there is no rule of work that violates the substance and basic principle of Islam. For example, open aurat, do fraud, extortion, and others.
The opinions that did not allow to borrow money in the conventional banks
The difference of opinions or controversy about riba by ulama is caused by the difference of understanding the purpose or illat that was in verses Quran about Riba and the issue of dangerous debt through conventional banks. You may also read law of not paying debt in Islam.
Here is one of content from Majma’ Al’Buhuts Al-Islami, in his second congress, Cairo, 1965, which became a reference of ulama to establish the haram of borrowing money in Conventional Banks. “Interest from debt transactions, all of which are illegitimate usury. It makes no difference, whether it is debt fro consumptive or debt for productive activities. Because the arguments of Quran and Sunnah, all proclaim haram expressly both types of usury from that debt.” (Fawaidul Bunuk Hiyar Riba, Hal. 130)
From the opinions of classical ulama and ulama who are oriented on the text method, then it is gotten that the law of borrowing money at banks in Islam is haram. While anything that was done in Conventional Banks without Sharia is haram.
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