Thursday, July 24, 2008

Rib¯a includes the exchange of a debt with a debt

It is related from M¯us¯a ibn ‘Ubaydah from ‘Abd All¯ah ibn D¯in¯ar from Ibn ‘Umar from the Prophet (God’s peace and blessings be upon him) that he proscribed the exchange of a k¯al¯i’ (debt) for a k¯al¯i’ (debt), while in some versions the words are, “exchange of a dayn (debt) for a dayn (debt),” but they are both the same. This is, however, overlooked up to the session of the contract, because it is permitted to o?er dirhams by way of salam for the delayed delivery of wheat when both are debts. However, if they part without taking possession of the dirhams the contract is void. Likewise, the sale of dirhams for d¯in¯ars is permitted, when both are debts, but if they part before possession the contract is void.

Prohibition of rib¯a implied in the verse

If a man who owes one thousand dirhams after a period negotiates an early payment at five hundred (instead of one thousand), it is not permitted. It is related by Sufy¯an from Humayd from Maysarah, who said, “I asked Ibn ‘Umar, if a man owes me a debt after a period, and I tell him to pay it sooner for which I will lessen the amount he owes.” He said, “This is rib¯a.” A proscription about this is narrated through Zayd ibn Th¯abit as well about this. This is also the opinion of Sa‘¯id ibn Jubayr, al-Sha‘b¯i, al-Hakam, and it is the opinion of our (Hanaf¯i) jurists as well as that of the jurists generally. Ibn ‘Abb¯as and Ibr¯ah¯im al-Nakha‘¯i have said that there is nothing wrong with this.

The evidences that indicate the invalidity of this are two. First, is its designation as rib¯a by Ibn ‘Umar, and we have explained that legal terms are formed in response to queries. Second, it is well known that rib¯a al-j¯ahil¯iyah was through a loan for a period with a stipulated excess. The excess here was in lieu of the period. All¯ah annulled it and declared it prohibited and said, “But if ye turn back ye shall have your capital sums: deal not unjustly and ye shall not be dealt with unjustly,”( Qur’¯an 2 : 279 ) and He also said, “Give up what remains of your demand for usury, if ye are indeed believers,” (Qur’¯an 2 : 278) as a precaution against the taking of compensation in lieu of the period. Thus, if a person owed a thousand dirhams after a period and the other was prepared to give a discount for payment before the end of the period, then, this was the rib¯a that was stated in the verse by All¯ah through the prohibition. There is no dispute that if he was owed one thousand dirhams to be paid immediately and it was said to him, “Give me a further period and I will increase a hundred dirhams,” this would be prohibited, because the hundred would be in lieu of the increased period. Likewise, the discount carries a meaning of excess when it is in lieu of a period. This is the principle in the prohibition of the permissibility of taking counter-values in lieu of periods. It is for this reason that Ab¯u Han¯ifah said in the case of the person who gave cloth to the tailor saying, “If you stitch it today you get a dirham, but if you stich it tomorrow you get one-half dirham,” that the second condition is void and if he does stitch it he will have a reasonable wage. The reason is that the period has been equated with the counter-value when the work in both periods has the same nature. He, therefore, did not permit it, because it is like the delayed sale of the nature that we have elaborated. As for those among the ancestors who permitted the transaction based upon “hasten the payment and I will reduce the amount,” they probably did so because it had not been stipulated as a condition, that is, the discount

was offered without any condition being stipulated and the other party also hastened the payment without any condition.

Excerpt on Rib¯a from Ahk¯am al-Qur’¯an

All¯ah, the Exalted, said:

”Those who devour usury will not stand except as stands one whom the Evil One by his touch hath driven to madness. That is because they say: “Trade is like usury,” but Allah hath permitted trade and forbidden usury.” (Qur’¯an 2 : 275.)

Ab¯u Bakr (al-Jass¯as) said: The root meaning of al-rib¯a in the language is excess from which is also derived the word r¯abiyah, because of the excess compared to the land around it; so also rabwah, which is raised land. From the same meaning is the usage “arb¯a so and so over so and so,” when someone shows an excess in word and deed over another.

In the law (shar‘), it is applied to meanings in which it was not used in the language. This is indicated by the fact that the Prophet (God’s peace and blessings be upon him) termed nas¯a’ as rib¯a in the tradition of Us¯amah ibn Zayd. He said, “Verily, rib¯a is in nas¯i’ah.” ‘Umar ibn al-Khatt¯ab, may All¯ah be pleased with him, said that rib¯a has different forms and out of these salam in teeth, that is, in animals, is not concealed. ‘Umar also said that the verse of rib¯a was one of the last to be revealed, and the Prophet (God’s peace and blessings be upon him) was taken away before he could elaborate the details for us, therefore, give up rib¯a and the suspicion of rib¯a. It is established from this that rib¯a became a technical term, for had it been governed by its original meaning in the language, it would not have been obscure for ‘Umar, who was fully aware of the names used in the language, being a native speaker.

This (the conversion of the word into a technical meaning) is also indicated by the fact

that the Arabs were not aware of the sale of gold for gold and silver for silver with a delay (nas¯a’) as rib¯a, but this is rib¯a in the technical meaning. If this (meaning of rib¯a) is as we have explained it, then, it became like all the other unelaborated (mujmal) words that are in need of an elaboration (bay¯an). These are terms that have been transferred from the language to the law and assigned meanings to which the word was not originally applied in the language, like sal¯at, sawm, and zak¯at. Such words are in need of a bay¯an and it is not proper to employ them in legal reasoning for the prohibition of any of the contracts, unless an evidence has been adduced to show that such a meaning is employed by the law (shar‘). The Prophet (God’s peace and blessings be upon him) has elaborated on many occasions the intention of All¯ah in a verse, by way of an explicit statement or in response to a query (tawq¯if), and through these he has indicated the evidence (dal¯il). The (legal) meanings are, therefore, not lost to those who have knowledge when they employ legal reasoning.

The rib¯a that the Arabs knew and used to practice was the qard (loan) of dirhams and d¯in¯ars for a period with an excess over what was loaned and upon which they had agreed; they were not aware of the spot sale when it carried an excess in the same species. This (the giving of loans on interest) was well known among them, and because of this All¯ah said:

”That which ye lay out for increase through the property of (other) people will have no increase with Allah: but that which ye lay out for charity seeking the Countenance of Allah, (will increase): it is these who will get a recompense multiplied. (Qur’¯an 30 : 39.)

He, thus, informed them that this stipulated excess was rib¯a in the substance of the wealth, because there was no counter-value available from the side of the lender. The Exalted said: “Devour not usury, doubled and multiplied,” to indicate the manner in which the stipulated excess was doubled and multiplied. All¯ah, the Exalted, thus, annulled the rib¯a that they charged, and He annulled other types of sales and called

them rib¯a. All these were then accomodated under the prohition of the words, “And prohibited rib¯a,” because of the term having included them all in its meaning assigned by the law (shar‘). Their dealings in rib¯a were nothing more than the lending (qard) of dirhams or d¯in¯ars with a stipulated excess for a period.

Inthetechnicalsense,thewordrib¯aisassignedseveralmeanings.Thefirstistheonethatwasprevalent among the people of the j¯ahil¯iyah. The second is excess in the same species out of things measured and weighed, according to the view expressed by our (Hanaf¯i) jurists. M¯alik ibn Anas, along with species, considers the attribute of being food that can be stored. Al-Sh¯afi‘¯i considers consumption (as food) along with species. Thus, (similarity of) species is acknowledged by all in what pertains to the prohibition of

taf¯adul when the other attribute is associated with it, as we have explained. The third is nas¯a’ (delay), which is of several types. It is found in the same species of each thing, and exchanging a part of it for another part is not permitted, irrespective of its being a weighable or measurable or other commodity. Thus, in our view, it is not permitted to exchange dresses from Merv (of the same kind) with a delay, because of the existence of the same species. Among these types is also the attribute that is associated with species with the condition of the prohibition of the excess (taf¯adul), that is, weight or measure in things other than those serving as prices, which are dirhams and d¯in¯ars. Thus, if wheat is exchanged for barley with a delay, it is not permitted, because of the existence of measuring. Likewise, if iron is sold for brass with a delay, it is not permitted, because of the existence of weighing. All¯ah, the Exalted, is the Grantor of success.

Thursday, May 01, 2008


Amanah: It refers to deposits in trust. A person can hold a property in trust for another, sometimes by express contract and sometimes by implication of a contract. Amanah entails absence of liability for loss except in breach of duty. Current Accounts are regarded as Amanah (trust). If the bank gets authority to use Current Accounts funds in his business,
Amanah transforms into a loan. As every loan has to be repaid, banks are liable to repay full amount of the Current Accounts.

Arbun: Down payment; a nonrefundable deposit paid by a buyer retaining a right to confirm or cancel the sale.

Al-‘Aariyah (Gratuitous loan of non-fungible objects) Al-‘Aariyah means loan of a particular piece of property, the substance of which is not consumed by its use, without anything taken in exchange, In other words, it is the gift of usufruct of a property or commodity that is not
consumed on use. It is different from Qard that is the loan of fungible objects which are consumed on use and in which the similar and not the same commodity has to be returned. It is also a virtuous act like Qard. The borrowed commodity is treated as liability of the borrower who is bound to return it to its owner.

Bai‘ Muajjal: Literally it means a credit sale. Technically, a financing technique adopted by Islamic banks that takes the form of Murabaha Muajjal. It is a contract in which the seller earns a profit margin on his purchase price and allows the buyer to pay the price of the commodity at a future date in a lump sum or in installments. He has to expressly mention cost of the commodity and the margin of profit is mutually agreed. The price fixed for the commodity in such a transaction can be the same as the spot price or higher or lower than the spot price.

Bai' Salam: Salam means a contract in which advance payment is made for goods to be delivered later on. The seller undertakes to supply some specific goods to the buyer at a future date in exchange of an advance price fully paid at the time of contract. According to normal rules of the Shariah, no sale can be effected unless the goods are in existence at the
time of the bargain, but Salam sale forms an exception given by the Holy Prophet (SAW) himself to the general rule provided the goods are defined and the date of delivery is fixed. It is necessary that the quality of the commodity intended to be purchased is fully specified leaving no ambiguity leading to dispute. The objects of this sale are goods and cannot be gold, silver or currencies because these are regarded as monetary values exchange of which is covered under rules of Bai al Sarf, i.e. mutual exchange is hand to hand without delay. Barring this, Bai'Salam covers almost everything which is capable of being definitely described as to quantity, quality and workmanship.

Bai bil Wafa:
'' Sale with a right in the seller, having the'' effect of a condition, to repurchase (redeem) the property by refunding the purchase price. According to majority of Fuqaha it is not permissible.

1) Contract of guarantee, security or collateral; (2)
Responsibility of entrepreneur/manager of a business; one of two basic relationships toward property, entailing bearing the risk of its loss; compare Amanah.

Dayn or Debt:
A Dayn comes into existence as a result of any other contract or credit transaction. It is incurred either by way of rent or sale or purchase or in any other way which leaves it as a debt to another. Duyun (debts) ought to be returned without any profit since they are advanced to help the needy and meet their demands and, therefore, the lender should not impose on the borrower more than what he had given on credit.

Falah means to thrive, to become happy or to have luck
and success. Technically it implies success both in this world and in the Akhirah (Hereafter). The Falah presumes belief in one God, the apostlehood of Prophet Muhammad (Peace be upon him), Akhirah and conformity to the Shariah in behaviour.

Islamic law. The science of the Shariah. It is an important
source of Islamic economics. It means any element of absolute or excessive uncertainty

in any business or a contract about the subject of contract or its price, or mere speculative risk. It leads to undue loss to a party and unjustified enrichment of other, which is prohibited. This provides the rationale and

Al Ghunm bil Ghurm:
the principle of profit sharing in Shirkah arrangements. Earning profit is legitimized only by engaging in an economic venture, risk sharing and thereby contributing to the economy.

Anything permitted by the Shariah.


Anything prohibited by the Shariah.

Literally, it means transfer; legally, it is an agreement by which a debtor is freed from a debt by another becoming responsible for it, or the transfer of a claim of a debt by shifting the responsibility from one person to another – contract of assignment of debt. It also refers to the document by which the transfer takes place.

Hibah means Gift.

Offer, in a contract; see also qabul.

Letting on lease. Sale of a definite usufruct of any asset
in exchange of definite reward. It refers to a contract of land leased at a fixed rent payable in cash and also to a mode of financing adopted by Islamic banks. It is an arrangement under which the Islamic banks lease equipments, buildings or other facilities to a client, against an agreed rental.

A mode of financing, by way of Hire-purchase, adopted by Islamic banks. It is a contract under which the Islamic bank finances equipment, building or other facilities for the client against an agreed rental together with a unilateral undertaking by the bank or the client that at the end of the lease period, the ownership in the asset would be transferred to the lessee. The undertaking or the promise does not become an integral part of the lease contract to make it conditional. The rental as well as the purchase price are fixed in such a manner that the bank gets back its principal sum alongwith with some profit, which is usually determined in advance.

It refers to an endeavor of a qualified jurist to derive
or formulate a rule of law to determine the true ruling of the divine law in a matter on which the revelation is not explicit or certain, on the basis of Nass or evidence found in the Holy Qur’an and the Sunnah. Express injunctions
have no room for Ijtihad. Implied injunctions can be interpreted in different ways by way of inference from the accepted principles of the Shariah.

It is the attribute of an event that entails a particular Divine ruling in all cases possessing that attribute. ‘Illah is the basis for applying analogy for determining permissibility or otherwise of any act or transaction.

Consensus of all or majority of the leading qualified
jurists on a certain Shariah matter in a certain age.

‘Inah ( A kind of Bai):
Double sale by which the borrower
and the lender sell and then resell an object between them, once for cash and once for a higher price on credit, with the net result of a loan with interest.

‘Inan (A type of Shrikah):
It is a form of partnership in
which each partner contributes capital and has a right to work for the business, not necessarily equally.

It is a doctrine of Islamic law that allows
exception to strict legal reasoning, or guiding choice among possible legal outcomes, when considerations of human welfare so demand.

It refers to immoderateness, exaggeration and waste and covers spending on lawful objects but exceeding moderation in quantity or quality; spending on superfluous objects while necessities are unmet; spending on objects which are incompatible with the economic standard of the majority of the population. See also Tabzir

It is a contractual agreement for manufacturing goods and commodities, allowing cash payment in advance and future delivery or a future payment and future delivery. A manufacturer or builder agrees to produce or build a well described good or building at a given price on a given date in the future. Price can be paid in installments, step by step as agreed between the parties. Istisna’a can be used for providing the facility of financing the manufacture or construction of houses, plants, projects, and building of bridges, roads and highways.

Jahl or Jahala:
Ignorance, lack of knowledge;
indefiniteness in a contract, sometime leading to Gharar.

Jua alah or Ji’alah:
Literally, Joalah constitutes wages, pay,
stipend or reward. Legally, it is a contract for performing a given task against a prescribed fee in a given period. A similar contract is ‘Ujrah’ in which any work is done against stipulated wage or fee.

Kali bil-Kali: The term Kali refers to something
delayed; appears in a maxim forbidding the sale of al-Kali bil-Kali i.e. the exchange of a delayed counter value for another delayed counter value.

Al- Kafalah (Suretyship):
Literally, Kafalah means responsibility, amenability or suretyship, Legally in Kafalah a third party become surety for the payment of debt. It is a pledge given to a creditor that the debtor will pay the debt, fine etc. Suretyship in Islamic law is the creation of an additional liability with regard to the claim, not to the debt or the assumption only of a liability and not of the debt.

Kharaj bi-al-Daman ( ): Gain accompanies

liability for loss; a Hadith forming a legal maxim and a basic principle – see
also Al- Ghunm bil Ghurm.

Option or a power to annul or cancel a contract.
Khiyar (
Option of the contracting session;
Khiyar al-Majlis ( ):
the power to annul a contract possessed by both contracting parties as long
as they do not separate.
Khiyar al-Shart ( ): A right, stipulated by one or both of the
parties to a contract, to cancel the contract for any reason for a fixed period
of time.
Mal-e-Mutaqawam ( ): Things the use of which is lawful
under the Shariah; or wealth that has a commercial value. Legal tenders of
modern age that carry monetary value are included in Mal-e-Mutaqawam. It
is possible that certain wealth has no commercial value for Muslims (non
Mutaqawam) but is valuable for non-Muslims. Examples are wine and pork.
Maisir ( ): An ancient Arabian game of chance played with
arrows without heads and feathering, for stakes of slaughtered and quartered
camels. It came to be identified with all types of hazard and gambling.
Goods that can be returned in kind,
Mithli (Fungible goods) ( ):
i.e. gold for gold, silver for silver, US $ for US $, wheat for wheat, etc.
Object that is lawful (i.e. something which is permissible
Mubah ( ):
to use or trade in).
A form of partnership where one party provides
Mudarabah ( ):
the funds while the other provides expertise and management. The latter is
referred to as the Mudarib. Any profits accrued are shared between the two
parties on a pre-agreed basis, while loss is borne by the provider(s) of the
Literally it means a sale on mutually agreed profit.
Murabaha ( ):
Technically, it is a contract of sale in which the seller declares his cost and
the profit. This has been adopted by Islamic banks as a mode of financing.
As a financing technique, it can involve a request by the client to the bank to
purchase a certain item for him. The bank does that for a definite profit over
the cost which is stipulated in advance.
Musawamah ( ): Musawamah is a general kind of sale in which
price of the commodity to be traded is bargained between seller and the
purchaser without any reference to the price paid or cost incurred by the
Musharakah ( ): Musharakah means a relationship established

under a contract by the mutual consent of the parties for sharing of profits
and losses in the joint business. It is an agreement under which the Islamic
bank provides funds which are mixed with the funds of the business

enterprise and others. All providers of capital are entitled to participate in
management, but not necessarily required to do so. The profit is distributed
among the partners in pre-agreed ratios, while the loss is borne by every
partner strictly in proportion to respective capital contributions.
Acceptance, in a contract; see also Ijab.
Qabul ( ):
Qard (Loan of fungible objects) ( ): The literal meaning of Qard
is ‘to cut’. It is so called because the property is really cut off when it is
given to the borrower. Legally, Qard means to give anything having value in
the ownership of the other by way of virtue so that the latter could avail of
the same for his benefit with the condition that same or similar amount of
that thing would be paid back on demand or at the settled time. It is that
loan which a person gives to another as a help, charity or advance for a
certain time. The repayment of loan is obligatory. The Holy Prophet is
reported to have said “…..Every loan must be paid……”. But if a debtor is
in difficulty, the creditor is expected to extend time or even to voluntarily
remit the whole or a part of the principal. Qard is, in fact, a particular kind
of Salaf. Loans under Islamic law can be classified into Salaf and Qard, the
former being loan for fixed time and the latter payable on demand. (see

Qimar means gambling. Technically, it is an
Qimar ( ):
arrangement in which possession of a property is contingent upon the
happening of an uncertain event. By implication it applies to a situation in
which there is a loss for one party and a gain for the other without specifying
which party will lose and which will gain.
Qiyas ( ): Literally it means measure, example, comparison or
analogy. Technically, it means a derivation of the law on the analogy of an
existing law if the basis (‘illah) of the two is the same. It is one of the
sources of Islamic law.
An excess or increase. Technically, it means an increase over
Riba ( ):
principal in a loan transaction or in exchange for a commodity accrued to the
owner (lender) without giving an equivalent counter-value or recompense
(‘iwad) in return to the other party; every increase which is without an ‘iwad
or equal counter-value.
Riba Al-Fadl ( ): Riba Al-Fadl (excess) is the quality
premium in exchange of low quality with better quality goods e.g. dates for
dates, wheat for wheat, etc. – an excess in the exchange of Ribawi goods
within a single genus. The Concept of Riba Al-Fadl refers to sale
transactions while Riba Al-Nasiah refers to loan transactions.
Riba Al-Nasiah ( ): Riba Al-Nasiah or riba of delay is due
to exchange not being immediate with or without excess in one of the
counter values. It is an increment on principal of a loan or debt payable. It

refers to the practice of lending money for any length of time on the
understanding that the borrower would return to the lender at the end of the
period the amount originally lent together with an increase on it, in
consideration of the lender having granted him time to pay. Interest, in all
modern banking transactions, falls under purview of Riba Al-Nasiah. As
money in present banking system is exchanged for money with excess and
delay, it falls, under the definition of riba. A general accord reached among
scholar about its prohibition.
Goods subject to Fiqh rules on Riba in sales, variously
Ribawi ( ):
defined by the schools of Islamic Law: items sold by weight and by measure,
foods, etc.
Pledge, Collateral; legally, Rahn means to pledge or
Al- Rahn ( ):
lodge a real or corporeal property of material value, in accordance with the
law, as security, for a debt or pecuniary obligation so as to make it possible
for the creditor to recover the debt or some portion of the goods or property.
In the pre-Islamic contracts, Rahn implied a type of earnest money which
was lodged as a guarantee and material evidence or proof of a contract,
especially when there was no scribe available to put it into writing. The
institution of earnest money was not accepted in Islamic law and the
common Islamic doctrine recognized Rahn only as a security for the
payment of a debt.
Salaf or Loan / Debt ( )
The word Salaf literally means a loan which draws forth no profit for
the creditor. In wider sense, it includes loans for specified periods, i.e.
short, intermediate and long-term loans. Salaf is another name of
Salam as well wherein price of the commodity is paid in advance
while the commodity or the counter value is supplied in future; thus
the contract creates a liability for the seller. Amount given as Salaf
cannot be called back, unlike Qard, before it is due. (see Qard)

Al-Sarf ( ): Basically, in pre-Islamic times it was exchange of
gold for gold, silver for silver and gold for silver or vice versa. In Islamic
law such exchange is regarded as ‘sale of price for price’ (Bai al Thaman bil
Thaman), and each price is consideration of the other. It also means sale of
monetary value for monetary value – currency exchange.
Shariah ( ): The term Shariah refers to divine guidance as given
by the Holy Qur’an and the Sunnah of the Prophet Muhammad (PBUH) and
embodies all aspects of the Islamic faith, including beliefs and practice.
A contract between two or more persons who launch a
Shirkah ( ):
business or financial enterprise to make profits. In the conventional books of

Fiqh, the partnership business has been discussed under the option of
Shirkah that, broadly, may include both Musharakah and Mudarabah.
Custom, habit or way of life. Technically, it refers to
Sunnah ( ):
the utterances of the Prophet Muhammad (PBUH) other than the Holy Quran
known as Hadith, or his personal acts, or sayings of others, tacitly approved
by the Prophet.
It is a donation/gift the purpose of which is nit
Tabarru’ ( ):
commercial but is seeking the pleasure of Allah. Any benefit that is given by
a person to other without getting anything in exchange is called Tabarru’.
Gracious repayment of debt, absolutely at lender’s own discretion and
without any prior condition or inducement for reward, is also covered under
Tabarru’. Repaying a loan in excess of principal and without a pre-condition
is commendable and compatible with the Sunnah of the Holy Prophet (peace
be upon him). But, it is matter of individual discretion and cannot be
adopted as a system because this would mean that loan would necessarily
yield a profit. If such reward takes the form of a system, it would be
considered Riba.
Tabzir ( ): Spending wastefully on objects which have been
explicitly prohibited by the Shariah irrespective of the quantum of
expenditure. See also Israf.
Ujrah ( ): See Juaalah.
A contract of agency in which one person appoints
Wakalah ( ):
someone else to perform a certain task on his behalf, usually against a
certain fee.

Monday, April 21, 2008

Types of Wealth in Islam

The classification of wealth is to be laid down below to identify more comprehensively about the types of wealth in Islamic legal system. It is not to redefine the term as mentioned above but to elaborate the specific meaning according it's different aspects in result of which the proper legal implications can be drawn and to be applied accordingly.

Types of wealth can be classified below followed by description of each kind:

  1. Type of wealth in respect of permissible and impermissible.
  2. Type of wealth in respect of movable and immovable.
  3. Type of wealth in respect of fungible and non-fungible.
  4. Type of wealth in respect of determinate and indeterminate

Permissible and Impermissible Property:

Permissible property is said as valuable property (المال المتقوم) which means any substance that the Islamic shari'ah rules give permission to utilize it and make transaction in it except in some restricted conditions in which the thing is allowed to consume. This includes those movable and immovable properties, food stuffs, etc. Then the impermissible property is considered as invaluable property (المال غير المتقوم) which means those things which are considered illegal and prohibited in Islam such as alcohol, wine, pig and the like.[1]

Movable and Immovable Property:

A property is considered as movable (manqul) when it can be removed from one place to another, and may be destroyed which can be rarely happen to immovable property. Then by immovable property (ghairu manqul) is primarily meant land and along with it all permanent fixtures such as buildings. Land and buildings are also called “aqar” or landed property.

The effect of this classification is that in case of movable property the liability to destruction that a buyer of such property before he has received possession of it can not sell it, because in case it happens to be accidentally destroyed in the meantime, he would not be able to give possession.[2]

Movable property is classified as follows:

  1. Makilat: things which are ordinarily sold by measurement of capacity, such as wheat and barley.
  2. Mauzunat: things which are ordinarily sold by measurement of weight, such as gold, silver and oil.
  3. Adadiyat: things which are sold by tale such as fruits.
  4. Madhruat: things which are estimated by linear measurement, such as a yard of cloth.

All articles of above classifications are also called “muqaddarat”, or nuqud or price in case of gold and silver, or goods (urud) such as articles of furniture or animals.[3]

Fungible and Non-Fungible[4]

Fungible or similar which is translated as mithlī in Arabic means any article the like of which can be had in the market without there being such difference between the two as people are apt to take into account, in their dealings. This category of wealth is also of four kinds: makilat, mauzunat, 'adadiyat and some madhruat. Then, non-fungible wealth is any thing the like of which is not available in the market or if it available but with such difference between them as people are wont to take into account in fixing the price. This is like animals, trees, precious stone, etc.

Determinate and Indeterminate wealth

  1. Determinate property is called as ‘ayn: specific or determinate. When a man is to get certain property from another who either borrowed it from him or took it by force, if he is entitled to recover it in specie, then it is called specific or determinate.
  2. Indeterminate property is called as dayn: non specific property. When a man is to get certain property from another who either borrowed it from him or took it by force, if he is not entitled to recover it in specie, then it is called non-specific or non-determinate. Like: articles of the class of similars, because they can not be recovered specifically; like gold, solver in the shape of coins or otherwise, grain, oil, and the like.[5]

[1] Zuhaili, Al-Fiqhul Islami wa-Adillatuhu vol. 4, p. 2879

[2] Encyclopedia of Islamic Law, Pentagon Press 2006 vol. 3, p. 209

[3] Ibid, p. 210

[4] Mansuri, Islamic Law of Contracts and Business transaction, p. 189.

[5] Encyclopedia of Islamic Law, Pentagon Press 2006 vol. 3, p. 210


Definition of māl:

By definition, māl (مال) in Arabic which is translated as wealth in Latin word has various meanings in its technical meaning: It refers to things of value owned. Any existence which gives value in it can be considered as wealth including those though they are prohibited under Islamic point of view such as pig, wine, etc. The common laws nowadays also consider wealth in this sense.

In the legal technical terminology of the Islamic jurists, the term wealth is described as follows: The Hanafi School defines māl as that which is desired by the people and stored for use at a time of need and does not include benefits and incorporeal rights as māl. The like is the Maliki jurists in such definition. As for the Shafi'ī School, they treat benefits in the scope of māl and therefore in sale transaction, it affects the transfer of ownership in goods as well as in benefits. Somehow, Mustafa Zarqa gives more appropriate word in defining wealth as every thing which has legal and material value among the peoples. So, it signifies a broader sense with regard to what kind of thing will fall under the category of māl. Such a thing which is not real and perceptible could be regarded as wealth such as trademarks and intellectual property.

Wealth and Property
The term "māl", in many opinions of the Islamic scholars, instead of being translated as wealth it is generally translated as property as well. But actually, the term māl has a much narrower significance than the English word which is often used in a very wide sense. The word is properly applicable only to objects which have a perceptible existence in the outside world, such as the things corporeal and tangible. Adversely, future existence or Manfaat, for instance, may be the subject of ownership, but it is not called māl.
Keeping in view of such divergent meaning, in the later discussion I may consider māl as property to some extent as to ease our understanding according to its prevailing usage of the people, such as the term movable property and immovable property which are used to translate manqul (منقول) and 'iqār (عقار).

However, according to western people, the term "property" implies an enforceable claim to some use or benefit of something. The property is understood as right and not a thing and must be enforced by authoritative body such as state. The classification of property is also different from that which is classified in the Islamic term of māl or wealth.

Issue on The adoption of the Dinar and the Dirham in the Recent Era

The adoption of the dinar and the dirham is not binding on us. The followings are the basis of the argument:

a) There is no clear evidence from the Quran and Sunnah that the Muslim shall use and adopt the dirham in their transaction.

b)However, it is preferable to use the dinar and dirham as the gold and silver are the most stable currency since its emergence until the recent era.

c) Not only the paper money which is subject to the inflation, gold and dinar is also fluctuating. The simple example is that: a hundred grams of gold which has a purchasing power to buy a hundred square yards of land, it may happen that after 10 years the purchasing power of gold turns out to be only fifty yards.

d) The medium of exchange is not limited to gold or silver and the barter of commodity is not confined to specific articles such as gold, silver, etc, so paper money is possibly used as medium of exchange.

e) It is indispensable reality in this era to use paper money for our medium of exchange as every corner of the world atmosphere obliges us to be involved in using such instrument.

Zakat on Paper Money

In book of Al-Fiqhu Ala al-Mazahib al-Arba'ah, in case of paper money, the following different views of Islamic jurist are supposed to be noticed:

i. Hanafi School: banknotes –as in paper money- is considered as a substance upon which the payment of zakat is applied provided that it can be directly exchanged with gold or silver.

ii. Shafii School: also considered that money in the bank fall under the obligation of zakat.

iii. Same as Maliki School that the paper money if it can be exchanged with gold practically the payment of zakat is also obliged.

iv. Only Hambaly School who disagree the zakat is applied on paper money. Zakat is only on gold or silver.

The conclusion of these Muslim jurists is that the majority considers that if the paper money has a value and can be exchanged with gold or silver then zakat is applied.

It is not obligatory on the Muslim to use dinar and dirham for the payment of zakat as there is another medium of exchange and commonly used by the people in this world, that is paper money which has similar function to the payment of zakat. If it is applied to necessarily pay in dirham or dinar, the zakat of the people in this world will be invalid.

• The gold and silver is considered as medium of exchange which have a function to determine the value of other commodities. And that is why it is considered as money because they are easy medium of exchange and simple measure of value. These all functions and usages will not only be found in the gold or silver, but in paper money as well. Thus, the use of dinar and dirham is not obligatory for the payment for zakat.

Paper Money : Legal Currency or not

a. To test whether paper money is legal currency or not, just follow the three requirements above, if the above three requirements are found then paper money is legal currency. So, the use and role of paper money is similar to the dinar or dirham.

b. The medium of exchange is not limited to gold or silver and the barter of commodity is not confined to specific articles such as gold, silver, etc, so paper money is possibly used as medium of exchange.

c. It is indispensable reality in this era to use paper money for our medium of exchange as every corner of the world atmosphere obliges us to be involved in using such instrument.

d. The objection regarding the value (thaman) of the paper money is not relevant. Our jurists have classified thaman into to two categories: Haqiqi or intrinsic and Istilahi or mutually agreed upon (customary or urfi). There is no dispute among the jurists about the ruling that al-thaman al-istilahi has same position as an intrinsic thaman as far as Riba and Sarf transactions are concerned. So, the current note has to be considered as legal currency for all practical purposes. That is why the Council of Muslim Jurists working under Rabitah al-Alam al-Islami maintain the position of paper money is exactly similar to gold and silver.

e. The last we should bear in mind that now is the era of technology. Mostly everything which is presumed impossible in the old period now becomes possible due the sophisticated technology. It is not so difficult to make gold or silver in another form other than form of currency like something which is beautiful such as ring, necklace or any other form. For example, it had happened that a CPU costs up to not less than U$ six hundred thousand as it was made by a Japan company. Apparently the CPU was made of gold in result of which the price is too costly. if gold is used as public currency of the people, I am afraid the people who are equipped with knowledge of sophisticated technology start collecting the stock of gold -whether dinar, dirham or any other name- which is easily found everywhere and then reproduce it in to other form such as CPU as the case may be, and sell it with higher price than the legal value mentioned in such metallic currency, so that they will earn more benefit and profit than if they use as a currency. So the circulation of gold will open the door for the intelligent wrongdoer in the above manner. And this will not occur in case of paper money.

Legal Currency

1. By definition a currency is a unit of exchange, facilitating the transfer of goods and/or services. (wikipedia)

2. In Islam, there is no disagreement between the jurists, whether the old jurists or modern jurists that dinar and dirham was the legal currency. The currency which is recognized and commonly used at the time of the prophet Muhammad saw is the metal currency which is named as gold and dinar.

3. No clear evidence which instruct us to use the metal currency like dinar and dirham.

4. We can assume only from the rules and regulations in Islam which mainly affect the use of dinar and dirham, we don’t find the clear and specific evidence from saying of Muhammad that we must use dinar and dirham as our currency. The saying of Prophet: "A time is certainly coming over mankind in which there will be nothing [left] which will be of use save a dinar and a dirham." Does not mean that it is obligatory upon mankind to use dinar and dirham as currency.

5. This reality is like in Islam considered gold and silver are subject to zakat.

6. Further, at the time of Muhammad saw, all Muslim transaction considered dinar and dirham as valid and legitimate medium of exchange.

7. The use of metal currency is encouraged as it is previously used since the advent of the prophet in Islam.

8. The legal currency is that the following at least three requirements must be met:

1) It must be stored money which means the thing which can be stored.

2) It should be a medium of exchange.

3) It should be a unit of account which means the user of money can measure the value of different commodity with respect to that money. (According to Dr. Masum Billah)

How the Money Attained its Modern Form

Originally, paper money was a receipt which represented a certain amount of real money, usually gold and silver, given to the goldsmith. Paper money was a promise note to pay based on a previous deposit of quantity of money with someone in trust. A person, by using that paper money can exchange with any other service or commodity as he is declared to be the owner of that receipt and gold. Furthermore, the seller of the service or commodity could then go to the goldsmith and claims his gold by handing over the receipt. This system is known as a fully back system as the receipt issued by the goldsmith is similar to the amount of gold deposited. This time considered the gold as the main currency for trade and commerce. But eventually the use of paper money was preferred than by gold as carrying gold or metallic form of currency was not a safe practice. Since then, the people started thinking that if they wanted to buy something and they had some receipts, then why should they go to the goldsmith to exchange them for gold if they could buy directly with them.[1] Furthermore, at certain point the goldsmith assumed that although many people can exchange the receipts for the gold, not all of them do it at the same time, so he could just lend receipts for a period of time and no body would notice. Because the receipt is like gold, he can create money out of nothing and lend it at interest. Since then the principle of banking started.[2] Thus the money is no longer backed by the bank and the bank has created more money than really exists. Eventually, the gold backing money was totally abolished in August 15, 1971 when President Nixon suspended the gold payment. So the paper money that we have today is fiat money which is not backed by gold and is not really a receipt for gold as before. Moreover, the paper money is then considered as the medium of exchange.[3]

[1] Umar Vadillo, Fatwa Concewrning the Islamic Prohibition on Using Paper-Money as a Medium of Exchange, Madinah Press, p. 27

[2] Ibid

[3] Prof. Dr. Mohd. Ma’sum Billah, Journal of Islamic Banking and Finance, volume 24 July-Sept. 2007 no 3 p. 45

History of the Dinar

• At about 500 BC, pieces of silver coin were already known. It was found in Greek, Persian, turkey and Roman Empires. However, dinar which is too a form of coin and composed of metal emerged as a currency since being used by the Muslim at 7th century. The prophet also states: "A time is certainly coming over mankind in which there will be nothing [left] which will be of use save a dinar and a dirham." which shows the availabilty of these metallic currencies during the time of prophethood.

According the history, the first clearly Islamic coin was at the time of the Khalifat Ustman as there was inscription of words "in the name of Allah" in the observe margins. Later, in the year 75 (695 CE) when the Khalifah Abdul Malik ordered Al-Hajjaj to mint the first dirham in all the regions of Dar-ul-Salam and this order continued in the subsequent periods even after the era of Khilafat. In this time also he established officially the standard of Umar Ibn al-Khattab that the weight of 10 dirhams was equivalent to 7 dinars.

• Dinar came from the Muslim practices as the use of dirham and dinar was considered as their wealth and currency since that time. However, the use of coin as a medium of barter and transaction was found even since far before the advent of Prophet Muhammad saw as mentioned above.

• Dinar is a sole property which is considered and absorbed by Islam since the advent of Prophet (pbuh).

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