Islam and debt

[BornInMarch]

I recently learned that Muslims consider it sinful to be in debt. So sinful, in fact, that a Muslim person who dies in debt is barred from Jannah (Islamic Heaven).

When I learned about economics, I learned that there were multiple types of debts used in every day life. This raises some questions.

Does the tenets of Islam consider it debt if others invest in your company in exchange for dividends?

What about National Debt. If a Muslim Person becomes head of state to a nation with debt, does his faith require him to try and pay that debt off?

 

[Thorolfr]

I recently learned that Muslims consider it sinful to be in debt. So sinful, in fact, that a Muslim person who dies in debt is barred from Jannah (Islamic Heaven).

When I learned about economics, I learned that there were multiple types of debts used in every day life. This raises some questions.

Does the tenets of Islam consider it debt if others invest in your company in exchange for dividends?

What about National Debt. If a Muslim Person becomes head of state to a nation with debt, does his faith require him to try and pay that debt off?

I know a lot about Islam and lived in the Middle East for a number of years and have never heard that it is a sin for a Muslim to be in debt. What has been considered sinful is the practice of loaning money with interest which has been considered to be usury.

The word “riba” literally means “excess or addition”, and has been translated as interest, usury, excess, increase or addition. According to Shariah terminology, it implies any excess compensation without due consideration (consideration does not include time value of money).[18]

According to Islamic economists Choudhury and Malik[19] by the time of Caliph Umar, the prohibition of interest was a well-established working principle integrated into the Islamic economic system.

This interpretation of usury has not been universally accepted or applied in the Islamic world. A school of Islamic thought which emerged in the 19th century, led by Syed Ahmad Khan, argued for a differentiation between sinful “usury”, which they saw as restricted to lending for consumption, and legitimate “interest”, for lending for commercial investment.

Islamic banking (Arabic: مصرفية إسلامية‎‎) is banking or banking activity that is consistent with the principles of sharia (Islamic law) and its practical application through the development of Islamic economics. As such, a more correct term for Islamic banking is sharia compliant finance.[1]

Sharia prohibits acceptance of specific interest or fees for loans of money (known as riba, or usury), whether the payment is fixed or floating. Investment in businesses that provide goods or services considered contrary to Islamic principles (e.g. pork or alcohol) is also haraam (“sinful and prohibited”). Although these prohibitions have been applied historically in varying degrees in Muslim countries/communities to prevent un-Islamic practices, only in the late 20th century were a number of Islamic banks formed to apply these principles to private or semi-private commercial institutions within the Muslim community.[2][3]

As of 2014, sharia compliant financial institutions represented approximately 1% of total world assets.[4] By 2009, there were over 300 banks and 250 mutual funds around the world complying with Islamic principles[5] and as of 2014 total assets of around $2 trillion were sharia-compliant.[6] According to Ernst & Young, although Islamic Banking still makes up only a fraction of the banking assets of Muslims,[7] it has been growing faster than banking assets as a whole, growing at an annual rate of 17.6% between 2009 and 2013, and is projected to grow by an average of 19.7% a year to 2018.

en.wikipedia.org/wiki/Islamic_banking_and_finance

 

[GEddie]

Islam has banks, which loan money, so debt cannot be a sin.

One bank even has a credit card with a “Qibla compass” (adjusted to point to Mecca).

The only thing I’ve heard about that is that one cannot make the Hajj to Mecca while in debt. But even then, some of those banks will finance someone’s Hajj.

ICXC NIKA

 

[MugenOne]

Having lived in the Middle East for many years, ME banks do offer Hajj loans. It is routinely advertised on billboards along major highways and roads. Matter of facts, it is cheaper to take a traditional kaffir style loan than an Islamic one.

Islamic banking was all the rage couple of years ago.

 

[BornInMarch]

farhathashmi.com/articles-section/belief-and-introspection/debt/

When I look up Debt in Islam, I see things like this. Please, are there any Muslims who can shed light on the issue?

 

[drac16]

farhathashmi.com/articles-section/belief-and-introspection/debt/

When I look up Debt in Islam, I see things like this. Please, are there any Muslims who can shed light on the issue?

I don’t think there’s anything I can add. Thor gave a good answer above, though. When it comes to Shariah, each muslim has his/her own strengths and weaknesses. Finances is one of the areas I don’t understand well. Sorry.

 

[hasantas]

I recently learned that Muslims consider it sinful to be in debt. So sinful, in fact, that a Muslim person who dies in debt is barred from Jannah (Islamic Heaven).

When I learned about economics, I learned that there were multiple types of debts used in every day life. This raises some questions.

Does the tenets of Islam consider it debt if others invest in your company in exchange for dividends?

What about National Debt. If a Muslim Person becomes head of state to a nation with debt, does his faith require him to try and pay that debt off?

Being in debt is not sinful. On the contrary it is adivised to award a loan to help people who are in difficulties.

Debtor must pay the debt on time. And if the debtor do not pay on time although he/she is rich enough to pay hence it may considered a kind of sin. It is not direct sin but it is outrage.

 

[BornInMarch]

Being in debt is not sinful. On the contrary it is adivised to award a loan to help people who are in difficulties.

Debtor must pay the debt on time. And if the debtor do not pay on time although he/she is rich enough to pay hence it may considered a kind of sin. It is not direct sin but it is outrage.

Thanks for the clarification.

I was confused because I read an article once in which a Muslim college student wouldn’t take out a student lone out of fear that it would endanger his soul. Perhaps it was just a fringe view.

 

[GUNNER7070]

Thanks for the clarification.

I was confused because I read an article once in which a Muslim college student wouldn’t take out a student lone out of fear that it would endanger his soul. Perhaps it was just a fringe view.

That is not a fringe view, debt is a huge burden, if the debt was not payed back then that is a sin and cannot be forgiven.

The debt issue is not a light thing and it needs to be studied in detail.

That is why the college student was afraid and he or she has all the right to be.

I have found a link in English and I found it very good in covering the debt cases.
muslimtents.com/shaufi/b16/b16_12.htm

Getting back to your original post where you asked specific questions, I am afraid you need a scholar or higher to answer your questions.

I wish I could help but I really do not know the answer to those questions.

For a Muslims it is important to know what is lawful or forbidden in Sharia and what is the wisdom and purpose behind making it forbidden?