Q. Does Interest-based economy lead to imbalanced economy? And imbalanced economy leads to Terrorism?

Answer by Shaikh Arshad Basheer Madani

Interest, according to the Oxford Dictionary means: �Money paid for the use of money lent�.

The Arabic word used for the interest is �Ar-Riba'.
Riba itself is a root word, and the Qur'anic words derived from Riba are: Yarbu & Yurbi , which means �excess' or �increase'.

In the Islamic context, Riba is further classified into two categories, namely:

Let us now understand what is Riba alFazl ?

Riba alFazl means: �the excess which is taken in exchange of specific homogenous commodities such as selling gold with another gold, whereby one has more weight than the other"

Riban anNasee'ah is related to extension of repayment period for additional payment of money .

Riba is prohibited in the Glorious Qur'an. If you read:

Sura Ale-Imran Sura # 3 Ayat # 130

Sura Rum Sura # 30 Ayat # 39

In all these Aayaats, ALLAH (swt) prohibits Riba i.e. interest .

If we analyze further, we find that interest has been prohibited in all the major religious scriptures.

It is mentioned in:

The Hebrew word used for interest is: Neh-Shek .

Interest was at time denounced by a number of prominent religious leaders and philosophers like: Plato , Aristotle , and Gautam Buddha .

If you analyze the logic of interest prohibition in the world scenario, you will find the imbalanced economic system has prevailed everywhere, the third world countries term has been coined and accumulation of money took place and the rich goes richer, the poor becomes poorer, and the inflation is going up day by day. The credit crisis management is unable to handle the current situation.

Interest is becoming a hurdle in the development today.

Let us now see what the economists have to say on this:

�P. Sitaramana, who is the C E O of The Group of Banking in Qatar, says that the world today is affected by the global financial crisis and one of the major reasons is the �interest economy'. And he favors the implementation of the Islamic economic system throughout the world because it encourages trade within the limits of the Islamic Law.

�The author of the book �'Beyond the Dependency Culture� - James Robertson says: One of the biggest drawbacks of the interest economy is, �the rich goes richer, and the poor becomes poorer.'

For example, if you analyze the 17th March 2008 report of R B I, India has borrowed 201.4 billion dollars from different foreign sources. And the interest India has to pay on the total loan amount is 16 billion dollars.

This way the borrowing countries end up paying the heavy interest on the loans, and if they fail to pay back the amount in time, it attracts more interest.

This is the condition of a country like India, with a lot of natural resources, man power, and advanced technology. Imagine the condition of poor African countries, who take loans on interest.

Another drawback of interest economy is accumulation of money.

It restricts the circulation of money.

These days around 155 countries of the world fall under the category of the �Third World Countries'.

When we calculate based upon the figures from C I A fact book, we find that, the world today has 65.61 Trillion Dollars, amazing.

The more amazing fact is, 2/3 of this total amount does not lie in the hands of 50% population of the world, not 10%, not even 1%, and it lies with only 0.15% of the total population of the world. And the rest 99.85% of the world's population have to survive and be satisfied with the remaining 1/3 of the total amount.

That is the accumulation of money, lying isolated in the hands of very few.

This type of system is denounced by Qur'an in Sura Hashar Sura # 59 Ayat # 7.

59.7: What Allah has bestowed on His Apostle (and taken away) from the people of the townships belongs to Allah to His Apostle and to kindred and orphans the needy and the wayfarer; in order that it may not (Merely) make a circuit between the wealth among you. So take what the Apostle assigns to you and deny yourselves that which he withholds from you. And fear Allah; for Allah is strict in Punishment.

On the other hand, Islam gives you a completely balanced system, denouncing interest economy and promoting mandatory and optional charity system called Zakaat and Sadqaat (alms and charities).
Imagine the people holding the 2/3 of 65.61 trillion dollars paying the mandatory Zakat of 2.5 %, it will do miracles and change the world scenario.

If the billionaires and millionaires of the world spare 5% of their total wealth, the loans of 133 countries of the world can be paid back along with interest.
If these billionaires and millionaires spare 10% of their wealth, we can eradicate the poverty from the world.

If there is no interest economy, then only 2.5% of the total wealth of the billionaires and millionaires is sufficient to pay off the loans taken for the necessities, still there will be money left which can be utilized to rehabilitate the poor people.

Allah (swt) declares in the Qur'an that he will cause destruction to the interest economy and will promote the charity, mandatory as well as the optional.

If you want to eradicate poverty, you have to simultaneously implement both the systems, i.e. The Qur'anic Charity System and Interest Free Economy.

�Berisha Pennekmrt, from Thailand, who was a Buddhist belonging to the family of a priest, completed his Ph D on the imbalanced economic system and concluded saying, if the world adopts Islamic System, the poverty will be wiped out.

�And an orientalist called Leudrant says in Islamic Encyclopedia. We have seen that the rich have made such economic systems through which they sucked the blood of the poor. On the other hand Prophet Muhammad (pbuh) came with the system to take the money from the rich people and distribute it amongst the poor by implementing the mandatory charity system.

Based upon the observations so far, we can conclude that the Interest Economy is a disease for the humanity and is the biggest hindrance for the development of the world, and the Islamic Economy system is a blessing for all.