There are seven Quranic verses and about fifty sayings of holy prophet ( SAWS) that prohibit Muslims from dealings in ‘Riba’. In Islam it is considered as one of the ‘major sins’ (kabair) and the biggest evil in economics.
“Riba’ literally means increase, addition, expansion or growth. However, not every increase or growth is prohibited in Islam. A renowned contemporary scholar of Islamic economics, Dr. Mohammad Umer Chapra, ex- chairman of the Islamic Development Bank lucidly explains the term Riba (defined by ancient orthodox scholars) as:
“In Sharia ‘Riba’ technically refers to the premium that must be paid by the borrower to the lender along with the principal amount as a condition for the loan or for an extension in its maturity”.
From these words it is evident that whenever a loan is obtained or given with the condition of an increased return, it involves ‘Riba’. The modern commercial banks provide loans to their customers, for whatever purpose, commercial or consumer, with this precondition of ‘increased return’. Such banks also accept deposits of different nomenclatures again with this precondition of increased returns. Thus this increased amount paid by these banks to their customers or received from them, which is commonly called as ‘ bank interest’ is a perfect example of Riba in Islam.
The scholars of Islamic sharia are of the opinion that fixing of any type of profit in investment and financial deals, takes such deals out of the bounds of ‘Mazaribat i,e partnership of capital and lobour’ and includes them in Riba dealings. Thus the present day financial institution that provide capital to the commercial projects with the condition of increased returns, also are dealing in Riba (interest) and are not included within the limits of partnership in Islam. (Unless they are ready to take the risk of the loss and actually bear the same in case any loss occurs).
Common (Vital) Need:
As interest ‘Riba’ is prohibited by Almighty Allah, under this command of ‘thy lord’, There is a significant cross section of population of our society which is reluctant in making transactions ( investing capital, taking loans and advances ) with the present day interest based financial institutions (viz. banks, investment and insurance companies). As a result exclusion of capital and labour of such people from the modern economic activities occurs and thereby they are prevented from contributing their share to the GDP of the society. Hence there is dire need of interest free financial institutions which will cater the financial needs of such people and make their inclusion in the economic sectors possible.
Registration of the cooperative:
In the light of this need, felt for an interest free financial institution, a cooperative institution has been registered with the Govt. of Jammu & Kashmir under relevant laws in vogue in the state, under the name Crescent cooperative Ltd (CCL) , Anantnag, Kashmir.
Aims and Objectives of the Cooperative: The cooperative will provide its members a hassle free medium for ‘interest free financial transactions’ so that, they can avail the moral and material benefits of halal transactions in their economic activities and the redressal of their socio-economic conditions is achieved in accordance with the universal principles of mutual cooperation and social justice.
Mode of Operation of the Cooperative:
In addition to the compulsory share capital paid by its members, the cooperative will accept long and short term deposits &will raise loans of different nomenclatures from its members and will provide finances to them for catering their financial needs according to its debit and credit policy strictly guided by sharia principles of Bia, Musharika, Mazariba, Ijarah, Wadia, Dian & Tafakul etc.
Suggestions and Cooperation are solicited.