what is still due to you from the interest and you shall have the principal

What is still due to you from the interest and you

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'what is still due to you from the interest" and "you shall have the principal" makes it quite explicit that Allah does not condone the least quantity of interest, that "giving up the interest" implies that the creditor should get back only the principal. Thus, one can clearly see that Islam considers every rate of interest (except zero%) to be totally inadmissible. In the pre-Islamic period, certain Arab tribes used to carry on their trade with the help of money borrowed on the basis of interest from other tribes. Islam puts an end to such transactions altogether. Ibn Juraij says: "In the pre-Islamic period, the tribe of Banu Amr bin Auf used to take interest from the tribe of Banu-al-Mughira, and the Banu-al-Mughira used to pay this interest. When Islam came, the later owed a considerable amount of money to the former".
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Factors of Production in Islam The impermissible ways of Capital Investment in a business venture Money Lending Business “The Banu-al-Mughira used to pay interest to the Banu Thaqif" Let it be understood that the position of every Arab tribe was like that of a joint company, carrying on trade with the joint Capital of its individual members. So, when a tribe would borrow collectively from another tribe, it would usually be for the purposes of trade. The Holy Quran prohibited even this practice.
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Factors of Production in Islam The impermissible ways of Capital Investment in a business venture Money Lending Business Under the Islamic system of economy, if a man wants to lend his money to a businessman for being invested in business, he will have first to decide clearly whether he wishes to lend this money in order to have a share in the profit, or simply to help the businessman with his money. If he means to earn the right to a share in the profit by lending his money, he will have to adopt the mode of "partnership" or that of ―Co-operation'' (Mudarabah). That is to say, he too will have to bear the responsibility of profit or loss - if there is eventually a profit in the enterprise, he shall have a share in the profit; but if there is a loss, he shall have to share the loss too.
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Factors of Production in Islam The impermissible ways of Capital Investment in a business venture Money Lending Business Under the Islamic system of economy, If he is lending this money to another person by way of help, then he must necessarily regard this help as no more than help, and must forgo all demand for a “profit”. He will be entitled to get back only as much money as he has lent out. Islam considers it not only unjust but also meaningless that he should fix a rate of "interest" and thus place all the burden of a possible loss on the debtor. This discussion makes it clear that Islam places the responsibility of ''taking the risk of loss'' on Capital. The man who invests capital in a risk-bearing business enterprise shall have to take this risk.
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  • Summer '19
  • Faisal Sawar
  • Capitalism, Capital Investment

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