Islam Encourages Business
The Holy Prophet (SAW) has said:
"There are 70 parts of Ibadat. The best part of it is that of earning in a Halaal way, the best action is to work and earn livelihood by Halaal means. If a person earns by Halaal means then he will get the Thawab equal to the Prophets (A) on the day of Qiyamat."
The Shariah of Islam encourages Trade. There are 10 parts of earning, out of which 9 parts are in business.
However, the Imams (A) always said that a person engaging in trade must know its Masails to avoid falling into sinning.
Etiquette of doing Business
The Holy Prophet (S) said that when doing trade to note the following points :
1. No interest should be transacted (details to follow).
2. No swearing should be done even if one is speaking the truth.
3. Seller should not conceal defect of his own goods.
4. Seller should not falsely praise the quality of ones goods.
5. A buyer should not find fault falsely in goods when buying.
There are 4 Mustahabats to follow while in business transaction :
1. Price should be equal to all Muslims.
2. In question of price, one should not be harsh while dealing.
3. Give more and take less in quantitative measurements.
4. To take goods if returned if buyer does not want goods.
It is Wajib for a person to earn enough so that he may be able to feed his wife and children.
Six types of trades are Haraam:
To buy or sell intoxicating drinks, non-hunting dogs, pigs, dead animals e.g. meat, skins, hides of non-zabiha animals, etc. Other dealings involving Najis items is allowed if a good and logic use of it is being made e.g. fertilisers, etc.
To buy or sell wild animals.
To buy or sell Ghasbi (usurped) things.
To buy or sell goods used for Haraam purposea, e.g. instruments of gambling, etc.
To receive or give interest during transactions.
To sell adulterated (mixed) goods with full prior knowledge - for example, seeling a bag of flour that contains chalk as well, etc.
Types of trade which are Makruh are:
To sell ones estate or buildings, unless if one is going to buy a new estate (It is recommended in Shariah of Islam that one should live in ones own house).
Just slaughtering animals (It is said that in doing so ones mind becomes very hard).
Just to sell Kafan (shroud). As a side business it is allowed.
To do transaction with people of low morals e.g. thieves, smugglers, etc.
To do any business during the time from Dawn to Sunrise. It is the time reserved for the Ibadat of Allah.
To sell grains of foods, because if hoarding is committed then the consequences to be faced from Allah are grave so it has been made Makruh.
To swear during a transaction even when it is true.
INTEREST AND USURY
The basic element of Interest is the exchange of one commodity for the same commodity with an increase in payment. The Islamic law strictly prohibits Usury (the practice of lending money at a rate of Interest). The practice of Usury is equal to acting with hostility against Allah and the Holy Prophet (S). The Holy Quran says:
"O Believers, have fear of Allah and forego what is still due to you from usury, if you are (true) believers; but if you do not do so, be warned of war against you by Allah and His Messenger" (al-Baqarah, 2:278)
Our 8th Imam, Imam Ali ar-Reza (A) has said:
"Usury is unlawful, for Allah, the Almighty has forbidden it because it brings ruin and leads to the wastage of the property of the people. Everybody becomes interested in making easy profit and gives up the practice of advancing Interest-free loans, though it is an act of virtue to help the needy and to lend them money without Interest. In any case, Usury leads to corruption, injustice, violation of the rights of others and the wastage of property."
EVIL RESULTS OF USURY
The above Hadith clearly mentions the evil results of Usury. Other common effects of Usury are:
1. Exploitation and destruction of the poor in a society:
In most cases a person borrows money because his needs are greater than his earnings. By taking a loan on Interest, his debt becomes more than he actually needed. Furthermore, his needs begin to continue rising in more proportion than his earnings; thus widening the gap between income and expenditure. On top of the widening gap if he had to pay Interest then his position would worsen to an extent where most of his income would be used up in repaying the Interest and would not be paying the loan off yet.
2. Strengthening the rich society:
With Usury, the rich get richer; as a result the rich society takes control over both the production and consumption of commodities. They control the prices of almost all items, even those grown and produced overseas. Two extremes of the rich and the poor, the well-fed and the starving, the powerful and the powerless; are created in the society. Sadly however, these same rich society then misuses its power and influence to rule over the peoples' properties, honour and lives in any way they wish and desire. Because of their financial power, the rich become arrogant, an attitude totally denounced by Islam.
3. Discouragement towards helping a fellow Muslim:
Because of the temptation of receiving Interest in the extra money lying in the banks, one may be discouraged in advancing an Interest-free loan to a fellow Muslim who is needy, in spite of the fact that Allah has promised abundant reward for lending Interest-free loan money and has regarded this act better than giving the charity.
4. Creation of unemployment:
Due to Interest incentive, many individuals keep their money in the high Interest earning banks instead of investing in the business or industries which create employment. Even if the banks invest the money of savers, they would do it in those areas that benefit them, taking no consideration of the benefit of the poor section of the society.
Due to high Interest rates on the borrowing of loans, the production cost rises resulting into high prices of commodities. Furthermore, since the rich continues getting richer, he can afford to bid higher prices of goods especially those items whose availability is scarce.
TAKING INTEREST FROM KAFIR:
According to fatwas of Ayatullah Seestani, a Muslim cannot take Interest from Kafir-e-Zimmi (those kafirs who are under the protection of Islamic state).
It is Ehttyate Wajib not to take Interest from all other Kafirs who are known as Kafir-e-Harbi.
However, in case the Kafirs in both the above cases, agree to pay the Interest on there own free will, then the amount may be accepted not as Interest but with other intentions.