07-11-2005, 02:24 AM
i agree with ehson. we shud not test our wits against the quranic teachings.
Dear Mr. Jaan
In ur example the bank is lending 100,000 dirhams to some entrepreneurs. The objective of an entrepreneur is to make profit. Assuming that he uses all the 100,000 in paying for the cost of materials, factory overhead and other costs and incurs 10,000 financial charges ( the interest on the loan), the entrepreneur must be planning to attain some profit. i.e his revenue should exceed his costs. if he cannot make profit it makes no sense for him to carry on his business. his revenue should exceed 110,000 dirhams.
in ur example the money supply is limited to 100,000 dirhams which is creating a liquidity crisis. The economy can expand but there is not enough money there to oil the wheels of economy so the central bank will have to inject some more money.
there is no fault on the part of the bank because bank has to bear the risk of defaults by the debtors as well as the bank has to pay some interest on the deposits maintained with bank by the depositors. So in order to run the business profitably the bank has to charge interest on the advances. Otherwise the whole banking system in ur example would collapse.
My point is that bank is not the culprit for liquidity crisis in ur example. the real culprit is the central bank in ur example which is totally absent in ur example.
<b>
BOTTOM LINE money supply should be increased with the growth in economy. it shuld ideally grow at the same rate as the growth rate of economy.
</b>
CONCLUSION Riba is totally haram (as we all know from quran). However the example quoted by u cannot be quoted in support of the quranic teachings.
Peace!
I being a responsible muslim would advise u to be careful while posting things related to religion because non-muslims and muslims of weak faith may also read ur posts and draw wrong conclusions and get wrong ideas from ur post.
May Allah increase our faith.
Ice Blue
Dear Mr. Jaan
In ur example the bank is lending 100,000 dirhams to some entrepreneurs. The objective of an entrepreneur is to make profit. Assuming that he uses all the 100,000 in paying for the cost of materials, factory overhead and other costs and incurs 10,000 financial charges ( the interest on the loan), the entrepreneur must be planning to attain some profit. i.e his revenue should exceed his costs. if he cannot make profit it makes no sense for him to carry on his business. his revenue should exceed 110,000 dirhams.
in ur example the money supply is limited to 100,000 dirhams which is creating a liquidity crisis. The economy can expand but there is not enough money there to oil the wheels of economy so the central bank will have to inject some more money.
there is no fault on the part of the bank because bank has to bear the risk of defaults by the debtors as well as the bank has to pay some interest on the deposits maintained with bank by the depositors. So in order to run the business profitably the bank has to charge interest on the advances. Otherwise the whole banking system in ur example would collapse.
My point is that bank is not the culprit for liquidity crisis in ur example. the real culprit is the central bank in ur example which is totally absent in ur example.
<b>
BOTTOM LINE money supply should be increased with the growth in economy. it shuld ideally grow at the same rate as the growth rate of economy.
</b>
CONCLUSION Riba is totally haram (as we all know from quran). However the example quoted by u cannot be quoted in support of the quranic teachings.
Peace!
I being a responsible muslim would advise u to be careful while posting things related to religion because non-muslims and muslims of weak faith may also read ur posts and draw wrong conclusions and get wrong ideas from ur post.
May Allah increase our faith.
Ice Blue
