Lending money by rates or simply the usury (part 02) : a different perspective

   When many economist admit the practical working of usury in monetary system now, and they justify that implementation by reason of the missed opportunities, today; many others are bearing the idea of cancelling the usury from all commercial contracts and lending policies, including practical Christians and Muslims who consider that as a violation of God’s legislation, in case of the big gap between the rich people who become richer, and the poor who became poorer too with time when many people can’t pay their interests regardless to the origin debt and its services which denotes a new crisis in the road. And the authorities prefer to escape forward in hoping to get results, but they don’t know how much they waste from time and from other hidden and fruitful experiences until now, or maybe deliberately isolated, but they agree also that these economic benefits of usury, “make enormous problem from ethical and philosophical aspects”.

    The Islamic banks provide several ways to invest in money avoiding the usury transactions, the first experiences in this way were unilateral tries since the forties of last century until seventies in Dubai. Then these experiences are expended in many countries when the UK integrated these transactions as a part among their financial systems to collecting more and bringing an important amount quantity from Muslim community in there.

    There are 7 or 8 faces of financial products in Islamic banking, and I’ll mention here the most important of them like:  “al-murabah” (win-win) or “al-musharakah” (contribution in the capital, and whether in benefit or losses), direct or indirect investments. Besides; some other procedures and mechanisms (which we can explain all of them in one article or two) to insure the legal transactions between people, organizations or banks.

    From their benefits on global economy, these rules decrease the inflation rates, because the money is used just in legal investments, and not to make a large expenditure without production increases the volume of cash without exchanging for foods or services. And we get a monetary inflation in fact. The Islamic perspective is based on the principle of lending money without zero interests but with a deadline of course. But in case of “procrastination” and delay in payment of debts, what should we do if someone exceeds that deadline?

Regardless to the sinfulness toward the god (the reason which push the majority of people to rushing in payment); the logical sanctions are the imprisonment, inhibition him from the licit advantages for whole people, prevention from the financial facilities in his transactions and the reputation of - person/organization/company- in business generally.

    And from practical solutions we can cite: the collaboration between banks and financial institutions against those who delayed intentionally to pay off their debts to adding them into the blacklist.  Or like it is going now by holding on some of his properties to the bank or the entering of bank by a certain portion with the debtor in his realties.

Lending money by rates or simply the usury

    I talked in two previous articles about “Ez-zakah” and I discussed the matter how to proceed the way to make an equality between people in their incomes. But the content was talking only about the cash sources to support the fund of this institution, because there are other sources are existing also to share them like we do with money and apply them too for the same purpose, like the agricultural crops yearly and livestock which are regarded as an asset too. Today we’ll turn to another topic knowing that we’re staying in the same context.

    This March, the EU bank cuts the benchmark of interest rate until 0% to stimulate economy, not only in Europe, even in US, Canada and Japan, the banks cut the interest rate to the negative rates, in order to insure some recoveries for economy and avoid the case of collapse or recessions, but the problem can be worse, in brief when the risks of inflation increase because of the big amount of money created and delivered without stock of gold or foreign currency, which leads to falls of prices then the weakening of production’s cycle, so the question is: what’s the harm on economy because of the existing of interest high or less from banks?  And why these rates of interests make negative effects on economies’ growth?

    From definition; the usury is an illegal action to lending money at high rates of interest. From the Christian perspective, clear chapters from the bible preventing the deal on usury. But the church –after many centuries- distinguished between the people in the same society about the way how to apply on them these rules of interests (the nobles were like victims who deserve to get compensations, else the money will stay between hand of church instead to direct toward poor), “that fact strengthen the financial power of church into the society.” so this practice is forbidden from all religions on account of its bad consequences on the economy, and social life in every society.

    Although the term “usury” is widely taken to mean “excessive interest” (which is never defined how many exactly) or illegal interest, now the usury is defined as a practice to lend the money with an interest.  This interest is fixed by time, and when the time isn’t enough to return (money + interest); this last will grow up more and more

    A European study about the “usury laws in EU” said it its main finding that usury ceiling had led to a high degree of exclusion from small loans for poor people in those countries and created a market of illegal lending.

    Of course, government policy for decades has been to encourage lenders to provide mortgage loans to lower-income families, “In this way, homeownership would be impossible to all but the wealthiest people they do”. That looks unjust in somehow when people can’t guarantee the basic needs for a normal life to a family (I mean to have a shelter). In the next article we’ll continue a second part to show a different perspective too going on the same way to fight the usury.

Some details about Ez-zakah mechanism

    I talked in the previous article about one important mechanism “EZ-ZAKAH” and I displayed generally how this system can affect on people’s life, like the social benefits on people, and the big results of equality in incomes even we don’t reach 100% but we can obtain better than we're in now. This system was used in past and its effectiveness has proven. But I didn’t mention how the mechanism is applied and how is the way exactly to apply that?

    To make it more obvious for people who read before, I’ll review some details:

    In first place; It isn’t easy to make rich people dispense of some of their money annually, and that calls in minds that the matter is depending on kind of attitude (conduct / manners), which work in starting from the human belief of whether charity and obligation to do. The feeling of guiltiness “in this way” is greater than when it comes “in policies’ way”. I mean the religious aspect in the human character, people can deceive rules but they can’t deceive themselves when there is a true belief inside, it’s necessary so to complete the integrity and sincerity of human being, and i talked before that we can't make a strict rules of all (social, economic and cultural sides) of society’s life without interference of manners and religions too.

    Secondly, i didn't mention the people who really deserve this money, besides to say they're 8 kinds of people, besides the strict procedures are detailed in this mechanism to function correctly and efficiently. And these people who deserve to get this amount of money, they're also needed to have some qualities (ethic), so like the first one accepts to give his money, the second also must have some characteristics. And that brings the mutual confidence and trust between all people in the same society, especially when they see the positive effects of their money appearing in the fact.

    Thirdly, I can notice some kinds who deserve to get that money, and give examples for that. The poor people (in 2 parts: who haven't the food even for one day, and who can't provide to themselves everything necessary to live (basic for life)). It’s a right for those in bondage and those in debt. For the wayfarer people who travel in everywhere for study or seeking livelihood. The people who employed to administer and gather that big money from rich people in all provinces, also they have a portion, like charitable projects,....etc and other kinds as well. The students (in different ages) also get their finance from this money. And every kind - among these 8 kinds - has a defined portion, precisely.

     It’s true that the world has a huge diversity between people, and that appears also in their experiences, and they’re amazing and successful experiences which are able to change our world is we apply them, a lot of experiences are in different nations and accumulated for several years to be fruitful. If we learn from each other and share the valuable knowledge (wherever it is), we can get many benefits and have better life in all sides mentioned above.