loan as a tool to control the needy by exploiting their labor or eventually
confiscating their lands, houses, and crops. Historically, some of the rich
gave their lower quality assets and foods to the needy. They also used harsh
language and actions to remind the poor and needy of the favors that had
been bestowed on them. All original teachings in Judaism, Christianity, and
Islam prohibit such behavior.
Islam advanced and expanded Shari’aa one step further by divinely
institutionalizing the rules of lending to the poor, pronouncing that the only
loan that is recognized is known asqard hassan(a good bite/loan). It is di-
vinely considered the only loan allowed in Islam. The qard hassan can be a
term loan, with a time limit for the money to be paid back—in a flexible and
merciful way, depending on the specific situation and needs of the borrow-
ing poor and needy—or, in most cases, without a time limit. In fact, in Shar-
i’aa the qard hassan is looked upon as a donation to be paid back by the
heavily indebted (for good reasons) whenever they can afford to. The qard
(or the bite) out of the owner’s assets is considered a loan to God. In Islam,
as in the original teachings of Judaism and Christianity, no additional direct
or indirect benefit (such as labor, free use of the indebted person’s residence,
or receipt of gifts from the person who took the loan) can be drawn out of
such a loan, because these are considered services that command a value
and, hence, are considered paymentsof implied interest. Shari’aa even
encourages that the payback be made at the place of residence of the poor
borrower, to relieve them from paying the cost of travel (which itself can be
considered an implied interest payment). Judeo-Christian-Islamic rules
stress that the dignity of the borrowers should be preserved by never telling
others about the loan given to them, never trying to take advantage of the
borrowers, never trying to pressurethem to expedite the payback of the
loan, nor even frowning in their face. The Shari’aa goes further, encourag-
ing the Muslim to forgive the loan in case the borrower is heavily indebted
and in no position to pay the loan off. The Department of Treasury of the
State (Bayt ul Maal) is also made responsible by Shari’aa to collect alms
(zakah) from the citizens and use part of this money to relieve those who
are heavily indebted and cannot pay the loans back (giving alms in Islam is
calledthe ritual of zakah, which means the ritual of purifying one’s assets
by paying back the right of God in these assets). Shari’aa requires that if the
indebted person dies, the lender forgive the loan as a gesture of good will if
the family cannot meet the demand. If the family is able to pay back, the
heirs are required to pay the loan off.
By the advent of Islam, the world economic systems had changed
from the slavery system of the ancient Egyptians during the time of
Moses (pp), and the agrarian systems that were prevalent when Jesus
(pp) was commissioned. The world had progressed with the development
20 THE ART OF ISLAMIC BANKING AND FINANCE