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Monday, 5 March 2012

Malaysia: CIMB Islamic plans to launch Ar-Rahnu Islamic pawnbroking

:The CIMB Islamic Bank plans to launch the Ar-Rahnu Islamic pawnbroking business in Malaysia in the second half of this year following the success of the similar business in Indonesia under CIMB Niaga Syariah, said chief executive officer Badlisyah Abdul Ghani.

“We’ve been fairly successful in our Ar-Rahnu business in Indonesia and it’s time for us to do the business here. We”ve obtained Bank Negara’s approval and once we finalise our delivery framework, we’ll launch the business most likely in the east coast.

“Malaysia’s market size is large and we believe there are ample opportunities for us despite being a late starter,” he told Bernama in an interview.

Although Badlisyah was cautious about the performance this year, he expects CIMB Islamic Bank and the group’s overall Islamic banking franchise to experience another good year.
“I am cautiously optimistic about 2012 in the light of all that is happening globally and the tighter regulatory framework and the general election fever at home, but I believe we will do well this year, better than last year. We are focused on growing our CASA (Current Account Savings Account) and hope to see double-digit growth in both our financing and deposit base,” he said.

CIMB Islamic has done well in Islamic investment banking, topping the global sukuk (Islamic bond) league table again last year, and entrenching its position as the second largest Islamic bank by assets in Malaysia and in the Asean region. For its financial year ended Dec 31 2011, CIMB Islamic Bank registered another record year, posting RM447 million profit before zakat (tithe), about nine per cent of the group’s pre-tax profit.

He said the bank’s assets grew 24.7 per cent to RM28.4 billion while the total financing book grew 28.9 per cent to RM29.2 billion, 15 per cent of the group’s total financing and 13 per cent of the overall financing asset of the Islamic banking industry.
On group level, Badlisyah said total revenue from Islamic banking operations across the CIMB Group totalled RM1.47 billion, the highest Islamic revenue generated since the group established the “CIMB Islamic” franchise in 2002.

Badlisyah said Malaysia’s operations contributed 89 per cent of the group’s total Islamic banking revenue, with Indonesia and Singapore accounting for about seven per cent and one per cent, respectively.

“We believe there is huge potential upside in Indonesia and we hope to grow its contribution to overall business to 10 per cent or more this year. The idea is to have a regionalised Islamic business in tandem with CIMB Group’s conventional business,” he added.

(Bernama, 05 March2012)

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Wisdom behind Prohibition of Riba - from Islam On-line Fatwa Bank


Could you please furnish me with the wisdom behind the prohibition of Riba?


In the Name of Allah, Most Gracious, Most Merciful.

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.

Dear questioner, we commend your pursuit of knowledge and your keenness to seek what is lawful and avoid what is not. We earnestly implore Allah to bless your efforts in this honorable way.

In an attempt to furnish you with a Fatwa regarding the wisdom behind the prohibition of Riba, we would like to cite for you what the eminent Muslim scholar Sheikh Yusuf Al-Qaradawi, stated in his well-known book The Lawful and the Prohibited in Islam, regarding the issue:

“Islam permits increase in capital through trade. Referring to this, Allah Almighty says, “O you who believe, do not consume your property among yourselves wrongfully, but let there be trade by mutual consent…” (An-Nisa’: 29)

At the same time, Islam blocks the way for anyone who tries to increase his capital through lending on usury or interest (Rriba), whether it is at a low or a high rate, reprimanding the Jews for taking usury, even though they had been prohibited to do so.

Among the last revelations are the following verses of Surat al-Baqarah: “O you who believe, fear Allah and give up what remains due to you of interest if you are indeed believers. And if you do not, then be warned of war (against you) by Allah and His Messenger, while if you repent you shall have your capital. Do not do wrong and you shall not be wronged.” (Al-Baqarah: 278-279)

The Prophet (peace and blessings be upon him) declared war on usury and those who deal in it; he pointed out its dangers to society, saying, “When usury and fornication appear in a community, the people of that community render themselves deserving of the punishment of Allah.” (Reported by Al-Hakim; Abu Y’ala has reported something similar on good authority)

Judaism, prior to Islam, had also prohibited interest. In the Old Testament we read, “If you lend money to any of my people with you who is poor, you shall not be to him as a creditor, neither shall you require interest from him.” (Ex. 22:25)

As for Christianity, the Gospel according to Luke reads, Give away to every one who begs of you, and of him who takes away from your goods, do not demand them back again. (Luke 6:30)

It is, therefore, sad to see that the Old Testament has been subjected to such distortions that the meaning of “my people,” which originally had a broader application, later became restricted to the Jews alone, as we read in Deuteronomy, You may lend on interest to a foreigner, but to your brother you shall not lend on inters”. (Deut. 23:20)

The wisdom behind the prohibition of interest

The strict prohibition of interest in Islam is a result of its deep concern for the moral, social, and economic welfare of mankind. Muslim scholars have sound arguments explaining the wisdom of this prohibition, and recent studies have confirmed their opinions, with some additions and extensions of their arguments.

We confine ourselves to what Imam al-Razi says in his tafsir of the Qur’an:

First: The taking of interest implies appropriating another person’s property without giving him anything in exchange, because one who lends one dirham for two dirhams gets the extra dirham for nothing. Now, a man’s property is for (the purpose of) fulfilling his needs and it has great sanctity, according to the hadith, “A man’s property is as sacred as his blood.” (Reported by Abu Na’eem) This means that taking it from him without giving him something in exchange is haram.
Second: Dependence on interest prevents people from working to earn money, since the person with dirhams can earn an extra dirham through interest, either in advance or at a later date, without working for it. The value of work will consequently be reduced in his estimation, and he will not bother to take the trouble of running a business or risking his money in trade or industry. This will lead to depriving people of benefits, and the business of the world cannot go on without industries, trade and commerce, building and construction, all of which need capital at risk. This, from an economic point of view, is unquestionably a weighty argument.
Third: Permitting the taking of interest discourages people from doing good to one another, as is required by Islam. If interest is prohibited in a society, people will lend to each other with good will, expecting back no more than what they have loaned, while if interest is made permissible the needy person will be required to pay back more on loans (than he has borrowed), weakening his feelings of good will and friendliness toward the lender. (This is the moral aspect of the prohibition of interest.)
Fourth: The lender is very likely to be wealthy and the borrower poor. If interest is allowed, the rich will exploit the poor, and this is against the spirit of mercy and charity. (This is the social aspect of the prohibition of interest.) (Tafsir by al-Fakhr al-Deen al-Razi, vol. 7, p. 4.)
Thus, in a society in which interest is lawful, the strong benefit from the suffering of the weak. As a result, the rich become richer and the poor poorer, creating socio-economic classes in the society separated by wide gulfs. Naturally, this generates envy and hatred among the poor toward the rich, and contempt and callousness among the rich toward the poor. Conflicts arise, the socio-economic fabric is rent, revolutions are born, and social order is threatened. Recent history amply illustrates the dangers to the peace and stability of nations inherent in interest-based economies.”

Source: Islam On-line Fatwa Bank

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