Adopt the concept and practice of Zakat and Sadaqa to eradicate poverty, says Ashraf Mohamedy.

Rehbar Financial Consultants, Bangalore organized an interactive session on the role and feasibility of Islamic finance in the contemporary world, here on June 7 at Feroze Estate, Cunningham Road, Bangalore.

Mr. Ashraf Mohamedy, director IDAFA Investments Pvt. Ltd., Mumbai, was the chief guest on the occasion. In the keynote address Mr. Ashraf, stressed that “adopting an interest free finance, in an interest based economy is a major challenge and great concern for the investors. Our capitalism is purely based on private ownership of the means of production, distribution, exchange and motive of profit being the prime stimulus for all efforts. Price mechanism, unrestricted economic freedom, free markets and interest are governing the capitalism of the country.”

He also highlighted that along with capitalism, socialism is also based on ownership and interference of state government and our economy is planned by the Centre. One of the fundamental rights, that is, complete freedom of expression is not being given.

Mr. Ashraf cited the findings of the United Nations Development Programme on Human Development report 1998 on ‘poverty alleviation’ which stated that, the richest 225 people own more wealth than the poorest 2.5 Billion. The report also declared that, “the richest three people have wealth which is equal to GDP of 47 poorest countries of the world.” If the 225 moneyed people would give a wealth tax of four percent, that would be enough money to eradicate world poverty, the report added.

Stressing out the solution and the alternative for the economic development; Mr. Ashraf said that “we should adopt Islamic economic system, that is, to follow the ‘way of life’ offered to us by Almighty Allah.” In the Holy Quran, Allah says that, He is the Sustainer and the absolute Owner. And, man is the trustee of God.”

“If we adopt the concept of Halal and Haram thoroughly, follow the system of Zakat and Sadaqah, it would be the permanent solution to eradicate poverty,” expressed Mr. Ashraf. He further added that we should avoid taking and paying interest. Our activities should be based on justice and equity.

“Not only Islam which called upon the prohibition of Interest, and also in the Manu Smriti (Hindu law) prohibition of usury is also mentioned,” said Mr. Ashraf.

“There are two types of Riba (often equalized as interest), Riba-Al Nasi’ah that is interest on loan and Riba-Al-Fadl, exchange or transaction of inferior quality with superior or vice-versa and other forms of malpractices which are declared as outlawed in Islam.”

To make people understand how interest kills economy of the country, he produced the example of former Nigerian president, Olusegun Obasanjo who had borrowed five Billion dollars from western creditors in 1978. Since then they paid back 16 Billion dollars. But it is ironical that the country still owes 31 Billion dollars! This is largely because of the compound interest and interest rate fluctuation.

Mr. Ashraf said that interest free banking is entirely based on equity, easy to accept and is different from other conventional banking, which includes: Mudaraba (fund manager), Musharaka (venture capital and PE funding), Ijara (leasing), Murabaha (cost plus) and finally, diminishing Musharaqa (reducing balance JV, Joint Venture).

A large audience had gathered on the occasion.Courtesy:Karnataka Muslims

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