This part is taken from lecture:
The Prohibition of Riba in The Qur’an & Sunnah, Malaysia 2011.
28 June 2011/ 26 Rajab 1432H
“Prophet (صلى الله عليه و آله و سلم) will sometimes go to the shops and buy goods. But (sometimes) he would not have the money to pay. So the shop keeper would give him the goods and he (صلى الله عليه و آله و سلم) would promise to pay him later. This is called credit transaction.
So a credit transaction; to buy now and pay later is Halal. It is Sunnah.
However because the shop keeper had to wait for his money, he was not allowed to raise the price. If you can raise the price because you have to wait for the money; then money can grow because of time. That is Riba.
Money cannot grow because of time.
So a credit transaction is permissible; provided that the credit price and the cash price are the same. There can be no increase in credit price over cash price.
If the credit price is higher than the cash price; then the difference between the prices would be Riba.
What Islamic Banks around the world are doing: if you want buy a house and you do not have the money to pay cash, the cash price is five hundred thousand, the Islamic Banks say no problem. We will buy the house for five hundred thousand. (The cash price) but we will sell that house to you now on credit. We give you 20 years to pay.
But (because we have to wait for our money for 20 years) our credit price is now twice the cash price One Million.
The difference between the credit price and the cash price becomes Riba. But the Islamic Bank say, No, this is something called Murabaha.
Murabaha is a transaction in which something is sold at a profit and both the buyer and the seller know the amount of profit and accept it.
But this is not Murabaha, no. If it was a cash transaction, yes. But this is a credit transaction. And because it is a credit transaction the difference between the credit price and the cash price is Riba.
I call it Riba through the back door. And if you want to differ with me, no problem.
If people want to use Islamic Banks; sure they can do that. That’s your choice.
But if you say I am wrong and want to silence me, and you want to band me, and you want come after me with boxing gloves, remember I can challenge you, just remember that.”