Merciful Finance

Islamic finance is merciful finance. The Qur’an starts with the name of our Lord, the “Divinely Merciful, the Intensely Merciful”. With a single exception, each and every subsequent chapter in the Qur’an starts in the exact same way. Additionally, the Qur’an goes on to describe the final Prophet ﷺ as “a mercy for existence”. The Qur’an and Prophetic tradition are the foundations upon which Islamic finance is built. Unsurprisingly, Islamic finance is a system filled with mercy and compassion. There are a few ways in which this characteristic manifest itself. These ways include the following:

Care for others

Financial support for who those unable to support themselves is an established part of Islam. Zakah, compulsory charity given to the poor from superfluous wealth, is one of the pillars of Islam. In addition to zakah, general charity is considered a commendable act in Islam. Muslims are taught that “whoever fulfilled the needs of his brother, Allah will fulfil his needs”.  In fact, the Prophet of Islam ﷺ went as far as saying that “he is not a believer whose stomach is filled while his neighbour goes hungry”.

The concept of caring for others is so vast that it extends to animals as well. The Prophet ﷺ said, “A man felt very thirsty while he was on the way, there he came across a well. He went down the well, quenched his thirst and came out. Meanwhile he saw a dog panting and licking mud because of excessive thirst. He said to himself, ‘This dog is suffering from thirst as I did.’ So, he went down the well again and filled his shoe with water and watered it. Allah thanked him for that deed and forgave him. The people said, ‘O Allah's Messenger (ﷺ)! Is there a reward for us in serving the animals?’ He replied: ‘Yes, there is a reward for serving any animate (living being).’” (Bukhari).

Avoidance of riba

Interest is an extremely cruel and harsh means of financing. The impact of riba is that it allows wealth to circulate among the wealthy as the wealthy can lend money while the poor are most likely to depend on debt for survival. This results in a negative outcome for society as a whole.

Irrespective of the situation of the borrower, the lender is bound to pressurize the borrower as much as possible as the lender has a monetary incentive to do so. This may put a borrower in a situation where the borrower must make decisions which aren’t in his, or his country’s best interest. When interest is used as a means of finance, as opposed to some sort of risk sharing mechanism, there is less of an incentive for the lender to ensure the venture of the borrower is successful.

The ideal form of financing in Islam is some form of risk sharing. This doesn’t result in the borrower taking on all the risk. Additionally, it incentivises the financier to have care, concern and be supportive of the success, or failure, of both parties as they have become inextricably linked together.

Merciful dealings

While mercy is a general theme within Islam, and by implication Islamic finance, there are numerous explicit references to being merciful. These include the command to “give the worker his wages before his sweat dries” or to be cognisant of the financial position of the borrower and grant them ease. In an ayat directed at lenders Allah says, “if it is difficult for someone to repay a debt, postpone it until a time of ease. And if you waive it as an act of charity, it will be better for you, if only you knew.” (Qur’an 2:280).

We are in the followers of the Beloved ﷺ, and we attempt to replicate his mercy. Let us use this month as a springboard to conscientiously incorporate mercy into our financial dealings. Let us treat our employees well, be kind in our dealings and be caring towards the less fortunate in our communities.

Allah Knows Best.