Previously in the Simple Introduction to Islamic Finance, we mentioned a little bit about Qard-al-hasan as the only cash money lending allowed in Islamic finance
. What is Qard-al-hasan actually?
As aforementioned, Islam doesn’t allow usury (riba) and money is not a trading item but a means of exchange. Therefore if you want to lend out money to someone else, you cannot ask more than you have lent out. This has been written in Al Baqarah 278-279:
“O ye who believe! Fear God, and give up what remains of your demand for usury, if ye are indeed believers. If ye do it not, Take notice of war from God and His Apostle: But if ye turn back, ye shall have your capital sums: Deal not unjustly, and ye shall not be dealt with unjustly”
The principle of Qard-al-hasan or giving good loan is mentioned several times in the Quran, such as Al Baqarah 245, Al Maidah 12, Al Hadid 18. They all mentioned that giving good loan in the name of Allah (Qard al hasan) is one of a good deed that will be rewarded by Allah himself.
However, from past experience I haven’t encountered any Islamic banks that offer qardh-al-hasan, except for charitable cause. So, where do we see the practice in our daily life?
The Daily Practice of Qard-al-hasan
1. When you lend someone your money without asking more than the principal to be returned, that is called qard al-hasan. This form is the one that is most suggested in Islam. As told in Hadits: Rasullullah (pbuh) said, “In the night of Mi’raj I noticed that it was written on the door of Paradise: THE REWARD OF SADAQAH IS TEN FOLDS AND THE REWARD OF QARDH IS EIGHTEEN FOLDS. I asked Jibril: ‘why giving of loan is better than SADAQAH? Jibril said, ‘A person can always beg (for Sadaqah) even when he is not a deservant whereas one who takes loan does NOT take it unless he is in dire need’ (HR. Ibnu Majah dan Baihaqi from Abas bin Malik ra, Thabrani and Baihaqi told the the same hadits from Abu Umamah ra).
And you will not be wronged if you follow the command of Allah in Al Baqarah 282 which said that any transaction of trading (debt and commerce) must be written clearly on the presence of a witness.
“O ye who believe! When ye contract a debt for a fixed term, record it in writing. Let a scribe record it in writing between you in (terms of) equity. No scribe should refuse to write as Allah hath taught him, so let him write, and let him who incurreth the debt dictate, and let him observe his duty to Allah his Lord, and diminish naught thereof. …”
2. “Arisan“: a very common tradition in Indonesia where people gather together once in a defined period of time, commonly every month. The gathering serves not only as a means of silaturahim but also as place where they collect a defined sum of money from the members of the gathering then draw a name to determine who will get that pot of money for that month. So, we can say that the person who receive the money in the beginning of the round is borrower and the persons who receive it later is the lender. Most of the time, the group can also decide to give to someone who asks to receive the money for that month, for instance when s/he needs it. However Arisan usually only take place when the group member knows each other.
3. Company loan: a company usually gives to its employee(s) qard al-hasan for a definite period of time without any interest, but the payment is directly withdrawn from the employee’s salary. And usually the time of loan is short for instance 12 or 24 months and the amount is of course being limited.
The lender may not take any extra from the money s/he lends, however, if the borrower would like to extend his/her gratitude to the lender by giving more or gift, that is allowed. Yet, the lender himself has already receive the bigger return from Allah as promised, insya Allah.
“Who is it that will lend unto Allah a goodly loan, so that He may give it increase manifold ? Allah straiteneth and enlargeth. Unto Him ye will return.”
(Al Baqarah 245)
