I personally agree with you on the stance against interest and it being morally wrong, but I would like to ask about circumstances where someone really wants to go out there and help people and probably to them interest is the only way to expand the pool of funds. I mean with the economic conditions in Pakistan or even in Bangladesh as a matter of fact, there are barely any investment opportunities whatsoever. What would you suggest for such a person who wants to use micro-finance to help people without the use of interest? Currently the estimated market for micro-finance is 29,000,000. There is just so much potential. I am only asking because I feel that with your qualifications you can suggest well. I do understand the restrictions Islam imposes on the interest taking. They are definitely valid and I also remember that last year in class of Islamic economics we discussed that with the current social system and the institutional weaknesses if we introduce Interest free banking probably it would lead to further inequality in our society. Also in such conditions people often talk about choosing the lesser of the two evils. How far should that be valid in this condition? To me the case of interest in microfinance sounds a little different from the example you gave about wine drinking(benefit going to the poor) because in that case there would be many other options which one could take up to help people. Please correct me if I am wrong.
Answer
While the kind of work institutions involved in the field of micro-finance business, like Grameen Bank, are doing is admirable in its real spirit, what they are doing is inconsistent with the teachings of Islam. We should therefore encourage them to continue doing what they have done while making their operations more and more consistent with those teachings.
I would suggest to somebody like you who is devoted to both causes (adherence to Islamic teachings and welfare of the poor) that you devote your energies to the task of designing products and institutions that are able to achieve both objectives simultaneously. I am sure it is a difficult task but not impossible. With the kind of achievements Grameen Bank has been able to achieve whereby it has silenced all those people who thought the poor are ‘unbankable’, one can always confidently hope that non-interest-based lending to such people would also be equally successful, if not more, with such people. Why should you not be the person who initiates the new idea? Even though profit-and-loss sharing may appear to be an unworkable idea in the present times, profit-only sharing may not be quite as difficult.
You can look at the different models of Islamic banks that are functioning these days and choose the kind of product range that suits micro-financing for the initial modeling of your institution. I hope and pray that you are able to bring about a breakthrough in this field.