Rulings of Employment in the Finance Industry by Dr. Main AlQudah

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financial 148 employment 87 rulings 76 university 73 services 69 prohibited 55 insurance 51 necessity 40 credit 37 riba 33 ruling 32 service 32 unlawful 32 finance 31 muslim 31 department 29 haram 29 transactions 29

DOCUMENT KEY POINTS

• research institute Dr.Main Khalid AlQudah assistant professor at AlHuda University AMJA permanent fatwa committee member translated by osamah salhia b
• published in the th issue of the saleh kamil center for islamic economics academic journal at al azhar university january

• introduction in the name of allah the most gracious the most merciful all praise is due to allah we praise him and seek his guidance
• in an effort to cater to the muslim community urgent need for religious instruction regarding employment in the finance industry AMJA leadership council dedicated the assembly th annual convention to addressing its nuances

• this research does not aim to replicate past works or redefine our legacy of islamic scholarship rather the aim is to practically apply islamic juridical discourse and to shed light on the ruling of some of these dealings and the legality of being involved at any capacity
• objective the convention assessed the impact of necessity daroora need haja and general hardship a umoom al balwa on the ruling of holding various job positions available in this field in non muslim lands

• Ijtihad would be applied to expose the reason for the rulinga alshatibi in terms of employment in the finance industry the relevant general rulings are already established with sound juridical reasoning however the proper application remains an area of scholarly speculation
• the first category of Ijtihad refers to tahqeeq al manat which is a valid method by consensus

• the opinion upheld by the hanafi school that states that partaking in invalid transactions with unbelievers in a the abode of war dar al harb has been declared weak by a multitude of scholars this opinion does not maintain any merit when compared to the plethora of legal evidence that attests to it being unlawful to engage in invalid transactions

• research layout chapter one an overview of the finance industry this chapter covers the following sections insurance banking mortgaging credit cards brokerage and financial advisory multi service financial corporations chapter two job positions available in this field this chapter covers the following sections medial and senior administrative departments communications
• rulings can change based on necessity daroora or need haja according to its specific fiqh use not its definition in usul al fiqh

• consumer banking public relations finance human resources operations risk evaluation sales technical support chapter three the ruling of working in this field this chapter contains the following sections jobs permissible or prohibited by default ruling jobs that are abhorred or impermissible prohibited for its own sake vs
• prohibited due to another cause permissibility of an act prohibited in itself due to necessity permissibility of haram li ghayrih due to need research conclusions

• i ask allah the all capable to accept this humble work and to bless us to discern truth and follow it and to discern falsehood and avoid it
• i pray that allah blessings be upon muhammad the best of his creation and upon his family and companions in entirety

• chapter one an overview of the finance industry the finance industry comprises an intricate system of financial services so intertwined that each service can hardly be assessed independently
• the fiqh jurist is confined by the questioner in the sense that his answer is in part tailored by the framework imposed by the question

• it offers a number of services including autoclubgroup home and life insurance roadside assistance this service includes towing flat tire and winching services battery jump start and replacement services vehicle lockout assistance emergency fuel delivery hour customer support along with free aaa maps tour book guides and triptik routing maps

• the services offered by the american automobile association aaa are by no means limited to insurance they include loaning finance and a multitude of other non financial services
• however the important difference relevant to this research is that checking accounts are usually non interest bearing whereas savings accounts and cds accrue a fixated amount of interest periodically added to the account

• mortgage agreement the bank places the property as collateral for the loan and the borrower is the lienholder on the deed
• for example if he paid of the home value which has a sum total of he will receive a loan of in return for placing of his home as collateral

• individual retirement accounts iras with this account the bank offers the investor a variety of investment options
• the money manager would provide potential investors with a disclosure document known as a prospectus that describes financial securities including material information about a company business its financial records and its officers and directors

• however the bank international operations actively purchase its international stocks and that is the source of the remainder of its income
• personal loans boat loans auto loans and aircraft loans are all interest bearing loans

• there are two ways that properties are mortgaged in the united states wikipedia foreclosure this is a legal process in which the lender obtains a court order or follows statutory procedure to sell the asset used as collateral for the loan
• refinance home equity loans and home equity lines of credit heloc mortgage reverse mortgage this is a home loan that provides cash payments based on home equity

• the following methods are all included in the credit card agreement wikipedia interchange fees basically when cardholders purchase merchandise that values for example the credit card company pays the seller only or
• this is similar to the agreement in jahiliyya known as defer for an increase in which the borrower would request a payment deferral and in return he would pay more than the agreed amount

• when the grace period finishes an interest rate is added to the cardholder balance even if he pays it in full
• evidently the only services that may not include interest riba are the interchange fees annual fees and currency conversion fees

• section five brokerage and financial advisory speculation mudaraba of the money market is its own practice in the united states that has separate statutes and regulations
• fidelity investments is a retail brokerage firm that offers the following services to its clientele fidelity mutual funds stock trading fidelity speculates the stock and bonds market with the direct supervision of its clients

• since chase bank is indigenous to the united states it is perhaps the most suitable case study for multi service financial corporations chase common bank account options which are checking accounts savings accounts and certificates of deposit cds
• this london based multinational corporation has a strong presence in the united states and plays a critical role in finance investment financial advisory and stock market brokerage

• the bank makes fixed dollar payments to the annuitant for the term of the contract usually until the annuitant death
• the common loans such as home equity loans mortgages automobile loans and student loans

• chapter summary after explaining the functions of the various sectors in the finance industry the following conclusions can be made the services in the finance industry in the united states are strongly intertwined

• it differs from ijara in that there doesn t need to be a specific individual hired the individual is only deserving of the compensation if the task is completed and it cannot have a specific timetable
• usually exceed the grace period one time or another or otherwise pay off their credit debts in multiple payments or overdraft their credit cards

• also the fees that credit card companies charge business owners can also be described as compensation for hiring services ijara because the credit card companies are providing the service of delivering the money paid by the customers via credit card
• as previously mentioned fidelity investments has investments in telecommunications transportation hotels commercial lumber and building materials and newspapers and it also has employment and payroll agencies

• chapter two job positions available in this field it is evident that banking insurance and loan services strongly intertwine similar is the condition of the job positions available in this industry
• at a deeper glance one will realize that it is impractical to disassociate administrative work that directly deals with prohibited transactions from positions that facilitate the logistics such as maintenance or security

• section one job positions in chase retail banking the jobs will be listed from lower to higher grade bank teller a teller directly deals with the bank patrons deposits and withdrawals from checking and savings accounts
• financial advisor if the patron requests the investment department he will be assisted by a financial advisor who will clarify the bank investment policies and speculation in stocks and bonds

• head of retail banking the head of retail banking represents the board of directors in supervising the financial services of the company
• supervisor a supervisor in this division supervises loan officers area manager an area manager supervises supervisors regional manager supervises the work of a number of area managers

• head of mortgage lending the head of mortgage lending is responsible for the entire mortgage division in the corporation and he reports directly to the ceo in the executive committee meetings
• area manager market manager regional manager head of investment banking business banking department this department starts with a business banker and has the same hierarchy as previous departments

• section two job positions in bank of america medial and senior administrative departments these departments usually report directly to the ceo and do not communicate with the general populous
• corporate executives this subdivision is responsible for developing long term corporate strategies and planning corporate communications with other organizations

• risk management this subdivision consists of a legal advisory panel that provides legal representation for the bank in the court of law and it reviews the bank paperwork to ensure that it complies with legal ordinance
• communications department this department focuses on enhancing communications and facilitating the information flow throughout the corporate hierarchy and to the front desk employees who directly deal with the bank patrons

• this department contains a number of subdivisions corporate workplace this subdivision communicates with other competing corporations customer services this subdivision handles the bank customer hotline and addresses their questions and concerns

• human resources this department works on defining the job descriptions in the bank and specifies all necessary credentials for the positions
• it also offers financial advisory to high net worth investors to increase their revenue and to legally avoid taxation

• information technology it this department secures the bank it infrastructure which includes the consumer information database transaction details and the software and networks that maintain the bank services
• these reports include fraud risk assessment which basically analyzes the effects of fraud on the company success and on consumer approval ratings

• chapter summary after explaining the available jobs in this field the following conclusions present a degree of significance in addressing the fiqh nuances the jobs in this field are not limited to the ones mentioned other companies may have a different setup for their corporate hierarchy because this is not a matter mandated by law it is left to the discretion of each corporation
• to hold such an important position he would usually make his way up the chain and have his share of what the qur an described as one stands who is being beaten by satan into insanity al baqarah for those who deal interest

• for example one can work as a mechanic in an aaa car care center or as a commercial lumber and building materials salesman with fidelity or an it technician with chase
• the american automobile association aaa offers auto repair and driver education and fidelity controls other businesses such as telecommunications hotels commercial lumber and building materials and newspapers

• in the united states it is prevalent for a corporation to contract a human resources agency to handle the employment recruitment process or an information technology agency to set up its it infrastructure
• it is noteworthy that some companies contract the responsibilities of an entire department to an individual agency

• chapter three the ruling of working in this field after explaining the intricacies of the financial industry and the services it offers as well as the employment possibilities it is now suitable to present the religious edicts involved
• it will also address cases that are forbidden for its own sake haram li dhatih and cases that are prohibited due to another cause haram li ghayrih that is a prohibition of means

• every business that is permissible by default ruling is initially deemed a lawful workplace and remains so as long as there aren t external causes of prohibition such as stipulating an invalid requisite shart fasid interest riba or monopolizing the product ihtikar or dealing fraudulently or dealing in excess uncertainty gharar fahish

• al bukhari a more evident testimony to this concept is the prophet dealings with the polytheists of quraysh before hijra and with the jews of madinah after hijra and his acceptance of a gift from cyrus of alexandria with his full knowledge that they all deal in usury

• jobs that are abhorred or forbidden deeds either fall under the general sense of permissibility which comprises obligations wajib recommendations mandub and lawful deeds mubah or under the general sense of prohibitions nahy which comprises abhorred makruh or forbidden haram acts

• this is the common reference of the earlier scholars so as to avoid falling into the act prohibited in the verse and do not utter what your tongues wrongfully describe this is halal and this is haram al nahl
• in brief a makruh act may be permissible mubah in its origin but becomes makruh due to another cause just as a haram act may downgrade to makruh due to another cause

• there are of course academic nuances pertaining to the maxim in the books of usul al fiqh however it may be sufficient for the purpose of this research to mention a brief quote on the issue by imam al qurtubi relayed by imam al shawkani
• imam al shawkani said al qurtubi said a know that matters that lead to committing a prohibition either have certain or probable potential to lead to that result

• at best these roles usually lead to unlawful practices and hence it would be included in the dhara i maxim and it would be given the ruling of matters that definitely lead to unlawful practices as indicated by alqurtubi
• the rest of the departments that deal with communications customer care finance human resources and etc

• the purpose of this second marriage would be for the woman to lawfully return to her first husband after consummating the second marriage and divorcing
• scholars divide prohibitions into two degrees forbidden for its own sake haram li dhatih this denotes matters prohibited by islamic law due to certain or highly plausible harm that cannot be disassociated from the act such as fornication murder and intoxication

• the arabs would practice that if one delays the payment of his debt he would be required to increase the this refers to a type of interest in which the borrower agrees to increase the payoff on a loan in exchange for deferring its due date

• al jawziya the reason riba al fadl is forbidden for another cause is because if it was allowed to instantly exchange for but prohibited when the same transaction was deferred ie nasee ah instant transactions of this kind would merely become a ruse for deferred transactions
• hence by allah infinite mercy and wisdom he forbade interest and damned its giver its taker its clerk and its witness and he warned those who do not abandon it of an impending war declared by him and his prophet

• that being said the interest based financial services provided in the united states such as mortgage savings accounts certificates of deposit cds insurance refinance loans annuities and credit cards are all categorized as riba al nasee a in that the lender generates profit from the original loan

• the mortgage will have a fixated interest rate the down payment can only decrease the amount of interest the borrower is required to pay on the rest of the mortgage because of the lower loan to value ratio ltv
• after clarifying that the employment options in the finance industry cannot be disassociated with interest even if involvement is at varying degrees it is evident that working in this industry is prohibited in itself

• fatawa al lajna al da ima in another question posed to the committee on whether such a ruling differs between muslim lands and non muslim lands and if there are departments in the bank that are exceptions the committee responded sahih muslim

• firstly working in interest dealing banks is unlawful whether it is in a muslim country or a non muslim country because it entails supporting unlawful practices that transgress the boundaries of allah
• al ma idah secondly there are no exceptions as far as we can see in islamic law because the element of supporting unlawful practices is present in all bank employees

• the significance of defining the degree of prohibition lies in the application of a known fiqh maxim that states a matter prohibited in itself is allowed on the basis of necessity daroora and a matter prohibited for another cause is allowed on the basis of need haja

• al suyuti the practical application of this when addressing employment in the financial industry is that if a muslim aggressively searches for lawful employment options and follows all leads even outside of his locality but fails to find an opportunity and is overburdened by financial responsibilities that make him certain he will not be able to cover his basic needs and the needs of his dependents at that point he may engage in any job until his necessity ends
• for more details regarding the difference between needs and necessities reference al farq bayn al daroora wa al haja by doctor abdullah bin bayyah islamic european council of research and fatwa th and th edition of the academic journal

• it isn t required for the necessity to be imminent it is sufficient for it to be highly probable
• he is actively searching for a job but realizes it won t be easy and it isn t convenient for him to borrow money from someone until he finds a job

• imam al juwayni extensively addressed this issue when addressing what is permissible for a muslim to take if prohibitions become prevalent and outlets to halal are limited this section is based on a situation where unlawful practices become dominant and people across the globe do not find an alternative location with lawful practicesa in such a case it is incumbent that one limits himself to his needs and it is prohibited to live in any type of luxurya the ruling remains the same even if the inhabitants of an area with unlawful practices are unable to relocate and are large in numbers and it is presumed
• in a case where it is allowed for a muslim to work in this field he can only spend as much as is needed to alleviate his necessity daroora or even his need haja and that of his dependents by no means is it allowable for him to spend more than that

• that if they limited themselves to the basics of livelihood they will not be able to prosper they too must limit themselves to fulfilling needsa al juwayni the words of imam al juwayni are clear in that the presence of necessity is required and in that case it is permissible for one to acquire the amount that will fulfill his needs and it is impermissible to engage in any form of luxury
• since one can only take a position with unlawful practices to fulfill a necessity or a need he must discard the rest of the income and give it to general muslim causes

• imam al suyuti explained the maxim a need is dealt as a necessity whether it is general or specific an example of a general need allowing otherwise unlawful transactions is the permissibility of renting goods and hiring services ijara ja ala reassignment of debt hawala and other transactions which have been allowed contrary to the general rulea and an example of a specific need is repairing vessels by welding them with silver tadbeeb

• for example farmers may not have the money to farm so this transaction allows them to use the money fronted by the buyer and they would deliver the product at the time of harvest this refers to the sale of moist dates on the palm trees in exchange for dry dates or the sale of grapes still on its vines in exchange for raisins

• ibn qudama sums up this conclusion in the context of addressing public interest masalih mursala after mentioning examples of needs hajiyyat and luxuries tahseeniyat we do not know of any difference of opinion regarding the impermissibility of clinging to these two categories without any textual basis

• that being said the axiom that states a matter prohibited in itself is allowed on the basis of necessity and a matter prohibited for another cause is allowed on the basis of need or outweighing benefit is more of a usul al fiqh axiom than a fiqh maxim
• for example in its nd annual conference in jeddah saudi arabia in the islamic fiqh council a subset of the muslim world league explicated consumer insurance that insurance companies commonly offer contains a great deal of uncertainty gharar that invalidates the transaction and hence it is unlawful in islamic law

• when discussing the ruling of insurance and the evidences mentioned by those who prohibit he said secondly it is presumed to contain interest because an insurance policy entails a monetary exchange namely the insurance payments in exchange for the service
• this monetary exchange lacks the presence of immediacy taqabud and the payment and the compensation are not of equal sum tamathul note these are two regulations for monetary exchanges and the exchange of interest based commodities set by islamic law

• life insurance and there is a legally regarded need haja to work in this field i pray that this would be fine based on the maxim that states matters prohibited due to other causes haram li ghayrih are allowed on the basis of need

• ibn taymiyya allah have mercy on his soulsaid it is permissible to sell gold and silver jewelry in exchange for its own type without the stipulation of it being of an equal sum tamathul
• an example of such a case would be if a muslim cannot find any other halal alternative that would cover his needs or he may find an alternative that is not suitable for his social status

• there aren t any insurance companies that do not offer life insurance as far as i know
• the details presented are merely a theoretical breakdown in case there are insurance companies that do not offer life insurance

• section summary the following conclusions can be made based on the research presented in this section the only jobs in the financial industry that are permissible by default ruling are ones involving non financial services such as auto repair driver education transportation telecommunications selling commercial lumber and building material edible goods and etc

• a repentant muslim is not required to immediately abandon his position as long as he is in dire need of that income
• there is an academic basis for it being halal to work in insurance companies that do not offer life insurance because the other insurance agreements do not contain interest

• research conclusions after an extensive analysis of the united states financial industry and the various jobs one can hold in this field the following matters can be concluded the finance industry encompasses a wide variety of financial services that include insurance banking mortgaging credit card services brokerage and financial advisory
• the transaction may directly involve interest such as one of the various interest bearing loans or the transaction may initially be void of interest but either directly lead to it or usually does so as is the case with credit card companies

• a repentant muslim is not required to immediately leave a position he holds in this field if he is in dire need of that income he can maintain that job but he must limit his use of his income to the bare minimal needed to cover his necessities and needs

• it may be allowed to work in some insurance agencies on a need haja basis if it is void of life insurance and if the scholars establish that it is indeed void of riba al nasee a
• i conclude this research of the financial services industry in the united states praying to allah the beholder of my success i depend on him alone and to him is my return

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AlHuda Material\Dr. Main

KeyWords

financial service employ ruled insurance corporate transaction credit department invest finance manage unlawful mortgage allowable companies riba maxim address positions

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Number of Pages

72

Published Date

2014-11-22 07:53:16

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