A RELIGIOUS row has erupted amongst Egyptian scholars over the monthly interest rates offered by commercial banks on all forms of money loans, or deposits. The scholars are divided as to how far the Sharia (religious law) permits these rates of interest. Whilst some view these interest rates as strictly forbidden, others are yet to make up their minds on this issue. Some scholars have gone so far as toissue a fatwa (religious edict) declaring that bank interests on loans should be considered as the taking of illegal interest on a loan, or usury, and are therefore forbidden. In this respect, they support the basic tenet of Islam, which regards interest rates and future contracts, as speculative tools belonging to gamblers. Controversial Sheikh Youssef el-Badri says that Muslims should not deal with banks, or financial houses that pay or accept interest on loans, because these transactions must be based instead on sharing profit and risk with clients. However, El-Badri, has also attacked the issued fatwas saying that the interests were halal (permissible), whereas the majority of scholars agreed that they should be considered usury. "When some scholars become Government employees, they change the well-established Islamic views to please their employer," he said, without naming names. Islam, he continued, has identified different ways to recognise profit generated from Murabaha, a widelyused system of finance involving sale at cost plus an agreed profit margin. He said that Murabaha is a classic practice under which a borrower has to pay an extra amount agreed in advance. "This amount is regarded as a reward for the risk taken by the bank," he said. El-Badri reiterated that bank interests are banned under Islam, which forbids usury. Ahmed Taha Rayan, a professor of Islamic Sharia law at Al-Azhar University, said that Muslims should deal with banks that do not pay or charge interest. "Muslims can generate profits from returns and not interests on investment ventures or trade activities that are approved by Islam, which among other things exclude alcohol and gambling," Rayan said. Interests on bank deposits or loans are against Sharia, which values equity above profits, he said. Mohamed Raafat Osman, member of the Islamic Research Council, said that the Islamic financing model excludes elements such as speculation and uncertainty. Osman added that Islam bans banking structures that are vague or ambiguous in order to avoid exploitation, or suspicion of usury. However, he said that he would permit derivatives as long as they are used to hedge risks on existing investments and not for speculation.
