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A Religious Ethical Dilemma for a Muslim Businessman

Mr. Kamaluddin, a highly successful businessman, was faced with an ethical dilemma of a religious kind when he bought his company some twenty-three years ago. At first he did not let the owner of the property know that he had an ethical and religious problem with a transaction that involved him paying interest, because he was concerned that the seller would have factored that interest into his selling price. So after Mr. Kamaluddin had negotiated the price, he told the owner that he make a down payment, and then cover the rest in installments over a period of time. However, he could not pay interest on the unpaid balance because that was not allowed by his religion. The owner suggested that the selling price be increased to cover the interest. Mr. Kamaluddin argued that it would amount to the same thing as paying interest and in good conscience he could not justify that. He also made it clear that if this were not acceptable then he would simply not proceed with the transaction. At this point, the owner agreed not to charge the interest. Mr. Kamaluddin finalized the deal and bought the business.

In this case the amount of the interest was not significant and the owner was not going to lose much money. Nevertheless, it is hard to predict what the owner would have done had the amount of the interest been significant. And because the stakes are often much higher, the prohibition on interest-taking presents serious problems to Muslim business people. While Mr. Kamaluddin had enough resources to make the down payment, those Muslims who don't, face a quandary. Either they would have to apply for a loan to an interest-charging bank or they would simply have to give up an opportunity to start a new business.

Adapted from the book: "The Issue of Riba in Islamic Faith and Law" by: "Dr. Abdulaziz Sachedina"

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