The American Muslim Community and LARIBA
(Islamic) Financing
The American Muslim Council (AMC) in a popular survey published in December 1992
estimated that the population of Muslims in the United States ranges between 5to 8
million. A most acceptable figure is an average of 6 million. In the United States the
State of California has the largest Muslim population among all states. It is estimated
that there are at least 1,200,000 Muslims living in California. Following California are
the States of New York (4.7% of total state population), Illinois (3.6%), New Jersey
(2.5%), Indiana (3.2%) and Michigan. There is significant Muslim community living in other
states like Virginia, Texas, Ohio and Maryland.
Most of the Muslims in the United States have been integrated in the RIBA conventional
banking system prevailing in the United States. Most take advantage of RIBA interest based
FDIC insured deposits in the banks, borrow money for buying homes using RIBA mortgages,
use their credit cards and sometimes extend its use as a source of RIBA based credit and
take home equity RIBA based line of credit. Most of the affluent members of the Muslim
business community have used the institutional RIBA financing through the banking system
in the USA and accumulated significant wealth through its use. Fatwas (Islamic legal
opinions) based on Muslims being a minority and/or that RIBA is usury and not interest
have been used by many leaders in some significant communities to justify RIBA. Most
affluent and upper middle class members of the community have been used to and the
beneficiaries of RIBA system. So, it was unconvincing for many to try to make them change
over even in a small way because of the HARAM (forbidden) issue. A number of
justifications were used to allow members of the community to continue participating in
RIBA activities. Examples are: the fact that the laws of LARIBA cannot be upheld by a
minority which lacks the credible institutions, which can offer HALAL (lawful) LARIBA,
financing and banking. Another was the claim that RIBA and LARIBA are the same and that
the difference is a matter of replacing the word interest with the word profit. A third
excuse for not accepting LARIBA would be the failure of the Islamic financial institutions
in Egypt.
For a newly emerging alternative system to prevail and succeed it is an understatement
to say that it is a very difficult uphill battle. Unless the individual is motivated
deeply by the strict adherence to the Shari'aa, the Quraan and the Sunna we found it to be
almost impossible to capture peoples interest and imagination. It is interesting to
report, based on our experience that people thought that we are "silly" to try
to bring a LARIBA concept in a world run by RIBA. We even were ridiculed by the closest of
friends.
In all fairness, it is our feeling, based on first hand experience and our in-depth
knowledge at the grassroots level of the community, that a large portion of the Muslim
middle class households have accepted RIBA mortgages against their will. It is our feeling
that many of these households would convert to LARIBA if available and competitive. There
are many people, Muslims and non-Muslims, who feel disenfranchised by traditional methods
of financing, or who feel - correctly or not - that they do not have adequate access to
credit, or that the terms of the credit that is available to them are morally
objectionable or economically unfeasible for them. W are reminded of the successes of the
Credit Union industry among blue-collar workers in the U.S., many of whom simply cannot
afford traditional bank accounts because they live from paycheck to paycheck and cannot
maintain a minimum balance.