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Ghamidi Sb’s Opinion on Government Investment Schemes

On 28 Dec.08, answering to a question, Mr. Javed Ahmed Ghamidi said in a program “Live with Javed Ahmed Ghamidi” that investing money in Pakistan Govt. Saving Schemes and getting profit on them does not fall in the category of Riba or Sud. His justification was that the Govt. takes loan from the people and spends it on the defence and to fulfill its other needs and then returns it in a better way to the people. The lender neither demands certain rate of profit nor sets any preconditions.The Govt.increases or decreases the rate of profit from time to time thus this arrangement cannot be equated with Riba or Sud. Mr. Ghamidi called this transaction or arrangement Radde Ahsen(to return in a better way). I will be very much obliged if u give us your opinion on this matter. This will greatly help us in eliminating our confusion.


I also talked to Ghamidi Sb after he made the statement which surprised me as well. What he clarified to me was that since in case of riba/interest, the lender binds the borrower to pay a stipulated amount over and above the principal after a certain duration and in case of Govt of Pakistan’s saving schemes, it’s the borrower (G0P) which is voluntarily offering an amount over and above the principal, this arrangement cannot be considered as riba. He also clarified that ideally GOP should mention the way it planned to return its amount with increment. He also mentioned that a cautious Muslim should avoid even this arrangement offered by GOP, but these schemes were a better alternative to what banks were offering for the people whose needs were pressing.
One might think that if GOP’s ‘voluntary’ increment on principal could be termed as acceptable, why shouldn’t the increment on commercial banks’ accounts be likewise considered legitimate? Ghamidi Sb clarified that in the case of the latter, the way banks earned was riba-based and therefore un-Islamic and not the manner they paid returns to their account holders. While interest to account holders of banks could be considered radde ahsen, interest charged from the borrowers can’t belong to the same category, because it was involuntary. Therefore what banks give to their account holders was Islamically unacceptable.
He was as clear as ever in his understanding that poor pensioners were very likely not to be considered sinning if they received interest-based earnings, given that they had no alternative arrangements to survive.
My ordinary understanding is that GOP gets its revenues for giving higher returns to investors by taxing people and borrowing further loans from them on interest. Therefore, when it promises a fixed amount to be given to the investors in its savings schemes, it was doing so only after burdening its citizens. Such an arrangement cannot therefore be simply described as radde ahsen (voluntary return in a handsome manner). I therefore believe that people should consider it as no different from the bank interest and only resort to it if they don’t have any alternative means of living. And Allah knows the best.