Qardan Hasana, meaning interest-free loans, has been instrumental in the social and economic prosperity and growth the Dawoodi Bohra Muslim community has experienced in the last 40 years. The benefits of Qardan Hasana are numerous, from uplifting economic conditions to facilitating widespread access to higher education and proper healthcare. In addition to raising their standard of living, Qardan Hasana has fostered a renewed sense of community within the Dawoodi Bohras, encouraging them to help one another and invest in the common good of the community.
The Islamic Principle of Qardan Hasana
The Holy Quran encourages al-qard al-hasan, literally translated as ‘the good loan’. In line with the Islamic precept of aiding others and the prohibition of all forms of interest, the term means providing interest-free loans with purely altruistic intentions rather than for any form of material gain. Distinct from other lending and borrowing schemes common today, it is not only a financial transaction, but also a spiritual one. In the Quran, providing Qardan Hasana to a person in need is equated with giving to Allah, bringing the promise of manifold rewards. It states: ‘If you lend Qardan Hasana unto Allah, He will multiply it for you and forgive you, for Allah is most appreciative, most forbearing.’ (64:17)
In 1978, the late His Holiness Syedna Mohammed Burhanuddin, 52nd leader of the Dawoodi Bohra community, held a historic conference, al-Multaqa al-Fatimi al-ʿIlmi, to reinforce the Islamic identity that is the essence of the Dawoodi Bohra community. This seminal conference included reorienting the community towards an Islamic socio-economic system that would ensure spiritual as well as material prosperity.
Revitalising the time-honoured Bohra identity as a trading community, he encouraged members to preserve their tradition of entrepreneurship by upholding Islamic tenets and business ethics, especially the prohibition of all interest-bearing financial dealings. His Holiness enjoined community members to ensure that their business ventures were free from interest, which would ensure their continued prosperity and growth.
Institutionalising Qardan Hasana (Interest-free Loans)
Following the Multaqa conference, Syedna Mohammed Burhanuddin perceived the need to institutionalise the Islamic concept of giving and receiving Qardan Hasana. He established the Burhani Qardan Hasana Trust in Mumbai in 1979 with the primary objective of providing interest-free financial loans to all members of the community.
Over the last 35 years, hundreds of similar Qardan Hasana trusts have been set up in Bohra communities throughout the world, overseen today by his successor His Holiness Syedna Mufaddal Saifuddin. These trusts fulfill both large-scale financial needs for industrial and commercial growth and housing as well as smaller amounts for personal use, such as education, medical care and marriage.
The primary contributions to any Qardan Hasana trust are granted by His Holiness Syedna Mufaddal Saifuddin. Inspired by his example, community members contribute to Qardan Hasana schemes that are either refundable or non-refundable, and assist their fellow community members to the best of their abilities. Community members are also encouraged to provide Qardan Hasana to each other on a personal level.
Throughout the year, and especially on important religious occasions and social gatherings, His Holiness contributes additional funds to the worldwide Qardan Hasana trusts. Voluntary contributions by community members on a collective level are also particularly encouraged on these occasions. Consequently, contributing to Qardan Hasana has become an essential part of Dawoodi Bohra events, reminding everyone that aiding others is an important social and spiritual principle.
The Benefits of Interest-Free Loans
In the modern-day business arena where interest-based practices are the norm, the eschewal of interest in all financial dealings is not without its challenges; prime among them is access to interest-free loans and capital. It is to overcome these challenges that the worldwide network of Qardan Hasana organisations provide community members with interest-free loans, which help safeguard the Bohras from the burdensome effects of interest-bearing debts, such as having difficulty keeping up with fluctuating mortgage payments.
Due to Qardan Hasana and the fact that their financial dealings are free from interest, the Dawoodi Bohra community has enjoyed relative economic stability and peace of mind, even during times of international economic instability. The Great Recession of 2007-09, for example, was a global financial crisis prompted by failing mortgage loans in the US. Rising interest rates meant millions of borrowers could no longer afford their home loan payments, and many found themselves “underwater”, owing more on their mortgages than their homes were worth. The result—rising household debt, loan defaults, foreclosures and failure of major financial institutions—contributed to the near-collapse of the economy of the US and, consequently, of the rest of the developed world. Countries around the world faced a decline in GDP in addition to rising unemployment rates and income inequality, highlighting the risks of an interest-based financial system that was heavily weighted in favor of the wealthy.
Unlike other financial institutions, the requirements to apply for Qardan Hasana are comparatively undemanding. For instance, while many lenders require substantial collateral and security, community members are able to receive Qardan Hasana with relatively lesser pledges of collateral depending on the applicant’s needs, proposal, and income-generating ability. To help successfully manage and budget their loans, applicants are often given financial counseling as well. Instead of the restrictions and growing debts caused by interest-bearing loans, the economic method of Qardan Hasana helps community members invest in helping themselves and fellow community members achieve a better standard of living.
By virtue of Qardan Hasana, the Dawoodi Bohras have prospered spiritually and materially. In addition to enhancing lifestyles and businesses, it has encouraged them to aid one another and work for the collective well-being of their communities.
As a result, the Dawoodi Bohra community has not only grown in enterprise but in philanthropy as well, with the contributors and receivers giving back to the community with a revitalised sense of altruism.