That does not mean that our present-day scholars are not equally knowledgeable. We certainly have scholars of the highest caliber, and many of them are well aware of the commercial and business considerations that prevail in modern markets.

However, the intricate situations that we find ourselves in today, and the fact that the whole world may be described as a huge single market, and the competition that is truly fierce makes matters not so easy for the scholar to give a straightforward ruling. Moreover, how much bearing will the ruling or the opinions of Islamic scholars have on the way in which people conduct their financial affairs, considering that Muslim business people have to deal with the outside world, playing the game by its rules, as it were?

Interest has always been associated with usury in the perception of Muslim scholars and business people because of the apparent similarity, which means that a borrower repays more than the amount of money he had borrowed in lieu of the time he takes to repay his loan. The longer it takes him to repay, the more he actually pays back.

This fits in well with the description of usury outlined by Ibn Abbas, the Prophet’s cousin who was an authoritative scholar. When it was time for repayment, he said, "a lender would say to a borrower, ‘do you want to settle or to increase?’ If the borrower did not have the funds to repay, he would seek an extension of the period of the loan and agree to pay more at a later date."

It is easy to argue that interest works in the same way, and as such it is a modern form of the old practice of usury.

But to do so is to overlook certain important elements, which distinguish interest from usury. For one thing, the two words are still used in two different senses in Western society, where we find usury to be unacceptable while interest is perfectly acceptable.

That is because usury involves exploitation of the need of people while interest is received to give fair return to an investor and help the one who needs money without overburdening him. In other words, it is felt to be of help to both sides.

The bank is perceived to be a facilitator who brings together the businessman and the person with money to invest. It provides the latter with guarantees, which ensure that his investment is not lost, while giving the businessman the necessary financial liquidity to run his business and make good returns.

The more complicated and sophisticated society becomes, the greater the need for banking services, and the less ordinary people are able to look after their savings or make some returns on them without outside help. The banks provide that help. Dealing through the banks makes the whole affair of investing and lending rather "impersonal," which ensures that no one is exploited.

The reader points out to the very real problem of inflation, which makes it difficult for anyone to advance money to another for a period of time without making a loss on transaction. She mentions a loss of 15 % to 30 % over three years. In some countries, the inflation rate may be that high in a single year. That does not apply to a loan given to another person, but also to money kept in a current account, which pays no interest. Any form of saving, which does not give returns, is a losing transaction because of inflation.

How are people to protect their savings? Moreover, how are those with no business experience to invest their money in a way that gives them some returns while protecting their investment and exposing their capital to no risk of loss? Here the principle to which the lady reader has alluded is particularly significant.

There must be no injustice, perpetrated or suffered. That is the divine order stated clearly in Verse 279 of Surah 2:

"You shall inflict no injustice and shall suffer none."

All this requires thorough study so that scholars are able to come up with answers to present-day problems, instead of applying the rulings of earlier scholars to later problems.

Perhaps Islamic universities are in the best position to conduct such studies and come up with the right answers. They need to involve Muslim economists in such studies. The two groups must work hand in hand to arrive at satisfactory solutions.

May I say here that a few scholars have spoken about interest and found it different from usury. Most notable among these is Dr. Ma’roof Ad-Dawaleebi, who is a scholar of high repute and who has been involved in politics, being former prime minister in Syria and an advisor to the king for many years. His earlier background included being a professor of law in the University of Damascus. This has given him the very important mix of looking for practical solutions and a high standard of scholarship. But the majority of scholars still look at interest as forbidden.

Your relative must have been aware of his financial situation, so he should not have used the money, knowing that he was not in a position to pay it back. Although you may not be able to do anything to him for doing so, he is accountable to God for his action. He then continued to pacify you with promises of repayment which were not kept. There can be only one of two cases: He might have been able to pay you back but it suited him to keep the money and he simply preferred not to take any notice of your need. In this case, he would be doing you a great wrong. The Prophet, peace be upon him, says: "The non-payment of a financial debt by a person is an act of injustice." Needless to say that all injustice is forbidden. Your relative would then be placing himself in a very difficult position and stands to incur punishment by God.

The other alternative is that he genuinely needed the money and was unable to repay it throughout this period. Since you have subsequently agreed to consider the money as a loan given to him, although you had no choice in the matter, you have to treat it as such. God tells us in the Qur'an that if the borrower is genuinely hard up, then we should give him a grace period until he is able to repay his debt. If we make a charitable donation of what we have lent then that is much better for us. This is because an insolvent debtor is one of the eight classes of people who may benefit from zakah.

But I should add a word of caution here. If we decide to forgo an outstanding debt, we may not deduct debt amount from our own zakah liability. For that would constitute payment of zakah to oneself. But we may forgo an outstanding debt owing to us by someone who is unable to repay us. That counts as sadaqah, or charitable donation.

You are better able to determine which of the two situations applies in the case of your relative. If he is insolvent, then you should consider either giving an even longer grace period, or even writing off your debt, hoping for a rich reward from God for that.

On the other hand, if he is careless about your situation, and he only thinks of his own interest, then you should utilize whatever means available to you to recover your money.

How much should he pay you back? God tells us in the Qur'an that we may demand only the principal amount which we lent. This is what you should ask, but the change of currency value must be taken into account. It is totally unfair that your relative should be able to use your money for seven years and then give you an amount which is much less in value. When God mentioned the total prohibition of usury, He also told us: "Should you repent, you may have only the principal you advanced. You shall not wrong anyone nor shall you be wronged." The fact that you had to sell jewelry at a reduced rate is just one aspect of the injustice you have suffered. That injustice should be removed and transaction must be rendered harmless. Otherwise we should be allowing a person who does something good to be penalized for his good action. That is not fair.

God has laid down detailed legislation in order to put financial dealings within the Muslim community on sound footing. One aspect of this legislation is the one concerned with debts and loans. This is contained in verse 282 of surah 2, which is the longest verse in the Qur’an.

[Added: It may be rendered in translation as: "O Believers, when you contract a debt for a fixed term, you should put it in writing. Let a scribe write with equity the document for the parties. The scribe whom Allah has given the gift of literacy should not refuse to write. Let him write and let the one under obligation (the debtor) dictate, and he should fear Allah, his Lord, and should not diminish from or add anything to the terms which have been settled. But if the borrower be of low understanding or weak or unable to dictate (for any reason), then let the guardian of his interests dictate it with equity. And let two men from among you bear witness to all such documents. But if two men be not available, there should be one man and two women to bear witness so that if one of the women forgets (anything), the other may remind her. The witnesses should be from among such people whom you approve of as witnesses. When the witnesses are asked to testify, they should not refuse to do so. Do not neglect to reduce to writing your transaction for a specified term, whether it be big or small. Allah considers this thing more just for you, for it facilitates the establishment of evidence and lessens doubts and suspicions. Of course, there is no harm if you conclude daily on the spot, but in case of commercial transactions you should have witnesses. The scribe and the witnesses should not be harassed: if you do so, you shall be guilty of sin. You should guard against the wrath of Allah; He gives you the knowledge of the right way for Allah has the knowledge of everything."]

It makes it clear that when we make a loan agreement, it should be written down with witnesses present. The borrower is the one to spell out the terms agreed, because he is the weaker party in the agreement.

Yet in spite of this detailed legislation, which comes in the form of an order from God addressed to the believers, few people nowadays act on this order. Sometimes, lenders are embarrassed to ask for a written agreement. They leave it to the borrowers to suggest it. Some borrowers feel it incumbent on them to write down the amount borrowed and the terms of repayment, but there is hardly any witness to the agreement. People feel that this is too personal to involve witnesses. They forget that God has only required them to write loan agreements because He wants relations within the Muslim community to be put on sound basis, and not to be spoiled by people who do not appreciate kindness.

Had the parents of this young woman acted on God’s instructions, they would have had at least something in hand to prove their claims. The borrowers would have felt more obliged to settle their loans. That would have been far better. Be that as it may, our reader asks how would she establish relationship with members of her family, having known of her parents’ past experience with them.