“O you who believe, fear Allah and give up what remains of your demand for riba (interest), if you are indeed believers. If you do it not, take notice of war from Allah and His Messenger.” (Qur’an 2:278-279)
Today, we have alsorts of insurance, car insurance, holiday insurance, life insurance, death insurance and even PET insurance. We have so much fear of everything. Remember, whoever fears anything besides Allah, Allah will disgrace him and humiliate him.
Who looked after you in your mother’s womb?
Who fed you for 9 months?
When you were born, you drank breast milk, where was the insurance?
Have we lost trust in Allah SWT?
We fear everything besides Allah SWT.
Majority of Muslims buy houses with interest (Ribaa). Then you question the same Allah (that you disobey) “why is there no Barakah in my life?”
Remember brothers and sister, your family will fight for this same house once you are dead! We need true reliance (on Allah), NOT insurance.
Shaykh Muhammad Hoblous, Australia
Isn’t it strange how a Muslim will strictly stay away from eating pork because it is haram, yet the same person has no problem devouring riba (otherwise known as usury or interest)?
“…but whoever returns (to dealing in Riba), such are the dwellers of the Fire- they will abide therein”. (Surah Baqarah, verse 275).
Riba means an increase in a particular item. The word is derived from a root meaning increase or growth. Allah, may He be exalted, says (interpretation of the meaning): “Whatever you pay as interest so that it may increase (li yarbu) the wealth of people does not increase (fa la yarbu) in the sight of Allah” [al-Room 30:39]., i.e., it does not increase or rise in status before Allah.
Riba originated among the people of the Jaahiliyyah; if a debt became due, they would say to him (the borrower): Give us one hundred (that is due, now), or increase it to one hundred and fifty (and pay later). Then when the one hundred and fifty became due, they would say: Give us one hundred and fifty (now), or increase it to two hundred (and pay later) — and so on.
Islam also forbade another kind of riba, namely riba al-fadl, which means adding to the amount when exchanging one item for another of the same type. So if gold is sold for gold, that is not permissible except like for like, hand to hand. Islam stipulated that the exchange should be done hand to hand and that the items or goods should be of the same quality. Whoever gives more or asks for more has engaged in riba. If he sells a saa‘ of wheat for two saa‘s (of the same commodity), even if it is hand to hand, he has engaged in riba.
The principle of the circulation of capital exists in both the Muslim world and the non-Muslim world. What it means is circulating capital so that it will increase. The same applies to lending; they give money as a loan provided that it will increase when they get it back. Such transactions are undoubtedly riba.
Jabir (Allah be pleased with him) narrated, “The Messenger of Allah (peace and blessings be upon him) cursed the one who consumes Riba, the one who pays for it, the one who writes it down and the two who witness it.”He (peace and blessings be upon him): “they are all the same.”
“Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, “Trade is [just] like interest.” But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . But whoever returns to [dealing in interest or usury] – those are the companions of the Fire; they will abide eternally therein.” (Surah Baqarah, verse 275)
1) All kinds of commercial insurance are clearly and undoubtedly ribaa (interest/usury). Insurance is the sale of money for money, of a greater or lesser amount, with a delay in one of the payments. It involves riba al-fadl (interest-based transaction) and riba al-nas’ (interest to be charged if payment is delayed beyond the due date), because the insurance companies take people’s money and promise to pay them more or less money when a specific accident against which insurance has been taken out happens. This is riba, and riba is forbidden in the Qur’aan, in many ayaat.
2) All kinds of commercial insurance are based on nothing but gambling which is haraam according to the Qur’an:
“O you who believe! Intoxicants (all kinds of alcoholic drinks), and gambling, and Al-Ansaab (stone altars for sacrifice to idols etc.) and Al-Azlaam (arrows for seeking luck or decision) are an abomination of Shaytaan’s (Satan’s) handiwork. So avoid (strictly all) that (abomination) in order that you may be successful” (al-Ma’idah 5:90 – interpretation of the meaning).
All kinds of insurance are kinds of playing with chances. They tell you, Pay this much money, then if this happens to you we will give you this much. This is pure gambling. Insisting on differentiating between insurance and gambling is pure stubbornness that is unacceptable to any sound mind. The insurance companies themselves admit that insurance is gambling.
3) All kinds of insurance are forms of uncertainty, and transactions which involve uncertainty are forbidden according to many saheeh ahaadeeth, such as the hadeeth narrated by Abu Hurayrah (may Allah be pleased with him):
“The Messenger of Allaah (peace and blessings of Allaah be upon him) forbade transactions determined by throwing a stone and transactions which involved some uncertainty.” (Narrated by Muslim).
[“Transactions determined by throwing a stone” – this was a type of transaction that was prevalent in the markets of pre-Islamic Arabia, whereby a stone was thrown by either the buyer or the seller, and whatever it touched, its transaction became binding. “Transactions which involved some uncertainty” – is a transaction in which there is no guarantee that the seller can deliver the goods for which he receives payment. Footnotes from the translation of Saheeh Muslim. (Translator)].
All forms of commercial insurance are based on uncertainty of the most extreme kind. Insurance companies and those who sell insurance refuse to insure cases except where there is clear uncertainty in whether or not the condition being insured against will happen or not. In other words, the condition being insured against must have a possibility of happening or not happening (as opposed to, for example, someone who has a pre-existing condition, such as a person who is on death row applying for life insurance–translator.) Moreover, this transaction involves something uncertain, which is when an accident will happen and the extent of the damage caused. Hence insurance combines three kinds of extreme uncertainty.
The literal meaning of interest or Al-RIBA as it is used in the Arabic language means to excess or increase. In the Islamic terminology interest means effortless profit or that profit which comes free from compensation or that extra earning obtained that is free of exchange. Hazrat Shah Waliullah Dehlvi a great scholar and leader has given a very concise and precise definition of interest. He says,
“Riba` is a loan with the condition that the borrower will return to the lender more than and better than the quantity borrowed.”
Interest In Pre-Islamic Times
Hafiz Ibn Hajr writes in his commentary of Sahih Bukhari (Fathul Bari):
“Imam Malik reports on the authority of Zaid Ibn Aslam that in the period of ignorance (pre-Islamic times) interest was changed according to the following scheme. One person had a right in the property of another person. It may have been a general right because of the amount lent or the price of something purchased or in any other form. A time was set when the claim would be settled. When the appointed time arrived the creditor would ask the debtor if he wanted to settle the claim or pay interest with an extension to the time. If the claim was settled then there was no increase in the payment. Otherwise the debtor would increase the amount payable and the creditor would extend the period further.
(Vol. IV P.26)
Islam’s View Of Trade
Interest is not a subject without trade and commerce. Islam recognises trade and commerce not only as a lawful profession but also as a moral duty. Islam has laid down a complete set of rules for trade. The reason for these rules is to specify what halal earning is. There are many traditions (Ahaadith) concerning halal provision that can also be found in the books containing the traditions of the prophet (peace be upon him). Actually, Islam has encouraged men to earn their own provision and to provide it to their families. The condition is that the earning has to be according to the conditions set by the Shari’ah. Any sort of transaction that does not correspond to the rules of trade will not be allowed. These rules can be found under the heading of trade in the books of jurisprudence. Interest is amongst those conditions which all dealings must be free from.
How Is Interest Illegal
The definition of interest has already been mentioned as well as that it is prohibited. If we explore the Qur’an we will come across at least four places where Allah has mentioned interest.
The first one is in Surah Al-baqarah verse no.275
“Those who devour usury will not stand except as stands one whom the Satan by his touch has driven to madness. That is because they say, “trade is like usury”, but Allah has permitted trade and has forbidden usury”,
In the next verse verse 276 in the same place he says,
“Allah will deprive usury of all blessing, and will give increase for deeds of charity, for he does not love any ungrateful sinner.”
Two verses later in verse 278 he says,
“Oh you who believe! Fear Allah and give up what remains of your demand for usury if you are indeed believers.”
In verse 279 he says,
“If you do not, take notice of war from Allah and his Messenger sallallahu alaihe wasallm but if you repent you shall have your capital sum. Deal not unjustly and you shall not be dealt with unjustly.”
In the second place in Surah Aal-Imran, verse no.130 Allah says,
“Oh you who believe! Devour not usury doubled and multiplied; but fear Allah that you may prosper.”
In the third place in Surah Al-Nisaa’ Allah states in verse 161,
“That they took usury though they were forbidden and they devoured peoples wealth wrongfully; we have prepared for those amongst them who reject faith a grievous chastisement.”
In the fourth place, Surah Al-Room, verse no.39 Allah mentions
“That which you give in usury for increase through the property of people will have no increase with Allah: but that which you give for charity seeking the countenance of Allah, it is these who will get a recompense multiplied.”
Ahaadith Concerning Interest
These ahaadith have been taken from Mishkat-ul-Masabih under the section of interest and the English translation has been taken from its English version written by Al Hajj Moulana Fazl Karim (218-227 vol. II)
Hazrat Jabir radiyallahu anhu has reported that the Messenger of Allah sallallahu alaihe wasallm cursed the devourer of usury, its payer, its scribe and its two witnesses. He also said that they were equal (in sin).
Hazrat Abu Hurairah radiyallahu anhu reported that the Holy Prophet sallallahu alaihe wasallm said: A time will certainly come over the people when none will remain who will not devour usury. If he does not devour it, its vapour will overtake him.
(Ahmed, Abu Dawood, Nisai, Ibn Majah.)
Hazrat Abu Hurairah radiyallahu anhu reported that the Messenger of Allah sallallahu alaihe wasallm said : Usury has got seventy divisions. The easiest division of them is a man marrying his mother.
Hazrat Abu Hurairah radiyallahu anhu reported that the Messenger of Allah sallallahu alaihe wasallm said: I came across some people in the night in which I was taken to the heavens. Their stomachs were like houses wherein there were serpents, which could be seen from the front of their stomachs. I asked: O Gabriel! Who are these people? He replied these are those who devoured usury.
(Ahmed, Ibn Majah)
Hazrat Ali radiyallahu anhu reported that he heard the Messenger of Allah sallallahu alaihe wasallmcursing the devourer of usury, its giver, its scribe and one who refuses to give Zakat and he used to forbid mourning.
Hazrat Umar bin Al-Khattab radiyallahu anhu reported: the last of what was revealed was the verse of usury. The Messenger of Allah sallallahu alaihe wasallm was taken and he had not explained it to us. So, give up usury and doubt.
(Ibn Majah, Darimi)
Hazrat Abdullah bin Hanzalah radiyallahu anhu (who was washed by the angels) reported that the Messenger of Allah sallallahu alaihe wasallm said: A dirham of usury that a man devours and he knows is greater than 36 fornications.
Baihaqi reported from Ibn Abbas radiyallahu anhu in shuabul iman. He added and said: (as for) one whose flesh has grown out of unlawful food, the fire is more suitable for him.
After narrating all these verses from the Qur’an and relating all the Ahaadith it is apparent to us that interest could never be legal and halal. How could anybody even take the time out to think about a matter in which Allah has declared war on the user and his Beloved Prophet sallallahu alaihe wasallm has cursed him? As sensible people we can understand that what our creator has chosen for us is for our own prosperity only.
Interest From A Jurisprudical View
We should deeply thank the Sahaabah radiyallahu anhum in their efforts to spread the religion as they learnt it from the Prophet sallallahu alaihe wasallm. Then when the religion started to spread vastly Allah brought about four imams who described the religion in general terms in order to make the common public understand. They spent their lives trying to put the whole religion in a collective form through the Qur’an and the Ahaadith and the concise decisions of the Sahaabah radiyallahu anum. In the case of interest, all four imams established a general rule mainly concentrating on this statement made by the Prophet sallallahu alaihe wasallm.
Hazrat Al-Khudri radiyallahu anhu reported that the Prophet sallallahu alaihe wasallm said: Gold in exchange for gold, silver in exchange for silver, wheat in exchange for wheat, barley in exchange for barley, dates in exchange for dates, salt in exchange for salt is in the same category and (should be exchanged) hand to hand, so who ever adds or demands increase he has practised usury. The giver and taker are the same.
Out of the four imams, Imam Abu Hanifah rh has ruled that if the measurement system (volumetric or in compounds) is the same and the two items are in the same category, then they should be sold in the same amount and direct not in credit otherwise interest will be found.
Imam Shaf’ee rh says that if the items are valuable and could be considered food then there is the chance of interest. Imam Malik rh says that if the items are valuable and are edible then interest is a subject.
As you may have realised, giving and taking interest is unlawful. Unfortunately, the basis of many of the transactions (especially in banking and insurance), personal or business involve interest. Thus it is becoming increasingly difficult for the majority of the Muslims, especially those who are comercially orientated to abstain from dealings involving interest. Many of us purchase items on ‘Buy now, Pay later’ schemes thinking that this sort of scheme is of great benefit to us. Sadly, what we fail to recognize at the time of purchasing this ‘supposed bargain’ is the fact that if we fail to pay the required amount at the due time, we will be liable to pay interest.
Now, suppose a couple of months ago, we were purchased an item on a ‘Pay later’ scheme in which there was no question about us keeping upto date with payments, however due to a change in our financial situation, we have failed to pay the required amount, and are paying interest now as a result. We would have joined a group of those unfortunate people who have been cursed by the Prophet Sallallahu Alayhi Wassallam.
Our advice to anyone who is involved in any form of interest is that the individual should minimise his expenditure in these dealings and if possible abstain completely from these transactions. In any case, every individual should continue to seek Allah’s forgiveness. The philosophy shows that a person who takes interest does not gain anything in reality but through the explanation of the Qur’an verse,
” Allah decreases interest and increases sadaqah“
That in reality the money just goes to waste and the person does not even realise, and a person who gives money in the path of Allah, in whatever form it may be, actually gains although in reality it seems as though he is loosing out.
Every person should take all necessary precautions in their financial and social dealings. If a person neglects in keeping a watchful eye on financial dealings, this negligence will slowly spread to other aspects of religion. This will have a very detrimental effect on religious matters.
The dealings of usury and interest are not only a disadvantage to us in this world but will also be a source of great discomfort and pain for us in the hereafter. The Prophet Sallallahu Alayhi Wassallam has informed us about the punishment that awaits those people who deal with interest:
“Hazrat Abu Huraira Radhiallaho Anhu has reported the saying of the Prophet Sallallahu Alayhi Wassallam that during his ascension (Mi’raaj), he noticed a group of men whose stomachs were bloated to the size of big rooms and their wanting to move from their positions was impossible. They would be crushed in a stampede by the friends of Fir’awn. The Prophet Sallallahu Alayhi Wassallam seeing their condition asked Hazrat Jibra’eel Alayhis Salaam about their identity. He was informed that they were the people who indulged in dealings of usury and interest.”
The summary of the matter is that interest is hazardous and should be abstained from in all manners. If anybody has a case they wish to solve then they should contact a Mufti and present their problem as it is.
I conclude by asking you my dear reader, is it really worth destroying the eternal life of the hereafter, just so that we may have a few more comforts in a life which can come to an end any moment.
Is interest prohibited in Islam? This question is often repeated at different social gatherings because some people tend to argue that it is ribâ which has been prohibited by Islam and that ribâ is not equivalent to interest.
There is no doubt that what has been prohibited by both the Qurân and the hadîth is ribâ. The Qurán has prohibited it in four different revelations, the first of which (30:39) was in Makkah, and the other three (4:161, 3:130-2 and 2:275-81) were in Madinah. The last of these (2:275-81) came near the end of the Prophet’s life, peace and blessings of God be on him. It severely censured those who took ribâ, and declared them to be at war with God and His Prophet. It also established a clear distinction between trade and ribâ, and enjoined Muslims to forego all outstanding ribâ, enjoining them only to take the principle amount, and to remiss even this in case of the borrower’s hardship.
The Prophet, peace and blessings of God on him, also prohibited ribâ in the most unambiguous words, and condemned not only those who take it, but also those who give it, those who record the transaction, and those who act as witnesses to it. He even equated the willful taking of ribâ with committing adultery thirty-six times or being guilty of incest with one’s own mother.2
Since Ribâ has been censured severely by both the Quran and the Sunnah it is difficult to believe that it would be left so undefined that even after fourteen centuries some people would fail to understand its meaning clearly. Hence, it is necessary to go back to the classical sources of Islam to determine what the term ribâ really stands for.
Ribâ literally means increase, addition, expansion or growth.3IT is, however not every increase or growth which has been prohibited by Islam. Profit also leads to an increase in the principal amount, but it has not been prohibited. So what has been prohibited?
The best person to answer this question is the Prophet himself, peace and blessings of God be on him. He prohibited the taking of even a small gift, service or favour as a condition for the loan.4This answer of the Prophet equates ribâ with what is commonly understood to be interest. This meaning of ribâ has become reflected in the writings of all scholars in Muslim history. There is hardly any classical Qur’an commentary or Arabic dictionary which gives a different meaning. For example, al-Qurtubi (d.671AH/1070AC), indicates that “Muslims are agreed on the authority of their Prophet that the condition for an increase over the amount lent is ribâ, irrespective of whether it is a handful of fodder, as indicated by Ibn Mas’ud, or a particle of grain.”5Ibn Manzur (d.711AH./1311AC) also clearly states in his authoritative dictionary of the Arabic language (lisan al-‘Arab) that “what is prohibited is the extra amount, benefit or advantage received on any loan”.6The term ribâ has, thus been understood from the earliest times to stand for the ‘premium’ that the borrower is requires to pay to the lender along with the principal amount as a condition for the loan or for an extension in its maturity.7This is also the unanimous verdict of a number of international conferences of fuqaha’ held in modern times to discuss the question of ribâ, including the Mu’tamar al Fiqh al-Islami held in Paris in 1951 and in Cairo in 1965, and the OIC and the Rabitah Fiqh Committee meetings held in 1985 and 1986 in Cairo and Makkah resectively.8In the presence of such an overwhelming consensus there is no room for arguing that interest is not prohibited in Islam? A few isolated opinions expressing a different view do not, therefore, create a dent in the consensus.
This gives rise to the question of what is it that confuses some people about its meaning. The reason may perhaps lie in the terms ribâ being used in the Shariah in two different senses, and the difficulty of some people in clearly understanding the meaning and implication of both. The first is ribâ al-nasi’ah and the other is ribâ al-fadl.
Ribâ al Nasiáh
The term nasi’ah comes from the root nasa’a (äÓA) which means to postpone, defer, or wait, and refers to the time that is allowed to the borrower to repay the loan in return for the ‘addition’ or the ‘premium’. Hence ribâ al-nasi’ah is equivalent to the interest charged on loans. It is in this sense that the term ribâ has been used in the Qur’an in verse 2:275, which states that “God has allowed trade and forbidden ribâ (interest).” This ribâ is termed as ribâ al-Qur’an (ribâ specified in the Qur’an) or ribâ al-duyun (ribâ on loans).
The prohibition or ribâ al-nasi’ah essentially implies that the fixing in advance of a positive rate of return on a loan as a reward for waiting is not permitted by the Shari’ah. It makes no difference whether the rate of return is small or big, or a fixed or variable per cent of the principal, or an absolute amount to be paid in advance or on maturity, or a gift or service to be received as a condition for the loan. The point in question is the predetermined positiveness of the return. It is important to note that, according to the Shari’ah, the waiting involved in the repayment of a loan does not by itself justify a positive reward.
There is no room even for arguing that the prohibition applies only to the consumption loans and not to business loans. This is because the borrowing during the Prophets’ times was not for consumption purposes but rather for financing long distance trade. Accordingly, the late Shaykh Abû Zahrah, one of the most prominent Islamic scholars of this century, has rightly pointed out that:
There is absolutely no evidence to support that the ribâ of al-jâhiliyyah [re-Islamic days] was on consumption and not on development loans. In fact the loans for which a research scholar finds support in history are production loans. The circumstance of the Arabs, the position of Makkah and the trade of Quraysh, all lend support to the assertion that the loans were for production and not consumption purposes.9
Even Professor Abraham Udovitch, Ex-Xhairman of the Department of Near Eastern Studies at the Princeton University, has clarified that “Any assertion that the medieval credit was for consumption only and not for production, is just untenable with reference to the medieval Near east.” 10
There is, thus, absolutely no difference of opinion among all schools of Muslim jurisprudence the ribâ al-nasi’ah stand for interest and, is harâm or prohibited. Then nature of the prohibition is strict, absolute and unambiguous. However, if the return on the principal can either be positive or negative, depending on the final outcome of the business, which is not known in advance, it is allowed provided that it is shared in accordance with the principles laid down in the Shari’ah.
While Islam has prohibited interest on loans and allowed trade, it has not allowed everything in trade. This is because it wishes to eliminate not merely the injustice that is intrinsic in the institution of interest on loans, but also that which is inherent in all forms of dishonest and unjust exchanges in business transactions. Anything that is unjustifiably received as ‘extra’ by one of the two counterparties to a trade transaction is ribâ al-fadl, which may be defined in the words of Ibn al-‘Arabî as “all excess over what is justified by the counter-value.” 12
The prohibition of ribâ al-fadl is intended to ensure justice, to remove all forms if exploitation through ‘unfair’ exchanges, and to close all back-doors to ribâ because, according to the unanimously accepted legal maxims of Islamic jurisprudence, anything that serves as a means to the unlawful is also unlawful. Since people may be exploited or cheated in several different ways, the Prophet warned that a Muslim could indulge in ribâ in seventy (= several) different ways. 13This is the reason why the Prophet, peace and blessings of God on him, said: “Leave what creates doubt in your mind in favour of what does not create doubt”, 14and Caliph ‘Umar was inspired to say: “Abstain not only from ribâ but also from ribâh.”15Ribâh is from rayb which literally means “doubt’ or ‘suspicion’ and refers to income which has the sembance of ribâ or which raises doubts in the mind about its rightfulness. It covers all income derived from injustice to, or exploitation of, others.
The Prophet, peace and blessings of God be on him, has indicated, by way of example, at least four different ways of indulging in ribâ al-fadl. The first of these is the exploitation that may take place in trade through the use of unfair means even though trade is by itself allowed. He equated with ribâ even the cheating of an unsophisticated entrant into the market (ghabn al-mustarsil) and the rigging of prices in an auction with the help of an agent (al-najash).16Analogically one may conclude that the extra money earned through such exploitation and deception falls within the ambit of ribâ al-fadl.
Another way of being guilty of indulging in ribâ al-fadl is by accepting a reward in return for making recommendation in favour of a person. This implies that the performance of an apparently charitable act with the intention of making money surreptitiously is also prohibited. The rationale behind this may be that such money-motivated recommendation might give benefit to a person who does not deserve and, thereby, indirectly deprive others who are more deserving.17
A third way of indulging in ribâ al-fadl is through barter transactions because of the difficulty of measuring the counter-values precisely in such transactions. The Prophet, peace and blessings of God be on him, therefore encouraged barter in a monetized economy and required that the commodity to be exchanged on the basis of barter be sold against cash and the proceedings used to buy the needed commodity.
This leads to the fourth way of indulging in ribâ al-fadl which has received the maximum attention of the fuqaha’. A number of authentic ahadith stipulate that if the same genus of commodity is exchanged against each other than the same weight of the commodities should be exchanged (sawa’an bi sawa’in and mithlan bi mithlin or equal for equal and like for like) hand-to-hand (yadan bi yadin). If the commodities exchanged are different, it does not matter if there is difference in weight and quantity, provided that the exchange takes place hand to hand. One of the implications of this requirement is the elimination of the backdoor to ribâ (which is referred to in fiqh as sadd al-dharî’ah). Another implication of these ahadith, as understood by the fuqahâ’, is the prohibition of futures transactions in foreign exchange. However, whether hedging, which is one way of managing the risks involved in exchange rates fluctuations, is possible within the constraints of the Sharî’ah is a question which need the attention of the fuqahâ.
Ribâ al-nasî’ah and ribâ al-fadl are, thus, essentially counterparts of the verse “God has allowed trade and prohibited ribâ “(2:275). While ribâ al-nasiah relates to loans and is prohibited in the second part of the verse, ribâ al-fadl relates to trade and is implied in the first part. Because trade is allowed in principle, it does not mean that everything is allowed in trade. Since the injustice inflicted through ribâ may also be perpetuated through transactions in commodities and currencies, ribâ al-fadl refers uncertainty and speculation. It demands a fair knowledge of the prevailing prices and the quality of goods being purchased or sold on the part of both the buyer and the seller. It necessitates the elimination of cheating in prices or quality, and in measures or weights. All business practices which lead to the exploitation of the buyer or the seller must be effectively eliminated.18
While ribâ al-nasî’ah can be defined in a few words, ribâ al-fadl, interspersing a vast array of business transactions and practices, is not so easy to specify. This what may have prompted ‘Umar, the Second Caliph, to say: “The Prophet, peace and blessings of God be on him, was taken without elaborating it to us.”19The attempt to justify ribâ al-nasî’ah or the interest on loans on the basis of this saying of ‘Umar is absolutely fallacious because the reaction of ‘Umar, by way of caution, was to give up not only ribâ but also ribâh.
It is true that the Prophet specified only a few ways of indulging in ribâ al-fadl and did not indicate all the different ways, as one may have desired. However this was not necessary and not even feasible. Form of injustice and exploitation in trade and exchange of currencies have changed over the centuries and it was not possible for anyone to foresee and specify them all 1400 years ago. The Qur’ân and the Sunnah are there to provide the principles on the basis of which the Ummah can do so. This is the ongoing challenge to all Muslims – to examine their economic practices continually in the light of Islamic teachings and to eliminate all shades of injustice. This is a more difficult task than eliminating ribâ al-nasî’ah. It requires a total commitment and an overall restructuring of the entire economy within the Islamic framework to ensure justice. This was, and is, the unique contribution of Islam. While ribâ al-nasî’ah was well-known in the Jâhiliyyah, the concept of ribâ al-fadl was introduced by Islam and reflects the stamp of its own unflinching emphasis on socio-economic justice.
The principal reason why the Qur’ân has delivered such a harsh verdict against interest is that Islam wishes to establish an economic system where all forms of exploitation are eliminated, and particularly the injustice perpetuated in the form of the financier being assured of a positive return without doing any work or sharing in the risk, while the entrepreneur, in spite of his management and hard work, is not assured of such a positive return. Islam wishes to establish justice between the financier and the entrepreneur.
Under these circumstances it is difficult to see how anyone could justify interest in an Islamic society. The difficulty to understand the prohibition comes from lack of appreciation of the whole complex of Islamic values, and particularly its uncompromising emphasis on socio-economic justice and equitable distribution of income and wealth. Any attempt to treat the prohibition of ribâ as an isolated religious injunction and not as an integral part of the Islamic economic order with its overall ethos, goals and values is bound to create confusion.
1Narrated by Muslim from Jâbir and also by al-Tirmidhî and Ahmad. For the full texts and complete references to the ahâdith quoted in this paper, see Chapra 1985, pp. 236-40 2The first hadîh is narrated by Ahmad and Al-Dâraqutnî from Abdallah ibn Hanzalah, while the second is narrated by Ibn Mâjah and al-Bayhaqî (Shu’ab al-Îmân) from Ibn ‘Abbâs. 3See the word Ribâ in Ibn Manzur’s Lisan al-‘Arab; 1968; al-Zabidi’s Taj al-Arus; and Raghib al-Isfahani’s al-Mufradat. The same meaning is also unanimously indicated in all classical Qur’an commentaries. 4The Prophet, peace and blessings of God be on him, said: “If a man extends a loan to some one he should not accept a gift”(Bukhari in his Tarikh and Ibn Taymiyyah in al-Muntaqa). In another hadith the Prophet said:”When one person grants a loan to another and the borrower offers him a dish [of food] or a ride on his camel, he should not accept unless the two of them have been previosly accustomed to the exchange of such favours mutually”(Sunnan al-Bayhaqi, Kitab al-Buyu, Bab Kullu qardin jarra manfa’atan fa huwa ribân). Is it possible to conceive a lower rate of interest than a plate of food or a ride in one’s car?. 5Tafsir al-Qurtubi, 1967, Vol.3, p.241. 6Ibn Manzur, 1968, p.304. See also the commentary on verse 2:275 in Tafsir al-Kabir of Fakhruddin al-Razi, Akham al Qur’an of Abu Bakr al-Jassas, and Akham al-Quran of Ibn al-‘Arabi. 7See, al-Jaziri, Vol. 2, p.245 8See al-Sanhuri, 1953, Vol.3, pp.241-2 and al-Qaradawi, 1994, pp.129-42. See also Abdel Hamid al-Ghazali, 1990, pp.35-60, for verdicts about ribâ geven from 1900-89. 9Abû Zahrah, 1970, pp.53-4. 10Udovitch, 1970, p.86. 12Ibn al-‘Arabî, Ahkâm al-Qur’an, 1957, p.242. 13Reported byIbn Mâjah and al-Bayhaqî – (Shu’ab al-Îmân) from Abû Hurayrah. 14Cited by Ibn Kathîr in his commentary on verse 2:275. 15Reported by Ibn Mâjah and al-Dârimî from ‘Umar ibn al-Khattâb. 16The first hadîth is reported by al-Bayhaqî and al-Suytî (al-Jâmi’al Saghîr) from Anas ibn Mâlik. The second hadîth is reported from Abdallah ibn Abî Awfâ by al-‘Asqalanî in his commentary on al-Bukhârî and by also al-Bayhaqî in his Sunan from Anas ibn Mâlik. 17Reported from Abû Umâmah by Bulûgh al-Marâm on the authority of Ahmad and Abu Dâwûd. 18Several types of sales have been prohibited in the Shariah with the objective of safeguarding the right of both buyers and sellers. Examples are: najash (rigging and collusion), ghabn al-mustarsil (chaeting of an unsophisticated entrant into the market), bay’al-hâdir li al-bâdî and talaqqî al-rukbân (both implying monopsonistic or monopolistic collusion or exploitation to munâbadhah, mulâmasah and muzâbanah (sales involving uncertainty and speculation or gambling). See, for example, al-Jaziri, Vol.2, pp. 273-8 and 283-91). 19Reported by Ibn Mâjah from ‘Umar ibn al-Khattâb