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April 18, 2014

Riba and Usury in Islam, Definition and Meaning

THE literal meaning of riba is excess or increase. In Islamic terminology, interest means effortless profit or profit which comes free from compensation or that extra earning obtained that is free of exchange.
Hazrat Shah Waliullah Dehlvi 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 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. 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 Sharia.
If we study the Holy Quran, we will come across at least four places where Allah has mentioned interest. For instance, in Surah Al Baqarah verse no. 275 Allah says: 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 276 in the same place, Allah says, “Allah will deprive usury of all blessing, and will give increase for deeds of charity, for He does not love any ungrateful sinner.” 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.” Hazrat Jabir has reported that the Messenger of Allah (peace be upon him) cursed the devourer of usury, its payer, its scribe and its two witnesses. He also said that they were equal (in sin). (Muslim).


In the light of the Holy Quran and Hadis, it is apparent to us that interest could never be legal and ‘halal’. How could Muslims take the time out to think about a matter in which Allah has declared war on the user and His Prophet has cursed him?
A person who takes interest does not gain anything in reality but through the explanation of the Quranic verse, “Allah decreases interest and increases sadqah”. 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 though in reality it seems as if he is losing out. Source

Comments

  1. Chaudhary Muhammad Akram says:

    I wnna be know about any change and amended.

  2. Chaudhary Muhammad Akram says:

    for know something

  3. Araufyusuf says:

    I have read with interest the various comments by your readers on RIBA. How ever nobody has discussed what the Quran actually said about RIBA and what we may deduce from it. The relevant verses areAl-Rum 30 ( the first reference to RIBA), Al-Imran 130, and Al Baqarah 275 to 280 and 282 ,
          The  Quran has not defined RIBA as any increase on the principal lent.This definition was made by our learned men some twelve centuries ago when there was no 
    banking system r compare with. Banking started in the 16th century and, with the capacity to mobilize money,  private mercantile companies conquered almost the whole world. They  intruded into the Muslim world perhaps 150 years ago and we have had to reconsider our economic system.
           The Quran,however, has vividly described RIBA. It is exploitative, rapacious, it doubles and quadruples, it seeks to capture the .’s property, is excessive and is frequently is compared and contrasted to charity in which is great good. Why does Allah so highlight this point. Allah suggests that if the borrower is in difficulty forgive not only the RIBA  but indeed the principal! In effect it means that the borrower was a case for charity and you are giving him RIBA.
             A small  bit of basic arithmetic should highlight the difference between RIBA and banking. (I suspect that our aalims are singularly deficient in this) .  The RIBA rates in Arabia in those days were 50 to100 percent  for one year. Suppose 1000dollars are lent. At one year the borrower is unable to pay the RIBA -then his security would be lost. He pays the RIBA but not the principal, then the agreement is repeated for subsequent periods.  This is simple interest. Thirdly he cannot pay either and he asks for more time. Now it would be for 1500$ because in fairness the lapsed profit is the lender’s right and the next period would be $2250. And so on. This is compound interest. In five years simple interest would be $2500. At compound interest it would be $7600 
                 At bank interest of 10 percent $1000 would become $1500 and $1610 at compound interest. Which fits the Quranic description should be quite obvious! The bank is not out to exploit you. It’s purpose is that you thrive and are able to pay their profit and the principal. The bank does not want to take over a failed business or a house which does not sell and keeps it’s capital blocked.
                  One would think that if one may not only not get a profit but also lose the principal only an idiot will lend money, yet v 282 al-Ba qarrah tells you to set down in writing the terms whenever you give or take credit and have witnesses to it. This meant that trade and commerce carried on as before with the usual give and take because trade was international and extensive. The rules of business were the same all over the world till the Europeans began to get ahead.                                                                                                              
                  From the above it is obvious that ther were two types of lending  - RIba which was absolutely forbidden and another which was permissible. Business ethics and procedures, were the same all over the world because trade was international. Credit and time were normal practice. For example a trade caravan is being organized and you have some shortage of capital and you go to market ( where you are well known)  and borrow your need; next time you are in the position to lend. In this environment between equals the rate would that is affordable to all. RIBA would be between unequals. A farmer has had a very poor crop and is hand-to-mouth. He is exploited because of his precarious conditions and the lender can impose harsh demands!  Whereas he is just the case for charity!! And this deserves Allah’s wrath.
                     Banking is a means to collect money from a host of people and lend it to entrepreneurs. Who use to economic profit and benefit themselves, you and the nation.It enables everyone to participate. All. The little or more money you save can be invested in a saving scheme and is in circulation and use instead of lying fallow under your pillow.
                      There never was a banking system in Muslim countries and tha Islamic economic system was basically the same as in the rest of the world.r
                       Of course you do know that the Al Azhar university in 2002 gave a fatwa that banking as at present practiced is not RIBA and had previously accepted that government bonds and saving schemes are O,K,

    • @ Araufyusuf
      thanks for your comments and sharing your thoughts with us

    • Assalam-o-Allikum, I deal in cloth merchant a customer comes and asks for some cloth to sell that in sides of the city (rural areas).I show some cloth of various qualities ,but he says here is nothing according to my choice so give me net cash I shall buy from an other industrial city,I shall give you
      Rs: 10 rupee/meter as your profit.
      Please define the amount of 10 rupee/meter is Halal and is according to the Islamic concept of business.?

  4. Araufyusuf says:

    I trust ica write on other subjects .            One of the  ”big” maulanas  has stated on T.V. that if a rape victim cannot produce four witnesses she should remain silent (otherwise she would suffer
    eighty lashes as a liar) and because such news tarnishes the community’s reputation (not the deed itself– what hypocrisy).
          Adultery is a consensual affair and is a sin (between man and god) if committed in privacy. However if norms and ethics of society are so blatantly and openly flouted that, not one or two, but four people witness it then it becomes a crime, punishable by worldly laws.
           Rape, however, is a vile, violent and bestial crime even if committed in the darkest secrecy. Woman is violated, dishonored, defiled and subjected to physical, emotional and psychological damage, possibly permanently. And she should remain silent!? Is she allowed to tell her parents and family, consult a doctor or point to her attacker so that potential victims may be put on guard!? The maulana would have it that the victim has no redress or vindication and the criminal goes scot free!
             Maulana sahib may be a very good Muslim (though Allah is the best judge) but I ask where is his humanity and compassion, and his sense of justice, shame, outrage and revulsion. Does he consider himself a human being?
              Islam is already accused of sanctioning terrorism, now with Maulana’s blessings it would become the religion which gives legal protection to rapists!
              Let us pray Allah gives a grain of wisdom to our Maulanas. Amen.
               What can we do? It seems inconceivable to me that there would be such a gaping lacuna in Islamic jurisprudence that such a heinous, bestial crime would go unpunished. Deeper study by our serious scholars is required – there must be something on this subject. For one thing the requirement of four witnesses (otherwise eighty lashes) should be treated as a spouse bringing such a charge against the partner without the four witnesses. Nowadays with our present advances in forensic medicine it is very likely that evidence to bear out victim’s accusation would be accessible. There would be marks of violence and injury and forcible entry and DNA tests. The case needs to be quickly registered and forensic examination expeditiously done.

    Dr. A. Rauf Yusuf.

    Sent from my iPad

    Sent from my iPad 

  5. Araufyusuf says:

               One of the  ”big” maulanas  has stated on T.V. that if a rape victim cannot produce four witnesses she should remain silent (otherwise she would suffer
    eighty lashes as a liar) and because such news tarnishes the community’s reputation (not the deed itself– what hypocrisy).
          Adultery is a consensual affair and is a sin (between man and god) if committed in privacy. However if norms and ethics of society are so blatantly and openly flouted that, not one or two, but four people witness it then it becomes a crime, punishable by worldly laws.
           Rape, however, is a vile, violent and bestial crime even if committed in the darkest secrecy. Woman is violated, dishonored, defiled and subjected to physical, emotional and psychological damage, possibly permanently. And she should remain silent!? Is she allowed to tell her parents and family, consult a doctor or point to her attacker so that potential victims may be put on guard!? The maulana would have it that the victim has no redress or vindication and the criminal goes scot free!
             Maulana sahib may be a very good Muslim (though Allah is the best judge) but I ask where is his humanity and compassion, and his sense of justice, shame, outrage and revulsion. Does he consider himself a human being?
              Islam is already accused of sanctioning terrorism, now with Maulana’s blessings it would become the religion which gives legal protection to rapists!
              Let us pray Allah gives a grain of wisdom to our Maulanas. Amen.
               What can we do? It seems inconceivable to me that there would be such a gaping lacuna in Islamic jurisprudence that such a heinous, bestial crime would go unpunished. Deeper study by our serious scholars is required – there must be something on this subject. For one thing the requirement of four witnesses (otherwise eighty lashes) should be treated as a spouse bringing such a charge against the partner without the four witnesses. Nowadays with our present advances in forensic medicine it is very likely that evidence to bear out victim’s accusation would be accessible. There would be marks of violence and injury and forcible entry and DNA tests. The case needs to be quickly registered and forensic examination expeditiously done.

    Dr. A. Rauf Yusuf.

    Sent from my iPad

    Sent from my iPad 

  6. Araufyusuf says:

     Suicide Bombing

    It would require a lot of dedication, loyalty, faith and courage to blow oneself up. It would be admirable if the purpose  were not  so evil, blood-thirsty, inhuman to kill unarmed men, women and children and nimazis at mosques, shrines,schools and market places. How are they different from the gangsters and gunmen of the drug mafias and criminal gangs of the West?
             These bombers are young people, often in their teens, who have been deluded and brain washed to believe that by so committing plain murder they would be achieving Shahadat and get immediate admission to paradise! This is a shortcut to heaven–they would not have to live a lifetime of struggle to conform to Quranic and Islamic principles.How badly have they been misled because nowhere in the Quran is there any sanction to kill anyone -they will surely incur Allah’s wrath and punishment. Amin.
              How can w e counter this brainwashing? It can be done by bringing to their knowledge the commandments of Allah on killing. It is obvious that these poor, misguided young people have probably not read the Quran in translation and understood at all what it says -they take the word of their teacher for the Quran and we have to disabuse them of these beliefs.
                The following verses of the Quran should be displayed in all madrassahs and mosques:
                 Surah Al-Isra verse 33:. And do not take any human being’st life-which life Allah has willed to be sacred – otherwise than in the pursuit of justice.
                  Surah An-Nisa verse 93: But whoever deliberately slays another believer, his requital shall be hell, therein to abide; and God will condemn him, and will reject him, and  prepare for him awesome suffering.
                   Surah Al-Baqarah verse 256: There shall be no coercion in matters of faith.
                   And also inscribe: A Muslim’s creed – Kalma – Shahadat.
                    These are Indisputable sayings and no Muslim could object. The government and society can ensure that these verses are properly displayed. The constant exposure to these verse would at least create doubts as to the authenticity of their mullas teachings.
                     The newspapers can also be carrying a caption “Those who kill unarmed innocent men, women and children and nimazis shall surely incur Allah’s punishment. Amin.”

                                     A. Rauf Yusuf. 
                  11, A Danepur Road, Lahore.

              042

  7. @Araufyusuf
    Good job your posts are appreciated
    i request u all that write on impact of Islamic banking on economic growth i am working on this topic for my thesis i need some guidance.

  8. Admin can u plz guide me for Impact of Islamic Banking on economic growth of Pakistan.

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