Tuesday, 14 February 2012


It is said that the interest-based economy is the very backbone of the modern and capitalist economy. Dr.Waqar Masood Khan writes" On the one hand is this sordid reality of the present-day life and on the other is the vehement denunciation of riba in the Qur'an and in the tradition of the Prophet (Peace be upon him). The intensely vitriolic tenor of the Qur,anic castigation of riba cannot be lost on anyone who has gone through the Qur'an". IN THE HOLLY QUR'AN IT IS FOUND:-

The verses of the Qur'an, on the subject.

The study of verses about Riba in the Qur’an (revealed) in chorological order. There are four different sets of verses about Riba in Qur’an in the order of Occurrence from which an objective study is being made here under;-
1.     First, in Surah Al Rum (30; 39) which was revealed in Makah, The term of Riba has been used in the following manners;-                                                                                 That which ye give in usury(Riba) in order that it may increase on(other) people’s property hath no increase with Allah; but that which ye give in charity, seeking Allah’s countenance, hath increase manifold.
2.     The second place is the Surah Al Nisa (4.161) where in the Riba is used in the context of sinful acts of Jews with the following words.
And of their taking usury (Riba) when they were forbidden it,
3.     The verses (3; 130) of Surah Al Imran has the third number wherein the prohibition of Riba is laid down in the under noted wordings;   O ye who believe! Devour not usury (Riba) doubling and quadrupling (the sum lent). Observe your duty to Allah, that ye may be successful.
4. The fourth set of verses was revealed as follows (Surah Al Baqarah 275; 281)
275. those who swallow usury (Riba) cannot rise up save as he ariseth whom the devil hath prostrated by (his) touch. That is because they say: Trade is just like usury (Riba); whereas Allah permitteth trading and forbidden usury (Riba). He unto whom an admonition from his Lord Cometh, and (he) refraineth (in obedience thereto), he shall keep (the profits of) that which is past, and his affair (henceforth) is with Allah. As for him who returneth (to usury [Riba]) _ such are rightful owners of the Fire. They will abide therein.
276. Allah hath blighted usury (Riba) and made almsgiving fruitful. Allah loveth not the impious and guilty.
277. Lo! Those who believe and do good works and establish worship and pay the Poor-due, their reward is with their Lord and there shall no fear come upon them Neither shall they grieve.
278. O ye who believe! Observe your duty to Allah, and give up what remaineth (due to you) from usury (Riba), if ye are (in truth) believers.
279. And if ye do not, then be warned of war (against you) from Allah and His messenger. And if ye repent, then ye have your principal (without interest). Wrong not, and ye shall not be wronged.
280. And if the debtor is in straitened circumstances, then (let there be) postponement to (the time of) ease; and that ye remit the debt as almsgiving would be better for your if ye did but know.281. And guard yourselves against a day in which ye will be brought back to Allah. Then every soul will be paid in full that which it hath earned, and they will not be wronged (ref to Holy Qur’an by MARMADUKE PICKTHALL)

  Inferences drawn form there verses:

1.     There is a sharp contrast between charity and usury. Usury creates conflict, hatred, jealousy and economic warfare among individuals whereas charity promotes harmony, cooperation and collaboration in the society.
2.     There is distinct difference between legitimate trade and usury. Not every surplus in transaction is forbidden. The surplus, which is a result of spelling and purchasing, is legitimate and lawful. The surplus which one earns without exertion and bearing risk and liability is prohibited.
3.     The believers have been asked to give to the remaining amount of Riba` and permitted to receive their principal amounts. This gives Quranic definition of Riba`, that is, any addition to the capital in a transaction of loan is Riba`.
4.     No distinction has been made between an addition in the capital sum of the loan based on simple interest and an addition based on compound interest.
5.     No distinction has been made between a loan contracted for the purpose of consumption and that contracted for production.
6.     The creditors have right to their capital sums only.
7.     To demand excess in the capital is injustice to the debtor and to deny the creditor his principal amount is an injustice to him.
8.     Continuing any further dealing in Riba` will amount to inviting war from Allah and His Massage.
9.     Creditors have been asked to give time to debtors for repayment of capital, if necessary.
10.To write off a debt altogether is an act of charity.

Riba` in Sunnah is read as under:-

  The ahadith dealing with riba` are of two categories. First, those, which reaffirm the type of riba` mentioned in the Qur`an. The second categories are those that introduce a new form of riba`, not mentioned in the Qur`an. This latter form of riba` is known as Riba` al-fadl.
        A few of the ahadith relating to either category are reproduced below:
The First Category of Ahadith on Riba`

1.     The Prophet (saw) is reported to have said in his last hajj Sermon (the farewell address).”Beware, all Riba` outstanding from the Riba` prevalent during the pre-Islam era is void. You are entitled to your principal money. Neither shall you oppress nor shall you be oppressed.”¹
2.     ).“Beware, all Riba` of pre-Islam era is annulled and the first claim of Riba` which I cancel is that of my uncle”.²
3.     From Jabir, who said: “The Message of Allah (saws) cured the one who charges Riba`; he who gives it; the one who records it; and the two witnesses; saying that “they are all equal”. ³
The Second Category of Ahadith          
1.     From Abu` Sa’id al-Khudri, who said: “the Messenger of Allah  (saws) said: “Do not sell gold for gold except when it is like for like; nor misappropriate one through the other; nor sell silver for except like for like; nor misappropriate one through the other, nor sell thing that are absent for those that are present”.⁴
2.     From’Ubadah Ibn Samit who said; “The Messenger of Allah (saws) said; Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt, like for like, in equal weights, from hand for hand. If those species differ, then sell as you like as long as it is from hand to hand”.⁵ These two ahadith provide that the following three transactions are usurious transactions.
(i)                            A transaction of money for money of the same denomination where the quantity on both sides is not equal. Either in a spot transaction or in a transaction based on deferred.
(ii)                          A barer transaction between two weighable or measurable commodities of the same kind. Where the quantity on both sides is not equal or where delivery from any one side is deferred.⁶
(iii)                        A barter transaction between two different weighable or measurable commodities when delivery from one side is deferred.

  Kinds of Riba`

There are two main kinds of Riba`:  Riba` al duyun and Riba` al-buyu’ (Riba` of debt transactions and Riba` of sale transactions) Riba` al-buyu’ is further divided into two kinds, i.e., Riba` al fudl and Riba` al nasa`.
I)Riba` al fudl(Riba` by way of excess)
It is the excess revealed through a Shari’ah criterion stipulated in one of the two counter-values, in transaction of exchange.⁷ it can also be defined as an unequal exchange of wheat with wheat. The Shari’ah criterion in the above definition refers to weight or measure of capacity or count. Thus, if two persons were exchanging wheat with each other, the quantity must be equal on both sides: if there is excess on one side, it would amount to Riba` al fudl (Riba` by way of excess). Riba` al fudl takes place in a homogenous exchange with increase from one side in terms of weight or measurement. In the above example if 15 Kg wheat is exchange for 6 Kg wheat, that would amount riba al-fadl.

II)Riba` al-Nase’(Riba of delay):

It is Riba` by way of deferment of completion of an exchange. Riba` al-nasa`       ( Riba` by way of deferment) take place when articles of the same genera or different genera, whether measured or weighed, are exchanged with deferment on one side, whether or not there is releases in favor of either side. Thus, if 5 Kg gold is exchanged for 5 Kg gold with a delay of one year, it will amount to Riba al-nasa` because it has arisen from a period of delay.
¹Muslim, Sahih, Kitab` al-Hajj.
² Muslim, Sahih, Kitab` al-Hajj.
³ Bukhari, Sahih, Kitab` al-Buyu’ Muslim, Sahih, Chapter on Riba`
⁴ Muhammad ibn Islam’il San’ani, Subul al-Salam, Beirut: Dar al-Fikr, 1938, vol. 3,p.37
⁵ Muslim Sahih, Kitab` al-Musaqat, Bab al-Sarf. Hadith no 1587, vol,3, p. 1211.,vol. 3, p. 37.
⁶ Order of Supreme court’s Appellate Bench on Riba`. The News, December 24,1999
⁷ Kasani, Bada al-Sana’I, vol. 5, p, 183 (Abstracted from Islamic Law of Contracts and Business Transactions P.124:128 Shariah Academy International Islamic University Islamabad).  

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