Al-Ribā’ (Usury)

بِسْمِ اللَّهِ الرَّحْمَٰنِ الرَّحِيمِ
Indeed all praises is for Allāh (ﷻ), the Lord of the World; we praise Him, and we seek His aid, and we ask for His forgiveness, and we seek Allāh’s (ﷻ) refuge from the evils of ourselves and from our evil actions. He whom Allāh (ﷻ) guides, none can misguide him, and He whom Allāh (ﷻ) misguides, then none can guide him. Blessings and peace be upon our Prophet Muhammad (ﷺ) and upon all his Family and Companions. I bear witness that none has the right to be worshipped except Allāh (ﷻ), Alone, having no partners, and I bear witness that Muhammad (ﷺ) is His slave and His messenger.

Mu’ mīneen Brothers and Sisters

Amma ba’ād.

The Definition Of Interest (Al-Ribā’)

“Ribā’ is a loan with the condition that the borrower will return to the lender more than and better than the quantity borrowed.”

There is no doubt that what has been prohibited by both the Qurʾān and the ḥadīth is Ribā’. The Qurʾān 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 Madīnah. The last of these (2:275-81) came near the end of the Prophet Muḥammad’s (ﷺ) life. It severely censured those who took ribā’, and declared them to be at war with Allāh (ﷻ) and His Prophet (ﷺ). It also established a clear distinction between trade and ribā’, and enjoined Muslims to forego all outstanding ribā’, enjoining them only to take the principle amount, and to remiss even this in case of the borrower’s hardship.

Allāh (ﷻ) says in Qurʾān:
وَمَا آتَيْتُمْ مِنْ رِبًا لِيَرْبُوَ فِي أَمْوَالِ النَّاسِ فَلَا يَرْبُو عِنْدَ اللَّهِ ۖ وَمَا آتَيْتُمْ مِنْ زَكَاةٍ تُرِيدُونَ وَجْهَ اللَّهِ فَأُولَٰئِكَ هُمُ الْمُضْعِفُونَ
“That which you give in usury in order that it may increase people’s wealth does not increase with Allāh. But what you pay as zakāt seeking Allāh’s pleasure —it is they who will be given a manifold increase.” (30:39)

وَأَخْذِهِمُ الرِّبَا وَقَدْ نُهُوا عَنْهُ وَأَكْلِهِمْ أَمْوَالَ النَّاسِ بِالْبَاطِلِ ۚ وَأَعْتَدْنَا لِلْكَافِرِينَ مِنْهُمْ عَذَابًا أَلِيمًا
“…and for their taking usury —though they had been forbidden from it— and for eating up the wealth of the people wrongfully. And We have prepared for the faithless among them a painful punishment.” (4:161)

يَا أَيُّهَا الَّذِينَ آمَنُوا لَا تَأْكُلُوا الرِّبَا أَضْعَافًا مُضَاعَفَةً ۖ وَاتَّقُوا اللَّهَ لَعَلَّكُمْ تُفْلِحُونَ
وَاتَّقُوا النَّارَ الَّتِي أُعِدَّتْ لِلْكَافِرِينَ
وَأَطِيعُوا اللَّهَ وَالرَّسُولَ لَعَلَّكُمْ تُرْحَمُونَ
“O you who have faith! Do not exact usury, twofold and severalfold, and be wary of Allāh so that you may be felicitous. And beware of the Fire which has been prepared for the faithless, and obey Allāh and the Apostle so that you may be granted [His] mercy.” (3:130-132)

الَّذِينَ يَأْكُلُونَ الرِّبَا لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوا إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا ۗ وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا ۚ فَمَنْ جَاءَهُ مَوْعِظَةٌ مِنْ رَبِّهِ فَانْتَهَىٰ فَلَهُ مَا سَلَفَ وَأَمْرُهُ إِلَى اللَّهِ ۖ وَمَنْ عَادَ فَأُولَٰئِكَ أَصْحَابُ النَّارِ ۖ هُمْ فِيهَا خَالِدُونَ
يَمْحَقُ اللَّهُ الرِّبَا وَيُرْبِي الصَّدَقَاتِ ۗ وَاللَّهُ لَا يُحِبُّ كُلَّ كَفَّارٍ أَثِيمٍ
إِنَّ الَّذِينَ آمَنُوا وَعَمِلُوا الصَّالِحَاتِ وَأَقَامُوا الصَّلَاةَ وَآتَوُا الزَّكَاةَ لَهُمْ أَجْرُهُمْ عِنْدَ رَبِّهِمْ وَلَا خَوْفٌ عَلَيْهِمْ وَلَا هُمْ يَحْزَنُونَ
ا أَيُّهَا الَّذِينَ آمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا إِنْ كُنْتُمْ مُؤْمِنِينَ
فَإِنْ لَمْ تَفْعَلُوا فَأْذَنُوا بِحَرْبٍ مِنَ اللَّهِ وَرَسُولِهِ ۖ وَإِنْ تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ
وَإِنْ كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَىٰ مَيْسَرَةٍ ۚ وَأَنْ تَصَدَّقُوا خَيْرٌ لَكُمْ ۖ إِنْ كُنْتُمْ تَعْلَمُونَ
وَاتَّقُوا يَوْمًا تُرْجَعُونَ فِيهِ إِلَى اللَّهِ ۖ ثُمَّ تُوَفَّىٰ كُلُّ نَفْسٍ مَا كَسَبَتْ وَهُمْ لَا يُظْلَمُونَ
“Those who exact usury will not stand but like one deranged by the Devil’s touch. That is because they say, ‘Trade is just like usury.’ While Allāh has allowed trade and forbidden usury. Whoever, on receiving advice from his Lord, relinquishes [usury], shall keep [the gains of] what is past, and his matter shall rest with Allāh. As for those who resume, they shall be the inmates of the Fire and they shall remain in it [forever]. Allāh brings usury to naught, but He makes charities flourish. Allāh does not like any sinful ingrate. Indeed those who have faith, do righteous deeds, maintain the prayer and give the zakāt, they shall have their reward near their Lord, and they will have no fear, nor will they grieve. O you who have faith! Be wary of Allāh, and abandon [all claims to] what remains of usury, should you be faithful. And if you do not, then be informed of a war from Allāh and His apostle. And if you repent, then you will have your principal, neither harming others, nor suffering harm. And if [the debtor] is in straits, let there be a respite until the time of ease; and if you remit [the debt] as charity, it will be better for you, should you know. And beware of a day in which you will be brought back to Allāh. Then every soul shall be recompensed fully for what it has earned, and they will not be wronged.” (2:275-281)

The Prophet (ﷺ), also prohibited ribā’ 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 (ﷺ) even equated the willful taking of ribā’ with committing adultery thirty-six times or being guilty of incest with one’s own mother.
[Source: The first ḥadīth 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.]

On the authority of Jabir [ر], who said that the Messenger of Allāh (ﷺ) “CURSED THE ONE WHO CONSUMES INTEREST, THE ONE GIVING IT, THE ONE BEARING SCROLL, AND THE TWO WITNESSES TO IT“. He (ﷺ) said, “THEY ARE ALL EQUAL“. [Source: Sahih Muslim]

People are confused of the actual meaning of ribā’. The reason may perhaps lie in the terms ribā’ being used in the Sharī’ah in two different senses, and the difficulty of some people in clearly understanding the meaning and implication of both. The first is Ribā’ al-nasi’ah and the other is Ribā’ al-fadl.

Ribā’ al-nasi’ah:

The term nasi’ah comes from the root nasa’a 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, ribā’ al-nasi’ah is equivalent to the interest charged on loans. It is in this sense that the term ribā’ has been used in the Qur’ān in verse 2:275, which states that “God has allowed trade and forbidden ribā’ (interest).” This ribā’ is termed as ribā’ al-Qur’ān (ribā’ specified in the Qur’ān) or ribā’ al-duyun (ribā’ on loans).

The prohibition or ribā’ 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 Sharī’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 Sharī’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. It is ḥarām and prohibited.

Ribā’ al-Fadl:

While Islām 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 Ribā’ al-Fadl.

The prohibition of ribā’ al-Fadl is intended to ensure justice, to remove all forms if exploitation through ‘unfair’ exchanges, and to close all back-doors to ribā’ because, according to the unanimously accepted legal maxims of Islāmic 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 (ﷺ) warned that a Muslim could indulge in ribā’ in seventy (= several) different ways. This is the reason why the Prophet (ﷺ) said: “Leave what creates doubt in your mind in favor of what does not create doubt”.

Caliph Omar ibn al-Khaṭṭāb [ر] was inspired to say: “Abstain not only from ribā’ but also from ribā’h.” ribā’h is from rayb which literally means “doubt’ or ‘suspicion’ and refers to income which has the sembance of ribā’ or which raises doubts in the mind about its rightfulness. It covers all income derived from injustice to, or exploitation of others.

The Prophet (ﷺ) has indicated, by way of example, at least four different ways of indulging in ribā’ 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 ribā’ 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). Analogically one may conclude that the extra money earned through such exploitation and deception falls within the ambit of ribā’ al-fadl.

Another way of being guilty of indulging in ribā’ al-fadl is by accepting a reward in return for making recommendation in favor of a person.

A third way of indulging in ribā’ al-fadl is through barter transactions because of the difficulty of measuring the counter-values precisely in such transactions. The Prophet (ﷺ) 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 ribā’ al-fadl which has received the maximum attention of the fuqaha’. A number of authentic aḥadīth 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 ribā’ (which is referred to in fiqh as sadd al-dharî’ah). Another implication of these aḥadīth, as understood by the fuqahā’, 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 Sharī’ah is a question which need the attention of the fuqahā.

Ribā’ al-nasî’ah and Ribā’ al-fadl are, thus, essentially counterparts of the verse “God has allowed trade and prohibited ribā’ “(2:275). While ribā’ al-nasiah relates to loans and is prohibited in the second part of the verse, ribā’ al-fadl relates to trade and is implied in the first part.

The principal reason why the Qur’ān has delivered such a harsh verdict against interest is that Islām 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. Islām wishes to establish justice between the financier and the entrepreneur.

The summary of the matter is that interest is hazardous and should be abstained from in all manners. As for the loans you borrowed, you are obligated to return the initial money borrowed only. If you are forced to pay ribā’ with no way out, do your best in repenting to Allāh to pardon you.

And for those who give money on interest, I conclude by asking you, 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.

Whatever written of Truth and benefit is only due to Allāh’s (ﷻ) Assistance and Guidance, and whatever of error is of me. Allāh (ﷻ) Alone Knows Best and He (ﷻ) is the Only Source of Strength.

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