Riba is an Arabic word that is often translated
as interest though some Muslim jurists do not agree with this translation as
explained below.
Caliph Umar said that there were three issues, he wished, that the Prophet could
have explained them in more detail. Two of them were about Inheritance Law of
Islam and the third one was about Riba.
(Reported in Al-Tafseer Ibne Kaseer, Ibne Majha and Ibne Mardoodia) At another
occasion, he said that since some kinds of riba were not quite clear to them
(Muslims at that time), therefore they had left almost 90 percent of otherwise
permissible transactions in fear of involving in riba even unknowingly.
(Reported in Al-Kanz)
RIBA IN QURAN AND HADITH
Riba in Quran: The word 'Riba' means to increase, to grow, to multiply and to
climb. However, in economic context, it is generally considered as a contractual
increase on loaned money or commodity. This word as such or its variants have
been used in numerous versus of Quran. There is, however, a complete consensus
among Muslim jurists that only in the following eight verses of Quran, this word
has been used in its economic sense: -
And from the riba-based giving (investment), you think as if your wealth is
increasing at the cost of others (borrowers), but in the sight of Allah (from
overall perspective), it is not increasing. On the other hand, when you give
something in charity to please Allah, then your wealth is increasing (in the
sight of Allah). (al-Room 30:39)
And for their (Jews’) devouring of riba even though it was forbidden for them,
and for their (Jews’) wrongful appropriation of other peoples' property, We
(God) have prepared for those among them who reject faith a grievous punishment.
(al-Nisaa 4:160-1)
O Believers! Do not charge riba on top of riba and fear God so that you may
prosper. (Aale-Imran 3:130)
People who indulge in Riba shall be raised like those who have been driven to
madness by the touch of Devil. That is because they say that a riba-based
transaction is just like trading, while God has permitted trade and prohibited
Riba. Hence those who have received the admonition(warning) from their Lord and
have desisted accordingly, may
have what has already passed, their case being entrusted to God; but those who
revert to riba-based dealings, shall be the inhabitants of the hell-fire and
abide therein for ever. (You must know that) God deprives riba from all
blessings and blesses charity; He loves not any ungrateful sinners. (al-Baqarah
2:275-6)
O you (who claim to be) believers! Fear God and give up Riba that remains
outstanding if you are true believers. Watch out! If you do not obey this
commandment, then God declares war against you from Himself and from His
Prophet. But, if you give up your
outstanding Riba, then you can claim your principals. Neither should you inflict
harm (due to Riba) to others, nor others should do harm to you. (al-Baqarah
2:278-79)
Riba in Hadith: On the topic of riba, there is a big number of ahadith. Here a
selection of commonly quoted ahadith is reproduced that is divided, for
Pedagogical purposes, under the following four titles: -
1. Ahadith that reinforce the concept of Quranic Riba
1.1 The Prophet said: "There is no riba except in loaning." (Nasaee 4504)
1.2 The Prophet said: "Verily riba is in loaning." (Muslim 2991)
1.3 The Prophet said: "There is no riba in hand to hand (spot) transactions."
(Muslim)
1.4 At the last Pilgrimage, the Prophet said: "All of the riba of Jahilliya is
annulled. In this respect, the first riba I annul is the riba that the borrowers
owe to my uncle Abbas; it is cancelled completely. (Muslim)
1.5 After the prohibition of riba, all Muslims were clear not to indulge in it
anymore. However, a dispute arose between two Muslim tribes about the settlement
of outstanding interest on previously loaned capital. The dispute was put up to
the Prophet who forbade demand and payment of that interest too. (See Shafi 1996
p.28-9)
2. Ahadith that refer to riba in barter trade
2.1 Abu Saeed Khudri said that once companion Bilal brought to the Prophet some
good quality dates. The Prophet inquired as to where he got those dates. Bilal
replied that he had some low quality dates. which he had exchanged in 2:1 ratio
for high quality ones in order to present the latter to the Prophet. Upon
hearing this, the Prophet said: “OH no! Oh no! That is Riba. That is exactly
Riba. Do not do it again. If you want to do such an exchange, first sell your
dates (for money or another commodity) and then buy other ones." (Bakhari 2145)
2.2 The Prophet said: "While exchanging gold for gold, silver for silver, wheat
for wheat, barley for barley, dates for dates and salt for salt, exchange like
for like (in equal measure) and exchange at spot. Whosoever paid more than what
he received or demanded more than what he gave, verily he dealt in riba. Both
the payee and the receiver are equal in violating the Law of God." (Muslim 2971)
2.3 The Prophet said: "While exchanging gold for gold, silver for silver, wheat
for wheat, barley for barley, dates for dates and salt for salt, exchange like
for like (in equal measure). Whosoever gave more or took more, verily he made a
riba deal. However, you are permitted to exchange gold for silver, wheat for
dates, or barley for dates as you wish (in equal or unequal measures) provided
that, such an exchange is at spot." (Tirmizee 1161)
2.4 The Prophet said: "Do not exchange gold for gold except it is like for like
(in equal measure) and do not increase one over the other; do not exchange
silver for silver except when it is like for like (in equal measure) and do not
increase one over the other. Furthermore, do not exchange a commodity in hand
with the one not in hand." (Muslim and Bakhari)
2.5 Two traders asked the Prophet about their mutual barter trade. He said: "If
it is at spot, it is all right. But, if it involves loaning then it is not
permissible." (See Shafi 1996 p.90)
2.6 The Prophet said to companion Jabir b. Abdullah: "In a credit transaction,
it is not permissible to take two animals for one. However, if it is a hand to
hand (spot) transaction, such an exchange is acceptable." (Tirmiz)