Introduction

• Definition of Riba

• Islamic teaching – Riba vs Zakat

• Financial constraints , hardships and

belief

• Signs of Judgment Day

• The legal definition of any prohibited act is seldom given in the Holy Qur'an itself.

• For example, wine has been prohibited but no definition of wine has been given. Similarly, adultery, telling lies, back-biting and bribery have been prohibited by the Holy Qur'an but the definitions of these acts have not been provided.

• Reason for it is that all these concepts were too clear in the minds of the addressees to need any such definition. The same is the case of Riba.

• The concept of Riba was widely recognized among the addressees of the Holy Qur'an and it is that concept which is reflected in the legal definition provided for Riba either in the Hadith or in Islamic literature.

• According to this definition any transaction of loan where the payment of an additional amount on the principal is made conditional to the advance of such loan is called Riba.

• There is no distinction in Shariah between advancing a loan to a needy person or advancing it to a business concern.

• The principle is that the person who advances money to another person should clearly decide whether he wishes to assist him or he wants to share in his profits.

• In the former case, he should withdraw from any claim of additional amount (in the form of interest) while in the latter case he should share his loss also.

• It is not permitted by Shariah that he claims profit but does not agree to share his loss.

• Another point which needs attention here is that the distinction between a needy and a rich person in commercial matters is totally irrelevant.

• If a Shopkeeper sells a commodity to a poor person with a margin of profit which is not excessive nobody can say that this transaction is Haram because of the poverty of the purchaser.

• One can say that it would be more advisable for the Shop Keeper to give him the commodity either as a charity or at cost without charging a profit but it cannot be said that the marginal profit charged here is not Halal.

• If charging an additional amount on a loan is not in itself Haram then the same analogy should have been applied here meaning thereby that if a creditor charges a marginal interest on the loan he has advanced to a poor person it should not be condemned or declared as Haram

• But even the modernists who hold the commercial interest as Halal admit that this kind of transaction is Riba and prohibited by the Holy Our'an.

• It proves that the basis of the prohibition is not linked to the poverty of the debtor.

• Had it been so, charging profit from a poor person would also have been declared as Haram.

• Therefore, the only basis for distinction between a sale and a transaction of Riba is that the former relates to commodity while the latter relates to money.

To present prohibition of Riba in Islam in the

back drop of financial compulsions of modern world

Introduction

Aim

Background

Financial Cycle vs Belief

Riba as per Quran and Hadith

Comparative State

Q&A Session

Conclusion

• During pre-Islamic era, it was customary to borrow gold, silver, metals, live stocks and item of food to fulfill the requirement of a needy person

• However, in accordance with the deal, if the borrower fails to return the items he borrowed at the preset time, or

• In case of default; the lender often used to increasing the amount out of proportion, charging double or multiple time of the original amount according his own discretion

• Borrower had no say in it and there was nothing to control this trend which is basically an exploitation of the situation to weaken or destroy the borrower.

• As Muslims were also part of the society, they had to deal with the same prevailing trend.

• To address this trend, Allah, had sent a few revelations (30:39, 4:161, 3:130-2, 2:275-8 etc) and advised Muslim Ummah to refrain from Riba.

• Quranic verses relevant to riba and prophet’s saying on this subject of riba came during the last phase of prophet’s life.

• Hence we don’t have enough explanation of riba and its scope, depth or implications on Muslims Economical and Financial System.

• Consequently Muslims around the world are confused and polarized on the subject of Riba as compared to interest in modern day banking system.

• This uncertainty, surfaced due to the vagueness in the definition of riba and its rules.

• Even, Linguistic explanation of riba does not cover explicitly its scope as any legitimate increase of profit is also an increase.

• Hence riba falls with in the subjects of interpretation and needs to be addressed in order to avoid clash with Quranic verses.

Riba and Interest Equation• Through out the history of Islam many scholars,

intellectuals & Muslim jurists have tried to address this issue and provided their opinion about riba.

• Based on Quranic verses and Prophetic hadith, majority of jurists concluded that riba is forbidden

• But they did not come explicitly clear in equating riba to interest and in declaring that interest is the same as riba, hence not allowed.

• General consensus (Ijma) among Muslim Scholars equating Riba to Banking Interest, is still questionable due to vagueness in the definition of riba and it requires Ijtihad to resolve this issue.

Option to Riba and Interest• During last few decades some scholars came up with the

idea of Islamic Banking. • In reality there is no such thing like Islamic or Non-Islamic

banking. • It is more or less the same as western banking system

except that we have changed the name and modified few parameters to make it look justifiable.

Insecure environment

Uncertainty and difficult life styles

Living standards beyond capabilities

Bank deposits and banking system

Profit dreams and bank lifeline

Receiving and paying Riba

Signs of Judgment Day

10 m

12,000

10 m / 12 m deal

Loan

Loan Return @ 15%Profit @ 15%

12 millionProfit @ 15%

12 m – 1 m

RIBA QURAN AND HADITH

Svc Year Opening Balance Annual Subs Cumulative Annual Interest Total Assets0 - 12,000 12,000 1,800 13,800

1st Yr Svc 13,800 12,000 25,800 3,870 29,6702nd Yr Svc 29,670 12,000 41,670 6,251 47,9213rd Yr Svc 47,921 12,000 59,921 8,988 68,9094th Yr Svc 68,909 12,000 80,909 12,136 93,0455th Yr Svc 93,406 12,000 105,406 15,811 121,2176th Yr Svc 118,846 12,000 130,846 19,627 150,4737th Yr Svc 150,473 12,000 162,473 24,371 186,8448th Yr Svc 187,844 12,000 199,844 29,977 229,8219th Yr Svc 229,821 12,000 241,821 36,273 278,094

10th Yr Svc 278,094 12,000 290,094 43,514 333,60811th Yr Svc 333,608 12,000 345,608 51,841 397,44912th Yr Svc 397,449 12,000 409,449 61,417 470,86713th Yr Svc 470,867 12,000 482,867 72,430 555,29714th Yr Svc 555,297 12,000 567,297 85,094 652,39115th Yr Svc 652,391 12,000 664,391 99,659 764,05016th Yr Svc 764,050 12,000 776,050 116,407 892,45717th Yr Svc 892,457 12,000 904,457 135,669 1,040,12618th Yr Svc 1,040,126 12,000 1,052,126 157,819 1,209,94519th Yr Svc 1,209,945 12,000 1,221,945 183,292 1,405,23620th Yr Svc 1,405,236 12,000 1,417,236 212,585 1,629,82221st Yr Svc 1,629,822 12,000 1,641,822 246,273 1,888,09522nd Yr Svc 1,888,095 12,000 1,900,095 285,014 2,185,10923rd Yr Svc 2,185,109 12,000 2,197,109 329,566 2,526,67624th Yr Svc 2,526,676 12,000 2,538,676 380,801 2,919,47725th Yr Svc 2,919,477 12,000 2,931,477 439,722 3,371,199

Total 3,371,199 312,000 3,383,199 507,480 3,890,678

Ms. Naek Bibi

25 Yrs Service

Actual deposits : 312,000

Current Balance : 3,890,678

Total profit : 3,578,678

Profit in % : 89 %

Qurananic Prohibitions vs. 25 Yrs’ Interest

Actual deposits : 312,000

Current Bal : 3,890,678

Total profit : 3,578,678

Profit in % : 89 %

IMPORTANT WEBSITES

• www.harunyahya.com• http://www.alquranic.com • http://www.inter-islam.org/faith/Majorsigns.html• http://etori.tripod.com/dajjalsystem/judgement.html • http://www.alquranic.com/topsites.html• http://tanzil.net/#1:2• http://www.biharanjuman.org/Quran/quran.html