PROHIBITION OF PROHIBITION OF RIBA IN ISLAMRIBA IN ISLAM

• RIBA - Commonly referred as Sood (in Urdu)

– Riba means excess, increase or addition

– Riba in banking implies any excess compensation without due

consideration

– It Is a premium paid to the lender in return for his waiting as a

condition for the loan.

– In the words of Prophet (SAW) “Every loan that draws interest is

riba”.

• PROHIBITION OF RIBA IN QURAN

– Ar-Rome, Verse 39

– Al-Nisa', verse 161

– Al Imran, Ayat 130

– Al Baqarah Verses 275-281

ISLAMICISLAMIC BANKINGBANKING

– “That which you give as interest to increase the peoples' wealth increases not with God; but that which you give in charity, seeking the goodwill of God, multiplies manifold.” (Surah Rome, Verse 39)

First Revelation about RibaFirst Revelation about Riba

• Quran prepares grounds and minds of people to bring the change slowly and gradually.

• Encourages people to have permanent return in the Hereafter in mind.

• Apparently the saving increases with the interest earned, but in fact its not an increase because inflation eats it up.

• Swelling of our body is not a sign of health. It is indeed a sickness!

Ar-Rum 39Ar-Rum 39

Second Revelation

• “And for their taking interest even though it was forbidden for them, and their wrongful appropriation of other peoples' property. We have prepared for those among them who reject faith a grievous punishment ” (Surah al-Nisa', verse 161)

• Underlines the general principle that whoever disobeys Allah and declares lawful what He has declared unlawful, will be exposed to severe punishment.

• Muslims are told not to follow the footsteps of Jews, otherwise be prepared for the same consequences.

• Allah takes away the blessings of this world.

An Nisa 161An Nisa 161

– “Believers! Do not swallow riba, doubled and redoubled, and be mindful of Allah so that you may attain true success” ( Al Imran, Ayat 130)

Third RevelationThird Revelation

– Only a handful disobeyed the orders of the Prophet (SAW) by leaving their strategic points at Battle of Uhud but the consequences were suffered by all.

– Control over human tendency to multiply the wealth through any means. If one develops liking for interest, he increasingly indulges in it and does not remain satisfied with simple interest.

– People misinterpret that only compound interest is forbidden whereas a number of Quranic verses prohibit simple interest.

Ale-e-Imran 130Ale-e-Imran 130

– The words “doubled and redoubled interest” are used to highlight the shameful aspect of compound interest and not to limit the scope of riba only to compound interest.

– Similar to Allah’s command “Do not bargain on my orders for paltry gains in this world”. If one gains the entire world at the cost of hereafter, it is an immeasurable loss - a paltry gain.

– It does not mean that it is prohibited to obtain paltry gains but permissible to obtain a hefty price.

Ale-e-Imran 130Ale-e-Imran 130

– Surah Al

– Baqarah

– Verses 275-281

Fourth RevelationFourth Revelation

Al Baqarah 275

– Those who take riba (usury or interest) will not stand but as stands the one whom the demon has driven crazy by his touch. That is because they have said: Trading is but like riba. So, whoever receives an advice from his Lord and stops, he is allowed what has passed, and his matter is upto Allah. And the ones who revert back, those are the people of Fire. There they remain forever.

Fourth Revelation

• Similarity between a Riba consumer and a mad person: Both are insensitive

to other’s sufferings.

• What does Riba do? Create monopolies & open doors to selfishness, greed, injustice and oppression

• Islam on the other hand encourage highest moral ethics, universal brotherhood, collective welfare and prosperity, social fairness and justice.

• The above verse carries three strong expressions:

• a) Haram b) People of Fire c) Forever dwellers

• Let bygones be bygones: Don’t do it in future.

• He who repeats and justifies legitimacy of Riba is only rejecting faith in Allah.

Al Baqarah 275

Al Baqarah 276-77

• Allah destroys riba and nourishes charities. And Allah does not like any sinful disbeliever.

• Surely, those who believe and do good deeds, establish Salah and Zakah have their reward with their Lord, and there is no fear for them,nor shall they grieve.

Fourth Revelation

• There is no blessing in money earned through Riba.

• While charity may reduce wealth but provides bliss, peace and satisfaction.

Al Baqarah 276-77

Al Baqarah 278-79

• O those who believe, fear Allah and give up what still remains of the riba if you are believers.

• But if you don not, then listen to the declaration of war from Allah and His Messenger. And if you repent, yours is your principal. Neither you wrong, nor be wronged.

Fourth Revelation

• If you are indeed believers: Prove your claim with deeds.• Threat in the strongest words : Not used for any other crime.• Principle amount should be paid back.• Islam’s emphasis on justice: Deal not unjustly and you shall not be dealt

with unjustly. • After revelation of this verse, Prophet (SAW) in his last sermon at Haj-e-tul-

Wada which is called the charter/blue print of Islam declared: “Interest claim in respect of transactions during the days of ignorance are null and void and would not be claimed. To begin with, we forego the entire interest amount due to my uncle Abbas bin Mutalib”.

Al Baqarah 278-279

Quranic view

Wisdom of prohibition

To prevent individual gains that cause loss to the whole community. Bank caters loans only to rich sector. Entire capital is utilized for the benefit of few. Community gets poorer.

Islam does not distinguish between interest paid on loan for productive and profitable purposes and interest paid on loan taken for personal need and expenses and prohibit all types impartially.

Point to remember:

Riba: Selected Riba: Selected AhadithAhadith

From Hazrat Jabir Ibn-e-Abdullah (RA): The Prophet, may peace be on him, cursed the receiver and the payer of interest, the one who records it and the witnesses to the transaction and said: "They are all alike [in guilt]." (Muslim, Tirmidhi and Musnad Ahmad)

From Hazrat Abu Hurayrah (RA): The Prophet, peace be on him, said: "Riba has seventy segments, the least serious being equivalent to a man committing adultery with his own mother." (Ibn Majah)

Prohibition of Riba in Ahadith

From Hazrat Amr bin Al Aas (RA): “When interest based dealing becomes common among people, they will start facing draught and shortage of food. And when bribery becomes norm among people they will live under constant fear of their enemy”.

From Hazrat Abu Hurayrah (RA) : The Prophet, peace be on him, said: "There will certainly come a time for mankind when everyone will take Riba and if he does not do so, its dust will reach him." (Abu Dawud, Ibn Majah)

Riba: Selected AhadithRiba: Selected Ahadith

The prohibition of Interest is not limited to Islam, but it is shared by Judaism and Christianity.

Some of the old testaments have rendered riba as haram (See Exodus 22:25,

Leviticus 25:35-36, Deutronomy 23:20, Psalms 15:5, Proverbs 28:8,

Nehemiah 5:7 and Ezakhiel 18:8,13,17 & 22:12).

Agibi Bank was established circa 700 B.C. in Babylonian

and functioned exclusively on equity basis.

Prohibition of Interest in Other Religions

It has been reported by Hazrat Abu Hurairah that the Prophet (PBUH) said:

“Refrain from seven things which are deadly”. The companions asked him,

what are these? He said,

“To associate partners with Allah To cast spells To kill someone without a reason valid in the eyes of Allah To devour interest To devour the property of an orphan To run away from the battle field To falsely implicate innocent and chaste women of vulgarity”

Ahadith on Seriousness of RibaAhadith on Seriousness of Riba

Hazrat aun Bin Juhaifah has reported the prophet to have said

The Prophet

Cursed the women who get themselves tattooed and those who perform this act,

Those who charge and pay interest.

He (PBUH) stopped his followers from earnings obtained through the sale of dogs and the earnings of a prostitute.

He also cursed those who draw pictures.

Hazrat Abu Hurairah has reported the prophet to have said

“Four categories of people are such that Allah has made it binding upon himself to refuse them admission to paradise or to let them enjoy its bounties.

The first is the one who is a habitual drinker of alcoholic drinks, The second is the one who devours interest, The third is the one who devours the wealth of an orphan, And the fourth is the one who is disobedient to his parents. “

Hazrat Abdullah Ibn-e Masood has reported that the prophet said:

“The ills of interest are a little over seventy, and it is as bad as associating partners with Allah.”

Hazrat Hanzala Bin Abdullah reported that the prophet said “ Devouring a

dirham of interest is worse than committing adultery thirty six times, provided

one is aware that he is utilizing money earned by way of interest.”

Hazrat Ibn-e-Abbas has reported that the prophet instructed not to sell any

edible fruits before they were fully ripe.

He (PBUH) also said that when interest and adultery come in vogue in any

society, then it is like they have invited Allah’s wrath upon themselves.

Hazrat Abu Hurairah is reported to have said

“The Prophet said that when he reached the seventh stage of the heavens, on

the night of Mairaj, and looked overhead, he (PBUH) saw lightning and heard

thunder. He (PBUH) then said that I passed on a people whose stomachs were

large like houses, and they were full of snakes which were visible from

outside. I asked Gabriel as to whom these people were and he said that these

are the ones who devour interest.

Hazrat abdulah Ibn-e-Masood narrated that the Prophet said “ as the day of

judgement comes closer, interest, adultery and consumption of liquors will

become common”

Hazrat Anas has said that when you lend to someone and he then sends you

food as a gift, do not accept it, or if he offers you a ride, do not accept his

offer except if the two of you had such relationship prior to the lending of

money.

Hazrat Ali has reported that the prophet said, “when Allah intends to destroy a

people, interest-based business becomes popular among them”

What is called Riba in Quran is called Sood in Urdu

This gives the impression that Riba and Sood are one and the same

However, the difference is as follows:

-Riba carries a general and wider connotation-Sood is a form of Riba

The Difference Between Riba And SoodThe Difference Between Riba And Sood

Sood refers to -Lending of money

-For a specified period-At a specific rate

This is indeed Riba

However, Riba is not limited to Sood

It has a much wider connotation

The actual reach of the Riba prohibition goes far beyond compensation for lending money

It includes many transactions of sale and purchase where there is no element of credit

In the days of ignorance, Riba was generally considered what is today called Sood

The Prophet elaborated on the meaning of RibaAnd included certain transactions where there was no element of credit

Various forms of Riba were in vogue in Arabia when the prophet was sent

Most common practice was:-To lend a specific amount of money-For a specific period-At a known rate

If the borrower paid on time, only the agreed amount was chargedOtherwise the interest would be increased

Hence, even before the revelation of the Quran, Riba was considered to be

-A gain made out of lending of money

Almost 8 years after Hijra, verses in respect of Riba were revealed, and Riba was categorically prohibited

After these verses were revealed, Everyone realized that these related to profit on loans, and gave it up.

However, subsequently, the Prophet included in the definition of Riba, a kind of trade which was not previously considered Riba

The second kind of Riba, in the words of the Prophet was :

Gold for Gold, silver for silver, wheat for wheat, barley for barley, dates for dates and salt for salt; like for like,equal for equal and hand to hand, if the commodities differ, then you may sell as you wish, provided that the exchange is hand-to-hand

The obvious meaning of Riba i.e.Charging interest on loans or creditWas well-known even in the days of jahilayyah

The Prophet specified a new dimension to the issueThat certain type of sale & purchase transactions also fall under the domain of Riba

This is why scholars generally mention two kinds of Riba

The first is called – Riba Al Nasia OR Riba Al Jahiliyyah OR Riba Al Quran

The second is called Riba al Fadl OR Riba al Hadith

Summary of discussionSummary of discussion