Is the practice of lending money to people at unfairly high rates of interes (General meaning)

In its Qur`anic meaning, means paying money for the use of money.

literal translation of the Arabic word riba is increase, addition or growth

Is an item that fulfils two conditions:1. that it is from either of the categories of riba and has the illah (reason of riba) inherent in it.2. that is it being sold and traded in a manner that fulfils the condition of it being a riba item

Ar-Rum 39

An-nisaa 160-161

Reject the assumption that riba is an act taqarrub ilallah

Illustrate how bad the riba is and threat to jewish for taking riba

Ali-Imran 130

Al-baqarah 175-181

Revealed in 3H- prohibition of riba which being relates with extra charges given to debtor

Revealed in 9H- TOTAL PROHIBITION OF RIBA

Imaam ar-Raazi and other Muslim scholars state four reasons for forbidding Riba:

Fatwa

The Prophet (Sallallaahu Alaihi wa Sallam) said:"The inviolability of the money of the person is similar to the inviolability of his blood." So, taking his money without compensation is forbidden.

1. In riba, if A takes the money of B without compensation because A pays RM10 in return to RM 20 gets an increase in B`s money without A get anything. It is UNFAIR aand money is everything to us, need to be protected.

 2.some scholars state that Allaah forbade Riba as it discourages people from working

3.Riba causes severing relations among people as it takes the place of good loans which promote kindness and courtesy among people.

4. most of the time it is the rich person who gives the Riba loan to the poor person, hence putting yet another burden on the latter. So, encouraging Riba means giving more power to the rich over the poor who, in addition, will have to pay more than what he took and this is contradictory to mercy and benevolence and Allaah is the most Merciful, the most Benevolent.

DEBT RIBA TRADE RIBA

RIBA QARDHAny predetermined benefit for the owner to the debtor which stated in the contarct which debtor need to fullfill

Example: the interesrt stated in the loan contract

RIBA JAHILIAHThe excess payment in exchange as penalty due to inability repayment within the stipulated time.

Example: the interest from the credit card due to delap repayment.

RIBA JAHILIAHThe excess payment in exchange as penalty due to inability repayment within the stipulated time.

Example: the interest from the credit card due to delap repayment.

RIBA AL-FADL (quantity factor)

Definition: Any excess or additional in the exchange of goods from the similar types ribawi items.

RIBA AN_NASIAH (time factor)

Definition: The excess amount due to any delay in the exchange of the same type ansdcatogories of ribawi items.

Evidence;: AL-QURAN:

(al-baqarah: 275)

: while God has made buying and selling lawful and usury unlawful

This verses in Al-Quran because of the difficulties in distinguishing between the concept trade and riba

it seem similar but differ in reality, concepts and its consequences

THE SIMALRITY: both gain something extra from the original principal which achieved both interest and profit.

RATIONALE WHY ISLAM PROHIBITTED RIBA

THE DIFFERENCES: : In TRADING, the buyer will gain and retain something in his possession which have profit from the seller.

: In RIBA transaction, the debtor will not retain anything direct from the creditor even though the gets to utilize the money in the first place.

: Required to pay back more than the principal which is not justified since the creditor did not contribute anything to the debtor except lending him some money for a certain period, which he will retain it back later.

: Other words there is no value added in riba transaction compared to normal trading.

To prevent any form injustice, exploitation and manipulation among the parties.

the rulings would safeguards the interest financial institutions as well as customer.

they obliged to pay the deposited which more than principal amount deposited even if the company having financial difficulties or making loss.

Example in Bank sector:

Prohibition Riba al-fadl : because to ban any form of unfair trade practices found in the barter transactions.

This also is the way made by the prophet (S.A.W) to slowly or indirect eliminate the barter system by replace it by using currency as medium exchange.

AL-HADITH: from Jabir : (the prophet s.a.w cursed the receiver and the payer of usury, the one who records it and the two witnesses to the transaction and said: “ they are all alike (in guilty and sin)