Riba Riba Profit Profit

InterestInterest

Introduction Introduction & &

DifferenceDifference

Allah clearly defines usage of Allah clearly defines usage of goods and services for betterment goods and services for betterment

of humanity.of humanity.

Allah Prohibited things or acts Allah Prohibited things or acts that are harmful for humankind. that are harmful for humankind.

Or Or

Creating instability, injustice Creating instability, injustice damaging human life considered damaging human life considered

as unconstructive toas unconstructive to

Socio Economic SystemSocio Economic System..

There is a confusion with gap of There is a confusion with gap of understanding for the terms understanding for the terms

Interest, Profit &Interest, Profit & RibaRiba (Usury) (Usury)..

Is interest is Is interest is RibaRiba (Usury)? (Usury)?Or Or

Riba is Interest? Riba is Interest?

To make a distinction of terms with To make a distinction of terms with rational reasoning, Islam through rational reasoning, Islam through

definitions and interpretations, provided definitions and interpretations, provided in in

Holy Quran and Hadiath Holy Quran and Hadiath

RibaRiba

Abul Ala Maududi,Abul Ala Maududi,

Riba is an earning on lending of money by Riba is an earning on lending of money by lender from Brower on condition that lender from Brower on condition that lender shall charge a fixed amount of lender shall charge a fixed amount of

money in addition to the principal.money in addition to the principal.

Interest is prohibited in Islam and people Interest is prohibited in Islam and people are not allowed to make money by are not allowed to make money by leading their capital on interest. leading their capital on interest.

Capital to invest in productive manner that Capital to invest in productive manner that increases the profits. increases the profits.

InterestInterest

Western economist KeynesWestern economist Keynes defined "interest has nothing defined "interest has nothing to do with influencing volume to do with influencing volume of savings. Practically it is rate of savings. Practically it is rate

of return on investment that of return on investment that determines rate of saving” determines rate of saving”

Holy Quran on RIBA Holy Quran on RIBA

Holy Quran clearly inform thatHoly Quran clearly inform that It is clearly indicated that Riba must be It is clearly indicated that Riba must be

eliminating from the financial eliminating from the financial transactions. Nothing is more horrific as transactions. Nothing is more horrific as compare to Riba that Islam has compare to Riba that Islam has prohibited.prohibited.

Nothing more dreadful than Riba, that Nothing more dreadful than Riba, that remains in widespread threatening to remains in widespread threatening to socio economic activities in both theory socio economic activities in both theory and practice. and practice.

““Ye who believe! Be careful of Ye who believe! Be careful of your duty to Allah, fear Him your duty to Allah, fear Him and give up what remains of and give up what remains of your demand for Riba, if ye your demand for Riba, if ye are true believers”. are true believers”.

““But if ye turn back and ask But if ye turn back and ask forgiveness, then ye shall forgiveness, then ye shall have your capital sums, have your capital sums, neither shall you make the neither shall you make the debtor suffer loss, nor shall debtor suffer loss, nor shall you be made to suffer loss”.you be made to suffer loss”.

Greek researcher & Greek researcher & philosopher “Aristotle” on philosopher “Aristotle” on

InterestInterest in his book “Money in his book “Money and Politics”. and Politics”.

““Interest is an artificial profit, which does Interest is an artificial profit, which does not enter in legal trading. Using money as not enter in legal trading. Using money as a commodity which is on selling is just a a commodity which is on selling is just a forged artificial transaction. Money has to forged artificial transaction. Money has to be used as a means of sale and purchase be used as a means of sale and purchase and a measurement of a commodity to be and a measurement of a commodity to be sold or purchase. Money is just means to sold or purchase. Money is just means to ascertain value of commodity and it ascertain value of commodity and it cannot be sold or purchased within cannot be sold or purchased within similar qualities”.similar qualities”.

Prophet Moses Prophet Moses May Peace be Upon himMay Peace be Upon him

TorahTorah 22nd versus of the 22nd versus of the “Exodus” “Exodus”

If you lend money to any If you lend money to any of my people with you of my people with you who are poor, you shall who are poor, you shall not be to him as an not be to him as an exact Riba from him.”exact Riba from him.”

Versus 23rd of the Versus 23rd of the Deuteronomy Deuteronomy

““You shall not lend upon You shall not lend upon Riba to your brother, Riba to your brother,

Riba on money, Riba on money,

Riba on virtual, Riba on virtual,

Riba on anything that is Riba on anything that is lent for Riba.”lent for Riba.”

Ancient Hindu ReligionAncient Hindu Religion

VasishthaVasishtha, , a well known Hindu law-a well known Hindu law-maker made a special law which forbade maker made a special law which forbade higher castes ofhigher castes of BrahmansBrahmans (priests) (priests) and and KshatriyasKshatriyas (warriors) (warriors) from being from being usurers or lending at interest. usurers or lending at interest. VedicVedic texts texts of Ancient India of Ancient India

(2,000-1,400 BC(2,000-1,400 BC ) ) In the In the JatakasJatakas, , ((600-400 BC).600-400 BC). usury is usury is

referred to in a humiliating manner: “Two-referred to in a humiliating manner: “Two-Faced Elites accused of practicing Usury ”. Faced Elites accused of practicing Usury ”.

Criticism of Riba in JudaismCriticism of Riba in Judaism has its has its roots in several Biblical passages in which the roots in several Biblical passages in which the taking of interest is either forbidden, taking of interest is either forbidden, discouraged or contempt. discouraged or contempt.

Roman Catholic ChurchRoman Catholic Church in fourth in fourth century AD prohibited taking of interest by century AD prohibited taking of interest by clergy .clergy .

In the eighth century under Charlemagne it was In the eighth century under Charlemagne it was declared usury to be a general criminal offence.declared usury to be a general criminal offence.

Anti-usury movement gain momentum Anti-usury movement gain momentum during early Middle Ages and reached during early Middle Ages and reached its peak in 1311 when Pope Clement V its peak in 1311 when Pope Clement V forbid on usury absolute and declared forbid on usury absolute and declared all secular legislation in its favor, null all secular legislation in its favor, null and voidand void

ProfitProfitIncome on Financing determine Income on Financing determine

not on Financing Amount, but not on Financing Amount, but takingtaking

Principal Amount, Cost of Principal Amount, Cost of Transaction and applicable fee & Transaction and applicable fee &

charges as a part charges as a part

Profit is aim of Financing & Loss is Profit is aim of Financing & Loss is acceptance & precaution acceptance & precaution

Trust, confidence, will & sprit are Trust, confidence, will & sprit are business ethics business ethics

Any earning, income, profit or benefits Any earning, income, profit or benefits being earned, taken or received being earned, taken or received

through wrong means, bad through wrong means, bad intentions, shady practices or wicked intentions, shady practices or wicked participation are classified as RIBA. participation are classified as RIBA.

Such earnings & benefits are not only Such earnings & benefits are not only treated as immoral, injustice & filthy treated as immoral, injustice & filthy

but furthermore negative to socio but furthermore negative to socio economic life of society. economic life of society.

Such earning leads to crimes of Such earning leads to crimes of various nature, cruelty, exploitation various nature, cruelty, exploitation

& self-important.& self-important.

Any amount, earning or income that is Any amount, earning or income that is taken over and above to principal taken over and above to principal

amount, without any risk, efforts and amount, without any risk, efforts and activity without loss sharing. activity without loss sharing.

This compulsory return, income, This compulsory return, income, earning on a fixed term & fixed earning on a fixed term & fixed

percentage, upon principal amount, percentage, upon principal amount, is an is an InterestInterest..

Interest is the price of money whereas Interest is the price of money whereas money is just an intermediary money is just an intermediary

between exchanges of transaction.between exchanges of transaction.

1.1. RibaRiba is as an combination of evil & is as an combination of evil & sins, whereas Interest categorized sins, whereas Interest categorized as one of elements of Riba. as one of elements of Riba.

2.2. RibaRiba is bad practice to earn & is bad practice to earn & gain while Interestgain while Interest is price of is price of Wealth, demanded for assistance Wealth, demanded for assistance and need of money from the user and need of money from the user by the lender”. by the lender”.

3.3. There are many categories of Riba, There are many categories of Riba, Interest is one of the categories Interest is one of the categories among them.among them.

Now the question arisesNow the question arises

If Interest eliminated from monetary If Interest eliminated from monetary system, would it be possible that system system, would it be possible that system & transactions would become & transactions would become transparent and clear? Answer is simple transparent and clear? Answer is simple and straight: and straight:

““Filth remains in its hard and powerful Filth remains in its hard and powerful grip irrespective of other factors”.grip irrespective of other factors”.

Interest alone cannot be eliminating Interest alone cannot be eliminating without eliminating categories that fall without eliminating categories that fall

under Riba.under Riba.

Classifications of Riba Classifications of Riba

Some of the categories are mention Some of the categories are mention and clearly defined in Islamic and clearly defined in Islamic

Economics. Islam strictly prohibits Economics. Islam strictly prohibits these as well as society disregard these as well as society disregard

them due to their dreadful effect on them due to their dreadful effect on social, moral, cultural, economical, social, moral, cultural, economical, financial and legal life styles of the financial and legal life styles of the

society. :society. :

The main classes of RIBA The main classes of RIBA are as followsare as follows

Exploitation by taking advantage of Exploitation by taking advantage of status and position, status and position,

Irregular weight & measures for Irregular weight & measures for profitability,profitability,

Wrong declaration for higher return,Wrong declaration for higher return, Misconduct (misbehavior),Misconduct (misbehavior), Felony & Law breaking, Felony & Law breaking, Mistrust,Mistrust, Breaching/ false commitmentBreaching/ false commitment,,

Manipulation of affairs for Manipulation of affairs for benefits at a cost and efforts of benefits at a cost and efforts of other,other,

Gambling in all form,Gambling in all form, Making promise by covering Making promise by covering

honorable, nearest, dearest or honorable, nearest, dearest or lovable to secure the benefit,lovable to secure the benefit,

Fabrication, LiesFabrication, Lies Betting,Betting, Speculation, Conjecture, Speculation, Conjecture,

unfounded information,unfounded information,

Trading of commodities prohibited Trading of commodities prohibited Islam and law of the land,Islam and law of the land,

Income from the practices or Income from the practices or activities that are prohibit by Islam,activities that are prohibit by Islam,

Breaking and abuse of state law for Breaking and abuse of state law for self benefit or for any purpose that is self benefit or for any purpose that is declared as punishable act.declared as punishable act.

Disobedience the state law by Disobedience the state law by declaration and submission of wrong declaration and submission of wrong information for self-benefitsinformation for self-benefits..

Disturbing the peace of the community Disturbing the peace of the community and using the force and illegal act. and using the force and illegal act.

Interest that is the price of money Interest that is the price of money taken in cruelty, exploitation, wrong taken in cruelty, exploitation, wrong means, false declaration, and means, false declaration, and advantage based on weak or wrong advantage based on weak or wrong calculation,calculation,

Return on loans on fix return without Return on loans on fix return without appraising the usage of funds given to appraising the usage of funds given to user of fund,user of fund,

Keeping deposit with person or Keeping deposit with person or institution having involved in Riba institution having involved in Riba practices,practices,

Using deposits as investments Using deposits as investments and declaring non-transparent and declaring non-transparent results that led to discrimination results that led to discrimination of sharing in accordance with of sharing in accordance with investment percentage,investment percentage,

Holding/storage of currency or Holding/storage of currency or commodity that affects economic commodity that affects economic activities negatively,activities negatively,

Storage and holding of Storage and holding of commodities that leads to commodities that leads to scarcity in supply of any scarcity in supply of any commodity against the market commodity against the market demand, demand,

Monopoly and monopolization of Monopoly and monopolization of activity, transaction and business to activity, transaction and business to take sole benefit, stopping the take sole benefit, stopping the growth of employment and earningsgrowth of employment and earnings

Grabbing the wealth, Grabbing the wealth, Illegal encroachment on the property Illegal encroachment on the property

that is not owned by encroacher. For that is not owned by encroacher. For example, construction of Mosque on example, construction of Mosque on the property that was not purchased, the property that was not purchased, gifted or legally transferred to title gifted or legally transferred to title made,made,

Using public money for luxuries and Using public money for luxuries and self-usage,self-usage,

Misusage of rights belonging to Misusage of rights belonging to minors, orphans, widows and women, minors, orphans, widows and women,

Misappropriations among share Misappropriations among share division incase of profit or inherited division incase of profit or inherited wealth,wealth,

Miscalculation of share for inherited Miscalculation of share for inherited wealth under law of inheritance,wealth under law of inheritance,

Income by power and cruelty,Income by power and cruelty, Misuse of power and status,Misuse of power and status, Theft,Theft,

Burglary,Burglary, Smuggling,Smuggling, Adultery,Adultery, Human trading,Human trading, Pressurizing and influencing Pressurizing and influencing

of earning situation and of earning situation and taking benefits,taking benefits,

Misuse of public Misuse of public representation and obtaining representation and obtaining benefit through status as benefit through status as Public Representative,Public Representative,

Misuse of ownership right on the Misuse of ownership right on the commodity by charging over and commodity by charging over and above the prevailing price, above the prevailing price, furthermore, avoiding payment to furthermore, avoiding payment to state, that is its right toward state, that is its right toward revenue, by hiding the earning to revenue, by hiding the earning to such transaction. (Premium on such transaction. (Premium on commodity for extra benefit),commodity for extra benefit),

Abuse of labor, especially child and Abuse of labor, especially child and womenwomen. .

Above classes differentiate between Above classes differentiate between status of Interest vis-à-vis Ribastatus of Interest vis-à-vis Riba

Fundamental Facts on Fundamental Facts on Riba Riba

The bases of Islamic The bases of Islamic thoughts have a conflict thoughts have a conflict

directly with the Riba based directly with the Riba based system. system.

““No Islam exists in a place No Islam exists in a place where there is Riba based where there is Riba based

system”.system”.

Riba based system is a sadness Riba based system is a sadness on humanity as faith, morals or on humanity as faith, morals or imagination of life, but also in imagination of life, but also in every core of economic and every core of economic and

practical life. practical life. It is the most hateful system, It is the most hateful system,

which eradicates human which eradicates human satisfaction and frustrate its satisfaction and frustrate its

civilized and neutral civilized and neutral developmentsdevelopments..

Islam has complete ethical system Islam has complete ethical system supported by realistic system as supported by realistic system as interlink. interlink.

Ethnics & reality cannot separate in Ethnics & reality cannot separate in Islam & cannot be practice alone.Islam & cannot be practice alone.

Islam has clearly stated benefits of Islam has clearly stated benefits of followings of ethics & reality and followings of ethics & reality and followers follow in daily life.followers follow in daily life.

Successful Islamic economics does not Successful Islamic economics does not rise without Ethics which cannot be rise without Ethics which cannot be separate to reality of life and its separate to reality of life and its rational approach. rational approach.

Practical life of people cannot prosper Practical life of people cannot prosper without proper ethics.without proper ethics.

Riba practices corrupt the Riba practices corrupt the individual’s ethics, behavior, individual’s ethics, behavior, and feelings towards and feelings towards community and the society. community and the society.

It also corrupts the human It also corrupts the human life, culture and the life, culture and the relationship by spreading relationship by spreading the spirit of greed, the spirit of greed, selfishness, sneakiness and selfishness, sneakiness and gambling in general.gambling in general.

TodayToday investing the capital on investing the capital on minimum risk based over guaranteed minimum risk based over guaranteed return is commonly practice for the return is commonly practice for the funds received as deposit, and funds received as deposit, and investing on risk and return.investing on risk and return.

Thus, interest (Riba) is repaid at Thus, interest (Riba) is repaid at lower to the depositor’s investment lower to the depositor’s investment and higher to investment managers and higher to investment managers or vis-à-vis.or vis-à-vis.

Money lent on higher Interest (Riba) Money lent on higher Interest (Riba) does not grow useful projects but does not grow useful projects but seeks the most lucrative opportunity seeks the most lucrative opportunity even if profit comes from the lowest even if profit comes from the lowest nature and the meanest tendency.nature and the meanest tendency.

Islam is a connected system as it Islam is a connected system as it prohibits the dealing with Riba.prohibits the dealing with Riba.

It also defines all its systems It also defines all its systems based on providing the need to based on providing the need to

it. it.

It organizes the aspects of social It organizes the aspects of social life on giving out means of life on giving out means of dealing without touching dealing without touching growing human, social & growing human, social & economic development.economic development.

A true Muslim should have a firm A true Muslim should have a firm belief that whatever Almighty Allah belief that whatever Almighty Allah has prohibited, can develop human has prohibited, can develop human life in better and fair way. life in better and fair way.

It must be kept as a firm belief to It must be kept as a firm belief to restrain from false and evil acts for restrain from false and evil acts for the betterment of life with its the betterment of life with its development and growth in harmony. development and growth in harmony.

Almighty Allah is the Creator of this Almighty Allah is the Creator of this life and makes man custodian to all life and makes man custodian to all the blessings for humanity. the blessings for humanity.

Mans determination towards the Mans determination towards the Almighty Allah overcome all and Almighty Allah overcome all and guides the man to the right path. guides the man to the right path.

It is also impossible for the It is also impossible for the Muslims to raise the community Muslims to raise the community in prosperity or the perception in prosperity or the perception that wickedness can show the that wickedness can show the way to advancement, if going way to advancement, if going against the prohibitions of against the prohibitions of Almighty Allah.Almighty Allah.

Riba Al Nassieah Riba Al Nassieah

Riba al Nassieah practice before Riba al Nassieah practice before Islam because as the man had to pay Islam because as the man had to pay his money to another for a pre his money to another for a pre agreed period. agreed period.

In return, he took from him a In return, he took from him a certain amount every month without certain amount every month without taking the principal amount. taking the principal amount.

When date of payment came, he When date of payment came, he asked him for his capital and if he asked him for his capital and if he was unable to repay he increased in was unable to repay he increased in his fund and the term of repayment.his fund and the term of repayment.

Riba Al Fadi Riba Al Fadi

A man sells an article in exchange of A man sells an article in exchange of another article having same quality and another article having same quality and nature with an increase or decrease as nature with an increase or decrease as like gold sold for gold, rupee for a rupee, like gold sold for gold, rupee for a rupee, corn for corn and barley for barley. corn for corn and barley for barley.

This kind is considered as Riba as This kind is considered as Riba as commodities are similar to each with commodities are similar to each with different values not ascertain. different values not ascertain.

Such transaction has the involvement of Such transaction has the involvement of exploitation and injustice on any one’s exploitation and injustice on any one’s part of the two.part of the two.

Riba system emerges initially on a Riba system emerges initially on a rule that there is no relationship rule that there is no relationship between the determination of Allah between the determination of Allah and the life of man.and the life of man.

Riba create the false feeing in the Riba create the false feeing in the mind of men that wealth ownership mind of men that wealth ownership would bring the power to become would bring the power to become the master of this earth. It the master of this earth. It instructs the men to not to get instructs the men to not to get bound by a pledge himself from bound by a pledge himself from Allah and to ignore the importance Allah and to ignore the importance of following the commandments of of following the commandments of Allah. Allah.

Riba establishes a feeling of Riba establishes a feeling of liberty among humans for ways liberty among humans for ways and means of obtaining wealth, and means of obtaining wealth, encouraging them to adopt more encouraging them to adopt more unfair means t multiply it.unfair means t multiply it.

Riba provides an individual a Riba provides an individual a feeling that he is free to enjoy his feeling that he is free to enjoy his wealth without abiding the wealth without abiding the contract of faith and trust in contract of faith and trust in Almighty Allah or obeying any Almighty Allah or obeying any condition as holder of wealth, for condition as holder of wealth, for which he is not bound to keep which he is not bound to keep the interest of othersthe interest of others