The Concept of Riba and its Prohibition in Islam

Muhammad Usama 

In Islam, the issue of interest is not a novel matter that necessitates the writing of magazines and books. An individual born in Islamic family does know about the prohibition of interest in Islam. Moreover, non- Muslims are also aware of its implications. Also, it has been seen that the implication of interest is not the profound concept of this time but was a practice of ancient times, where people not only use it in daily life activities but also for business purposes. In last couple of centuries after the Europe creating hegemony all over the world, this practice was enhanced by giving it different names and now these new implications are considered as the backbone for all type of businesses and economic activities. This leads to the point where people think that there is no other system they can rely on except interest. On the other hand, some Europeans with a broader mindset and a different perspective view interest as a parasitic element that disrupts the economy and perpetuates inequality. These individuals recognize the negative effects of interest on economic systems.

The article aims to highlight the differences and motivations related to the problems caused by interest and riba. It addresses the various implications and consequences of interest, shedding light on its impact on economic stability and equality.

Definition of Riba and Difference between Riba and Interest:

The definition of riba, as outlined in the Quran, is more extensive and detailed than the interpretations that consider it synonymous with interest or soodh (in Urdu). Interestingly, the concept of riba existed among the pre-Islamic Arabs during the period of Jahiliyya before the prophethood of Muhammad (SAW).

While interest primarily involves the gain obtained by an individual from the principal amount, with interest payments made on the maturity date, riba encompasses a broader range of aspects that extend beyond loan transactions. While interest can be defined simply as the additional amount earned on the principal, riba is a more encompassing and multifaceted concept.

Terminological and dictionary meaning of Ribaa:

Connotatively, the term "ribaa" carries the meanings of "increasing" or "exceeding." Within the domain of Islamic finance and law, riba refers to the predetermined surplus or increment in a loan or debt contract, typically recognized as the interest charged on loans. This practice is unjust and exploitative, primarily due to its role in generating financial imbalances and fostering potential economic inequality. Additionally, the term 'ribaa' has been roughly translated to encompass the pursuit of illegal, exploitative gains derived from business or trade under Islamic law. Furthermore, riba also includes compensations obtained in both instances of loss and gain.

At the time of pagan Arabs there were many dealing and interest-based activities, one of it is charging interest on loan, which also increases if person delay to pay on the due date, he has to pay it. There are many hadith related to prohibition of Riba which was not practiced by pagan Arabs according to prophet Muhammad (PBUH) “gold in terms of gold, silver in terms of silver, wheat in terms of wheat and salt in terms of salt must be exchange on equality, where loaning it, and increase and decrease in its amount is considered as Riba”.

These hadiths shed light on Islam's stance regarding interest and the principles concerning the prohibition of riba. The Islamic principle of abstaining from interest is rooted in the objective of promoting justice and maintaining financial equilibrium. Consequently, interest-based practices have been prohibited among Muslims since the early stages of Islam, and instead, principles of halal (permissible) and fair trade have been embraced. This approach reflects Islam's commitment to fostering an equitable economic system that upholds ethical standards.

Books of Fiqh:

With the passage of time the new advancement and improvements in the practicing of riba was felt by tabaiens, the basic question they thought was, are there any other item which can resemble with the activity of the items which Prophet Muhammad PBUH has declared as riba and haram. So, after the detailed analysis all four Imams with ijtihad, they categorized other items too, as a practice of riba.

They categorized the Riba in two main types.

•           Riba al jahiliyah: this riba is also known as Riba al Quran, and mostly talks about the riba which was practiced by the pagan Arabs.

•           Riba al Bai, Riba al naqad: this is also called as Riba ul Hadith because it talks about those riba practicing which are proven haram by hadith.

As we are aware, the practice of Riba Al Jahiliyah, which refers to the interest charged on loans by pagan Arabs, was prevalent. They would charge interest on loans given to borrowers and increase the interest payment amount in case of delays. However, such gains obtained from these loans are prohibited in the Quran. Various chapters in the Quran, including Surah Al-Baqarah, Surah Al 'Imran, Surah An-Nisa, and Surah Ar-Rum, address the issue of riba and deem it haram. These chapters have been extensively explained in various tafsir books. Additionally, there are numerous tafsirs available that provide detailed interpretations of these verses. The most authoritative declaration regarding the prohibition of riba was made by Prophet Muhammad (peace be upon him) in his Farewell Sermon (Khutbah Hajjat al-Wida').

The revelation of Quranic verses about Riba clearly declares both commercial interest and interest on loans as haram. The concept of riba among pagan Arabs differed from the Islamic understanding, but the Quran already defines business interest. Interestingly, even pagan Arabs engaged in interest-based loans for business purposes.

In Sahih Bukhari, there is an account involving Zaid bin Arqam, Mikail ibn Hibban, and other companions. They explain an incident where the tribes of Banu Saqeef, Banu Umro bin Umair, and Banu Mukzom used to take loans on interest for their business ventures. However, when some of these tribes embraced Islam and had outstanding debts to repay to Banu Saqeef, they refused to pay the debt and interest as it was declared haram in Islam. This matter was brought to Atab Ibn Saeed, the appointed leader of Makkah by Prophet Muhammad, and with the assistance of Maaz Bin Jabal and the Prophet himself, it was ruled that the tribes were not obligated to pay riba to Banu Saqeef.

Surah Al-Baqarah contains verses 275-281 that address the issue of riba:

- Verse 275 states that those who benefit from interest will be raised like those driven to madness by the Devil. Trade is permitted, while interest is forbidden. Those who heed this admonition from God and refrain from riba can keep their previous gains, with their case entrusted to God. However, those who persist in riba will be inhabitants of the fire, where they will abide forever.

- Verse 276 emphasizes that God deprives interest of all blessings but blesses charity. He does not love the ungrateful sinners.

- Verse 277 reassures believers who have faith, perform good deeds, establish prayer, and pay Zakat that their reward is with their Lord. They should not fear or grieve.

- Verse 278 urges believers to fear Allah and give up any remaining interest that is due if they truly believe.

- Verse 279 warns of war from Allah and His Messenger if they do not repent from riba. However, if they do repent, they can reclaim their principal. Injustice should not be committed or tolerated.

- Verse 280 advises granting respite to debtors in difficulty until their situation improves. However, if the lender forgives the debt out of charity, it is better for them.

- Verse 281 reminds believers to fear the Day when they will be returned to the Lord and each soul will be fully compensated for what it has earned. No one will be wronged.

These verses are accompanied by various incidents, such as the case of Hazrat Abbas (RA), who had a substantial amount owed to him by Banu Saqeef with interest. Prophet Muhammad prevented him from claiming it, as riba was declared haram. However, the matter was clarified in the 10th year of Hijri during the farewell Hajj. Another incident involves Hazrat Usman (RA). These verses make it clear that riba, whether on emergency loans or for business purposes, is prohibited. The Quran explicitly declares trade as halal and riba as haram.

Some argue that poor individuals benefit from bank loans with interest, but this notion is a false perception created by English institutions. Riba complications have led to numerous problems, such as wealth accumulation, which remains controlled by a few individuals. Additionally, these individuals often resort to insurance and gambling as means of reducing their losses. While the majority of investments in insurance come from the public, only a few people have control over it. These circumstances contribute to the dominance of a select few in the market, leading to inflated prices and increased poverty.

The Quran highlights several adverse effects of riba, asserting that those who engage in interest-driven activities have been influenced by Satan and driven to madness. Moreover, such individuals prioritize accumulating wealth over addressing public issues. The Quran unequivocally warns of the consequences of riba, including hellfire for those who persist in it.

Over 40 hadiths are reported against the practice of riba, with Prophet Muhammad categorizing it as a major sin, even worse than adultery. The Prophet compared the sin of riba to performing adultery with one's mother in some hadiths, while in others, it is compared to the sin of adultery committed 33 or 36 times. These hadiths confirm the prohibition of riba.

Some, like Jaffar Shah, argue that business interest is halal as the Quran does not specifically address it. This stance goes against the principles established in the Qur'an and Sunnah. In fact, Mufti Taqi Usmani has elucidated that there exist two types of riba: individual interest (usury) and commercial interest, and the Qur'an, hadiths, and fiqh (Islamic law) unequivocally pronounce all forms of riba as haram. Therefore, there is no support or justification for the authenticity and applicability of riba, whether at an individual or commercial level.

In conclusion, the prohibition of riba in Islam transcends mere economic considerations related to interest. It serves as a reflection of the fundamental values upheld in Islam, including justice, financial balance, and social equality. To effectively address the issue, it is imperative to cultivate a broader awareness and understanding, while actively adopting alternative halal trade principles. By doing so, we can strive to minimize the negative repercussions associated with riba and promote a more equitable economic system in accordance with Islamic principles.