In the Muslim world, a multitude of inquiries and misconceptions have arisen concerning the intricate notion of riba and its applications. Throughout history, substantial deliberations have transpired among scholars in their concerted efforts to address and rectify the misconceptions and challenges associated with riba. This article in this regard highlights the historical evidentiary basis that underscores the prohibition of riba within the context of the Quran, the assertions of fiqh, as well as the prevalent misconceptions harboured by the younger Muslim generation. These misconceptions serve as a significant impediment, rendering it difficult for them to distinguish between riba and other business practices.
It is noteworthy that Allah has mentioned this kind of confusion in one of the verses that prohibit riba:
"Those who devour riba cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, 'Trade is [just] like riba.' But Allah has permitted trade and has forbidden riba. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein." (Baqara 2:275)
In contemporary society, particularly within the context of those engaged in the practice of riba, specifically riba al bai', which is unequivocally prohibited according to hadith, a range of misconceptions have emerged. These misconceptions contribute to uncertainties surrounding the identification and categorization of other elements and actions that might bear a resemblance to riba. These include but are not limited to, commercial interest, sales contracts, various trade practices, and even lotteries. The blurring of lines between these aspects and riba itself has led to a state of confusion among individuals seeking to discern the permissible from the impermissible within the framework of Islamic financial ethics.
1st misconception: Related to Sale Contract
Certain individuals resorted to practising riba, citing the words of Hazrat Umar (R.A), particularly about sale contracts known as Bai’-e-Sarah. In response, select Muslim scholars undertook ijtihad to reach a conclusive standpoint on this matter. Hazrat Umar's stance on forms of riba not explicitly outlined in the Quran was characterized by ambiguity. This position was also shared by the pre-Islamic Arabs who did not regard these practices as constituting riba. However, Prophet Muhammad (PBUH) took a broader perspective, encompassing the entire spectrum of these practices under the umbrella of riba and unequivocally labelling them as haram.
Notably, certain companions of Prophet Muhammad (PBUH), including his own uncle, were initially associated with engaging in riba. Despite this, Prophet Muhammad (PBUH) categorically declared such practices as forbidden. Furthermore, Hazrat Umar grappled with intricacies concerning matters absent from the hadith corpus. He surmised that the examples provided by Prophet Muhammad (PBUH) served as illustrative guides to comprehend the essence of riba. Consequently, due to these complexities, Hazrat Umar adopted a practice of avoiding anything that could potentially be deemed as riba. This approach, reflective of his wisdom, should ideally be adopted by all Muslims as a precautionary measure against falling into the trappings of prohibited transactions.
2nd misconception: Related to Business and Commercial Interest (Riba)
This misconception is explained in the context of individualistic riba and business and commercial riba (interest). The verse about riba in Quran usually refers to the practice of pagan Arabs which usually earn a profit on loans, but now when we look into it, we will find the different advancements and types in the practising of riba. A lottery is one of the new shapes of riba in modern times. Hence it is the conscience of ijma (scholars) that all those practices which are identical to riba in all spheres and outcomes are prohibited in Islam, just being in a new way of practice does not mean it is permissible in Islamic dimensions.
3rd misconception between trade and Riba:
If we talk about trade, there is an exchange of commodities, as in a riba loan is given and interest payment is demanded at a certain time with the principal amount. The basic difference here is the period which is used as a medium of exchange.
People think that Riba and trade are alike, some people claim that as people earn by renting their houses, cars, shops, etc. then why cannot we earn by renting our gold and silver, etc. but there is a basic difference between both practices because in renting gold or silver only one side gets benefits and the whole public suffer lots one of the common examples is prostitution. Such an activity, while serving the interests of an individual, can create a negative impact on the moral, social, and psychological well-being of the society. Besides there are many concepts defined in books of Fiqh related to Bai’ (transactions) which are called Bai fasid (defective sale) and Ijarah fasid (defective lease) because one person gets all the benefits and the other suffers. So, on the appearance bases, riba and doing business or trade looks alike but based on its repercussion and consequences it’s totally different, one is called halal and the other is haram. Moreover, if we talk about trade there is an exchange of commodities and services or selling of commodities in exchange of money. People who get the commodity have its ownership until he has paid for owning it or either paid for rent and nobody gets a loss in this trade-off. Moreover, if we talk about deferments in Islam, we do not need to pay any extra amount if we delayed paying the principal amount of deferments. Whereas if we talk about riba, it gets on adding with time, and sometimes due to this, interest payments exceed the principal amount and it still kept going on. Hence, we can conclude from here that trade is halal and it benefits all the society whereas riba leads the society to the verge of chaos.
In conclusion, the concept of riba in Islam has been a subject of debate and confusion among scholars and the Muslim community. However, it is important to understand that riba is not limited to the practice of earning interest on loans, but can take various forms in modern times. There are also misconceptions about the difference between riba and trade, as well as the interpretation of hadiths and fiqh rulings. Muslims need to educate themselves about the true meaning and implications of riba and avoid engaging in any practices that resemble or lead to riba. By doing so, they can uphold the principles of Islam and contribute to a just and prosperous society.