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4 STAGES
First Stage
(30:39)
Compare riba with zakat & charity
Praising zakat & charity, not riba
Second Stage
(4:160-161)...
Historical Context of Verses in the
Holy Quran
• The First verse is a part of Surah Ar-Rum revealed in
Makkah
"And whateve...
•The second verse is of Surah Al-Nisaa. Here the
term riba is used in the context of sinful acts of the
Jews
“And because ...
Historical Context of Verses in the
Holy Quran
• Third verse of Surah Al-i-'Imran :
“O those who believe do not eat up rib...
• The fourth set of verses is from Surah Al-Baqarah
"O those who believe, fear Allah and give up what still remains of the...
Riba in Hadith
. From Jabir: The Prophet, may peace be upon him,
cursed the receiver and the payer of interest, the one
wh...
Riba in Hadith
From Abu Hurayrah: The Prophet, peace be upon him,
said: "Riba has seventy segments, the least serious
bein...
Definition of Riba
• Not defined in the Holy Qur'an
• Prohibition of Riba is similar to the prohibition of pork, liquor,
g...
Definition of Riba
Definition of Riba from Hadith:
It is reported from Hazrat Ali (RA) that the Holy Prophet ‫هللا‬ ‫صلى‬
...
Definition of Riba
Definition of Riba according to interpreters of Quran:
• Imam Abubakr Al-Jassas:
– "And the riba which ...
Imam Fakhruddin Al-Raazi :
"As for the riba An-Nasiah, it was a transaction well-known and
recognized in the days of Jahil...
Classification of Riba
Riba is mainly of two types:
1. Riba Al Quran ( Loan Riba)
2. Riba Al Hadith (Trade Riba) it is als...
Definition 1
Loan transaction:
A predetermined excess or surplus over and above the
loan received by the creditor conditi...
(RIBAL QURAAN)
RIBAL QARZ RIBAL JAHILLIYA
Any predetermined benefit for the
owner of debt stated in the
contract, which th...
– Any additional quantity or
inequality in the exchange of
goods from the similar type
of the ribawi items
– (Quantity Fac...
Riba Al fadl
• The Holy Prophet, Sall-Allahu alayhi wa sallam, prohibited
some other transactions, which were not known pr...
Riba Al fadl
• Under riba al-fadl, the Holy Prophet, Sall-Allahu alayhi wa
sallam, has identified six commodities, i.e.:
–...
Riba Al fadl
• Measureable
– In terms of weight
– In terms of Volumes.
Riba Al fadl
JURIST MEASUREABL
E/WEIGHTABL
E
MEDIUM OF
EXCHANGE
FOOD ITEM ABLE TO STORE
Imam Abu
Hanifa & Imam
Ahmad
X
Ima...
General definition of Riba
• A surplus of any type without due
counter value or rightful consideration
(Iwadh) in a commut...
Arguments in favor of Riba (common myths) &
their rebuttal...1
It is argued that
– Prohibition of riba should be restricte...
Arguments in favor of Riba (common myths) &
their rebuttal...2
Consumption and production loans
• Holy Quran has prohibite...
Arguments in favor of Riba (common myths) &
their rebuttal...2
Consumption and production loans
• Productive and commercia...
Arguments in favor of Riba (common myths) &
their rebuttal...2
Consumption and production loans
The above argument is not ...
Arguments in favor of Riba (common myths) &
their rebuttal...2
• Ibn Jarir al-Tabari says:
"The tribe of Banu Amr used to ...
Arguments in favor of Riba (common myths) &
their rebuttal...2
Does Riba only refers to excessive rates of interest ?
• It...
Arguments in favor of Riba (common myths) &
their rebuttal...2
Does Riba only refers to excessive rates of interest ?
This...
Arguments in favor of Riba (common myths) &
their rebuttal...2
Does Riba only refers to excessive rates of interest ?
This...
• Under the capitalist system, loans are purely commercial transactions
meant to yield a fixed income to the lenders
• Isl...
However, if his intention is to share the profits of
the borrower, he shall have to share his loss also
he will have to un...
Overall effects of Interest:
Interest-based loans have a persistent
tendency in favor of the rich and against
the interest...
RIBA ( Interest )
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RIBA ( Interest )

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RIBA ( Interest )

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RIBA ( Interest )

  1. 1. 4 STAGES First Stage (30:39) Compare riba with zakat & charity Praising zakat & charity, not riba Second Stage (4:160-161) Attaching the practice of riba with the Jews Consider the practice as an inequity (zulm) Third Stage (3:130) Prohibiting the practice of charging double and multiple riba Fourth Stage (2:275-281) Conclusively prohibiting all forms of riba Any excess over the capital is disallowed
  2. 2. Historical Context of Verses in the Holy Quran • The First verse is a part of Surah Ar-Rum revealed in Makkah "And whatever riba you give so that it may increase in the wealth of the people, it does not increase with Allah.”
  3. 3. •The second verse is of Surah Al-Nisaa. Here the term riba is used in the context of sinful acts of the Jews “And because of their charging riba while they were prohibited from it." Historical Context of Verses in the Holy Quran
  4. 4. Historical Context of Verses in the Holy Quran • Third verse of Surah Al-i-'Imran : “O those who believe do not eat up riba doubled and redoubled”
  5. 5. • The fourth set of verses is from Surah Al-Baqarah "O those who believe, fear Allah and give up what still remains of the riba if you are believers. But if you do 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." Historical Context of Verses in the Holy Quran
  6. 6. Riba in Hadith . From Jabir: The Prophet, may peace be upon him, cursed the receiver and the payer of interest, the one who records the transaction and the two witnesses to the transaction and said: "They are all alike [in guilt]” (Muslim, Kitab al-Musaqat, Bab la‘ana akil al-riba wa mu’kilahu; also in Tirmidhi and Musnad Ahmad).
  7. 7. Riba in Hadith From Abu Hurayrah: The Prophet, peace be upon him, said: "Riba has seventy segments, the least serious being equivalent to a man committing adultery with his own mother” (Ibn e Majah).
  8. 8. Definition of Riba • Not defined in the Holy Qur'an • Prohibition of Riba is similar to the prohibition of pork, liquor, gambling, adultery etc., for which no specific definition was given. • Arabs and all the previous societies had no confusion about its exact sense.
  9. 9. Definition of Riba Definition of Riba from Hadith: It is reported from Hazrat Ali (RA) that the Holy Prophet ‫هللا‬ ‫صلى‬ ‫وسلم‬ ‫عليه‬ has said, “Every loan that derives a benefit (to the creditor) is Riba”
  10. 10. Definition of Riba Definition of Riba according to interpreters of Quran: • Imam Abubakr Al-Jassas: – "And the riba which was known to and practiced by the Arabs was that they used to advance loan in the form of Dirham (silver coin) or Dinar (gold coin) for a certain term with an agreed increase on the amount of the principal advanced.“ – On the basis of this practice, the same author has defined the term in the following words: “The Riba of Jahiliyya is a loan giving for stipulated period with a stipulated increase on the principal payable by the loanee” (Ahkamul Quran p. 465, 469)
  11. 11. Imam Fakhruddin Al-Raazi : "As for the riba An-Nasiah, it was a transaction well-known and recognized in the days of Jahiliyya i.e., they used to give money with a condition that they will charge a particular amount monthly and the principal will remain due as it is. Then on the maturity date they demanded the debtor to pay the principal. If he could not pay, they would increase the term and the payable amount. So it was the riba practiced by the people of Jahiliyya.“(Al Tafsir Al Kabir p. 91)
  12. 12. Classification of Riba Riba is mainly of two types: 1. Riba Al Quran ( Loan Riba) 2. Riba Al Hadith (Trade Riba) it is also called Riba al Fazal.
  13. 13. Definition 1 Loan transaction: A predetermined excess or surplus over and above the loan received by the creditor conditionally in relation to a specified period Definition 2 Trade transaction: Unlawful gain derived from the quantitative inequality of the counter-values in any transaction purporting to effect the exchange of 2 or more species which belong to the same genus(category) and are governed by the same efficient cause(illah)
  14. 14. (RIBAL QURAAN) RIBAL QARZ RIBAL JAHILLIYA Any predetermined benefit for the owner of debt stated in the contract, which the debtor need to fulfil E.g.: interest stated in loan contract The surplus or excess payment above the original debt as a penalty to the debtor due to his inability toservice the loan repayment within the stipulated time E.g: .: interest in credit card transactions due to the delay in the repayment
  15. 15. – Any additional quantity or inequality in the exchange of goods from the similar type of the ribawi items – (Quantity Factor) – Any delay in the exchange of the ribawi items from the same type and category – (Time Factor) (Ribal hadis) Riba al- Fadl Riba- Nasiya
  16. 16. Riba Al fadl • The Holy Prophet, Sall-Allahu alayhi wa sallam, prohibited some other transactions, which were not known previously as Riba. • The Holy Prophet, Sall-Allahu alayhi wa sallam, issued the following injunction:
  17. 17. Riba Al fadl • Under riba al-fadl, the Holy Prophet, Sall-Allahu alayhi wa sallam, has identified six commodities, i.e.: – Gold, – Silver, – Dates – Salt, – Wheat, and – Barley • It was not clearly mentioned in the hadith whether this rule is limited to these six commodities or it is applicable to some other commodities.
  18. 18. Riba Al fadl • Measureable – In terms of weight – In terms of Volumes.
  19. 19. Riba Al fadl JURIST MEASUREABL E/WEIGHTABL E MEDIUM OF EXCHANGE FOOD ITEM ABLE TO STORE Imam Abu Hanifa & Imam Ahmad X Imam al-Shafii X X Imam Malik X X • This causes difference of opinion among Muslim Jurists. • Following table illustrates the difference of opinion among the Muslim jurists:
  20. 20. General definition of Riba • A surplus of any type without due counter value or rightful consideration (Iwadh) in a commutative transaction in which one asset/good/value is exchanged for another.
  21. 21. Arguments in favor of Riba (common myths) & their rebuttal...1 It is argued that – Prohibition of riba should be restricted to limited transactions specifically mentioned in the Hadith. – Its prohibition cannot be extended to modern banking system. – The modern banking system was not imaginable at the time of revelation of verses.
  22. 22. Arguments in favor of Riba (common myths) & their rebuttal...2 Consumption and production loans • Holy Quran has prohibited to claim any increase over and above the principal in the case of consumption loans only. • These consumption loans were taken by the poor and needy to fulfill their day to day needs such as food and clothing. • It is injustice to claim an additional amount on the principal from a poor person. • The Holy Quran has taken this practice as severe offence against humanity.
  23. 23. Arguments in favor of Riba (common myths) & their rebuttal...2 Consumption and production loans • Productive and commercial loans were not in the vogue in the days of Holy Prophet ‫وسلم‬ ‫عليه‬ ‫هللا‬ ‫صلى‬ • Nor the basic philosophy for the prohibition of Riba could be applied to these types. • Therefore productive and commercial loans do not fall under the ambit of Riba prohibited in the verses of Quran.
  24. 24. Arguments in favor of Riba (common myths) & their rebuttal...2 Consumption and production loans The above argument is not valid basically due to three reasons: 1. Validity of a transaction is not based on the financial status of the party. (ie Sale ijarah gambling) 2. The Nature of Qur’anic Prohibitions. 3. Banking and productive loans in the age of antiquity. (surah e quraish and ghazwa e badar)
  25. 25. Arguments in favor of Riba (common myths) & their rebuttal...2 • Ibn Jarir al-Tabari says: "The tribe of Banu Amr used to charge interest from the tribe of Banu al-Mughirah and Banu al-Mughirah used to pay them interest.“ • These tribes used to work as a joint stock company to finance their trade-caravans. • Loans taken by these tribes were not for the purpose of consumption only; rather these were commercial loans.
  26. 26. Arguments in favor of Riba (common myths) & their rebuttal...2 Does Riba only refers to excessive rates of interest ? • It is argued that prohibition of Riba is applicable to only those interest transactions where the rate of interest is excessive or exorbitant. • The verse of Surah Al-e-Imran is sought to Support this argument. • Since the Banking interest is normally not so high it is not covered by this prohibition.
  27. 27. Arguments in favor of Riba (common myths) & their rebuttal...2 Does Riba only refers to excessive rates of interest ? This argument is not valid due to the following reasons: • It is a well established fact that different verses of the Holy Quran on a single subject must be studied in juxtaposition with each other. • No verse can contradict another verse on the same subject. • The verse 278 of Surah Al Baqarah clearly states that give up “whatever remains of Riba”
  28. 28. Arguments in favor of Riba (common myths) & their rebuttal...2 Does Riba only refers to excessive rates of interest ? This argument is not valid due to the following reasons: • The verse (Al Baqarah 2:41) States “ Do not sell my verses for a little price.” • Similarly the verse (Al Noor 24:33) states “And do not force your slave girls to prostitution if they want to remain chaste”. • Interpretation of the Holy Quran should be based on the explanation given by or inferred from the Ahadith.
  29. 29. • Under the capitalist system, loans are purely commercial transactions meant to yield a fixed income to the lenders • Islam does not recognize loans as income – generating transactions they are meant only for those lenders who do not intend to earn a worldly return through them • They, instead lend their money either on humanitarian grounds to achieve a reward in the here after, or merely to save their money through a safer hand. Arguments in Favor of Riba & Their Rebuttal The reality of Qurz in Islam; Is lending a commercial transaction or a charitable one?
  30. 30. However, if his intention is to share the profits of the borrower, he shall have to share his loss also he will have to undertake a joint venture with the opposite party whereby both of them will have a joint stake in the business and will share its out come on fair basis Arguments in Favor of Riba & Their Rebuttal
  31. 31. Overall effects of Interest: Interest-based loans have a persistent tendency in favor of the rich and against the interests of the common people. It carries adverse effects on production and all location of resources as well as on distribution of wealth.

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