Riba refers to interest or usury which is forbidden in Islamic economic jurisprudence. There are two main types of riba - riba al-nasiah which refers to time period and riba al-fadl which is the exchange of commodities of the same kind in unequal proportions. Scholars have different views on what constitutes riba al-fadl based on characteristics of commodities. Riba is prohibited in Islam as it is an unlawful forced addition while profit from trade and business is permitted if derived fairly through mutual consent and sharing of risk.

1. CHAPTER 2
THE CONCEPTS OF
INTEREST USURY RIBA

2. 2.1 INTRODUCTION
2.2 DEFINITION OF RIBA
PRESENTED BY :-
HAFIZAH BINTI BAHARUDIN
( 213)

3. INTRODUCTION
• Riba or interest is forbidden in Islamic economic
jurisprudence fiqh and considered as a major sin
"Allah has permitted trading and forbidden Riba." (2:275)
• Riba is a prominent source of unjustified
advantage, because Shariah does not consider money as a
commodity
• The existence of interest in today’s global economic
system is an issue of great importance to Muslims. As the
world continues down the path of globalizations.

4. • As muslims, our main concern when it comes to financial
transactions is to avoid Riba in any of its forms, despite the
fact that the basic foundation of the world economics and
finance today is that of riba and dealing in usury.
• The Prophet has foretold us of a time when the spread of
riba would be so overwhelming that it would be extremely
difficult for the muslim to avoid it. This situation calls for
muslims to be extra cautious before deciding on what
money payment of financial methods to use in any personal
or business transaction.
• To make sure that we are safe from Riba, we have to learn
which transactions lead to it.

5. THE DEFINITION OF RIBA
• The literal meaning of Al-Riba as it is used in the
arabic language means to excess or increase.
• In this sense riba has the same meaning as interest in
accordance with the consensus of all jurists without any
exception.
• In the Islamic terminology interest means
effortless profit or that profit which comes free
from compensation or that extra earning obtained
that is free of exchange

6. Riba has been described as a loan
with the condition that the borrower will
return to the lender more than and better
than the quantity borrowed.
So the Holy Qur’an and the Hadith do not
make any such difference between usury and
interest. Interest and usury both are taken as
synonymous for the Arabic word riba.

7. 2.3 THE PROHIBITION OF RIBA
PRESENTED BY :-
NOOR A’DILAH BINTI ZABIDI
(213)

8. PROHIBITION OF RIBA IN THE HOLY
QURAN
 In several verses of the Holy Qur’an, Allah
s.w.t has mentioned the consequences of riba.
 The Qur’an did not declare the prohibition of
riba in the early stage of revelation, rather we
find that the complete prohibition of interest
came sequentially.
 In the Qur’an, the term riba signifies an
unlawful and forced addition to the payback
value of money or goods lent from one person
to another.

9. In the Qur’an Allah(swt) says:
 “That which ye lay out for increase through the
property of (other) people, will have no increase
with Allah: But that which ye lay out for
charity, seeking the countenance of Allah (will
increase): it is these who will get a recompense
multiplied”. (30:39)
“That they took riba (usury), through they were
forbidden and that they devoured men’s substance
wrongfully – We have prepared for those among
men who reject faith a grievous punishment.”
(4:161)

10. PROHIBITION OF RIBA IN THE
HADITH
 Jabir reported: The Prophet (saw), cursed the
receiver and the payer of interest, the one who
records it (the contract) and the two witnesses to the
transaction and said, “they are all alike (in guilt).”
 Abu Hurayrah (ra) narrated that the Prophet (saw)
said: “”God would not allow four persons to enter
paradise or to taste its blessings: he who drinks
wine, he who takes riba, he who usurps an orphan’s
property without right and he who is undutiful to his
parents.”

11. 2.4 TYPES AND CLASSIFICATION
OF RIBA
PRENSENTED BY :-
FATIN AMALINA BINTI MOHD.
SHAH
( 213949 )

12. TYPES OF RIBA
• Riba are divided into two types:-
Riba Al-nasiah
Riba Al-fadl

13. THE DIFFERENCES OF RIBA AL-
NASIAH AND RIBA AL-FADL
RIBA AL-NASIAH RIBA AL-FADL
Refer to time period The exchange of commodities
of the same kind.
Have additional of the Exchange against themselves
premium with unequal proportion.
Known as ‘riba hutang’ Known as ‘riba jualan’
Example: conventional bank Example: gold for gold, silver
loan for silver, wheat for wheat.

14. Imam Abu Hanifa on
Riba Al-Fadl
• Commodities must have two common
characteristics:-
– Volume
– Weight
• Includes all commodities having weight
or volume and are being exchange.

15. IMAM SHAFI ON
RIBA AL-FADL
• Commodities must have two common
characteristics:-
– Be a medium of exchage
– Be edible
• Includes all the commodities that are
edible or can be used as a medium of
exchange (currency)

16. IMAM MALIK ON
RIBA AL-FADL
• Commodities must have two common
characteristics:-
– Can be preserved
– Be edible
• Includes all commodities that are edible
and can be preserved

17. IMAM AHMAD BIN HANBAL ON
RIBA AL-FADL
• First citation conforms to the opinion of
Imam Abu Hanifa
• Second citation conforms to the opinion
of Imam Syafi
• Third citation includes the three
characteristics at the same time;
edible, weight and volume

18. 2.5 THE DIFFERENCES BETWEEN RIBA
AND PROFIT
CONCLUSION
PRESENTED BY :-
NORAIN BINTI ABDULLAH
( 213986 )

19. RIBA
The Arabic word riba linguistically means “an addition to, or
an increase of, a thing over and above its original size or
amount.” In the Qur’an, the term riba signifies an unlawful
and forced addition to the payback value of money or goods
lent from one person to another.
PROFIT
A financial benefit that is realized when the amount of revenue
gained from a business activity exceeds the expenses, costs and
taxes needed to sustain the activity. Any profit that is
gained goes to the business's owners, who may or may not
decide to spend it on the business.

20. RIBA AND PROFIT IN ISLAMIC
PERSPECTIVE
• Islamic banking has the same purpose as
conventional banking except that it operates in
accordance with the rules of Shariah, known as
Fiqh al-Muamalat (Islamic rules on transactions).
The basic principle of Islamic banking is the
sharing of profit and loss and the prohibition of
riba (usury). Common terms used in Islamic
banking include profit sharing (Mudharabah),
safekeeping (Wadiah), joint venture
(Musharakah), cost plus (Murabahah), and
leasing (Ijarah).

22. THE DIFFERENCES BETWEEN RIBA
AND PROFIT
RIBA PROFIT
Haram Halal
Derive from debt (al-nasiah) and trading Derive from trading
(al-fadl)
The debtors cannot settle the The buyer purchases the items he needs
transaction on equal terms with the and the seller gets profit for the time,
creditor because of his weaker position. labour and brains he employs in
providing that items to the buyers.
There is no limit to the interest the The profit which the debtor make on
creditor may charge on his money. money of the creditors has after all its
own limits.
The transaction in trade comes to an The transaction in trade comes to an
end as soon as the items and its price end as soon as the items and its price
change hands. After this the buyer is change hands. After this the buyer is
not required to return anything to the not required to return anything to the
seller. seller.

23. CONTINUE…..
RIBA PROFIT
Riba is the premium paid by the Profit is the difference between the
borrower to the lender along with value of production and the cost of
principal amount as a condition for the production
loan
Riba is prefixed, and hence, is no Profit is post-determined, and hence, its
uncertainty on the part of either the amount is not known until the activity is
givers or the takers of the loans done.
Riba cannot be –ve, it can at best be Profit can be +ve, 0 or even –ve.
very low or 0.

24. CONCLUSION
• RIBA IS PROHIBITED IN SYARIAH OF ISLAM
• PROFIT IS THE HALAL WAY TO MAKE
INVESTED
• Riba was prohibited just to prevent the
creation of "extra liability/demand“.
• Riba (interest, usury) is a mechanism and
dangerous weapon.
• Nature is the Limit in Islam; any thing not
natural is prohibited, stopped, and declared
illegal.