Rules Regarding Riba (Usuary) And its Different Forms
Definition:
Riba is an additional amount received on capital, whether the amount is small or large.
Allah (SWT) said:
“…and if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you should not be dealt with unjustly (by receiving less than your capital sums).” (V. 2: 279)
The ruling on Riba:
It is Haram in all the revealed religious ----Judaism, Christianity, and Islam, except that the Jews do not see the prohibition as preventing them from taking Riba from non-Jews. As Allah (SWT) mentioned about them (in the course of describing their blameworthy qualities):
“And their taking of Riba (usuary) though they were forbidden from taking it…” (V. 4: 161)
The Qur’an discusses Riba in a number of different places, and in periodic order. In the Makkan period, the following verse was revealed:
“And that which you give in gift (to others), in order that it may increase (your wealth by expecting to get a better one in return) from other people’s property, has no increase with Allah…” (V. 30: 39)
In the Madnian period, the following verses were revealed:
“O you believe! Eat not Riba (usuary) doubled and multiplied…” (V. 3: 130)
The final legislation in this issue was the Statement of Allah (SWT):
“O you who believe! Be afraid of Allah and give up what remains (due to you) from Riba (usuary) (from now onward) if you are (really) believers. And if you do not do it, then take a notice of war from Allah and His Messenger, but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums).” (V.2: 278,279)
In this verse is a decisive refutation of those who say usuary is prohibited only if the sum paid back is doubled and multiplied, because Allah made lawful only the retrieval of the capital (i.e. the sum which was loaned) without any addition.
Riba is a major sin, as proved by the statement of the Prophet (SAW) :
“Stay away from the seven destroyers”. They asked, “What are they, O Messenger of Allah”? He said, “ Ascribing partners with Allah; witchcraft; killing the soul which Allah has prohibited except for just reasons; consuming Riba; consuming the property of an orphan; running away from the battle; and slandering chaste, believing women who are unaware of the possible misinterpretation of their innocent but indiscreet acts.” (Agreed upon)
The Prophet (SAW) cursed the one who consumes Riba and the one who pays it, and the scribe who writes the contract, and the witnesses to it; and said, “They are equal (in sin)”. (Muslim)
The wisdom behind the prohibition of Riba:
The reason for its prohibition is its harm incurred by the society economically, socially, and morally:
1. It sows the seed of enmity between individuals and destroys the spirit of mutual help and aid between them.
2. It leads to the formation of a leisure class, which does no work at all, yet money piles up and concentrates in their hands with no effort on their part, so that they become the economic equivalent of parasites which grow and relish at the expense of others.
3. Riba has been and remains a major instrument of colonialism and imperialism (in fact of neocolonialism), it is said that imperialism follows in the wake of traders and priests. (We have known the damage of usuary in some countries’ colonialism).
4. Riba is the appropriation of people’s wealth without compensation, which is prohibited, as the Prophet (SAW) said:
“Verily, your blood and your wealth are inviolable (amongst yourselves).” (Muslim)
The types of Riba:
A. Riba An-Nasi’ah: This is the stipulated interest which the lender takes from the borrower in consideration of the time given to the borrower to pay back the capital. It is Haram based on the Qur’an and the Sunnah and the consensus of Muslim scholars.
B. Riba Al-Fadi: This applies to barter, where commodities of the same type are exchanged in unequal amounts, especially the exchange of precious metals and foodstuffs, it is Haram by the Sunnah and the consensus of scholars; as it paves the way for Riba Nasi’ah.”
1. The Prophet (SAW) said:
“Do not sell one Dirham for two Dirhams, for I fear for you regarding Riba.” (Ahmad)
2. Numerous Ahadith have demonstrated the prohibition with regard to gold, silver, wheat, barley, dates, and salt.
The Prophet (SAW) said:
“Gold for gold, and silver for silver, and wheat for wheat, and barley for barley, and dates for dates, and salt for salt, like for like, equal for equal, from hand to hand (i.e. the transaction must be completed before the two sides leave each other). But if the types are different then sell as you wish, as long as it is hand to hand.” (Muslim)
The Prophet (SAW) also said:
“Whoever gives more or asks for more (than what he gave) commits an act of Riba, the given and the taken are equivalent (in this sin).” (Muslim)
The reason for its prohibition:
The commodities mentioned in the above Hadith are fundamental necessities of life:
1. Gold and silver have been, throughout most of the history, the mediums of exchange which make precise commercial transactions possible.
2. Wheat, barley, dates and salt are essentials foodstuffs (specially in Al-Madinah at the time the Prophet (SAW) was giving these instructions, so they were tailored to the particular audience, but the general can be inferred from the specific).
3. If Riba is present in the exchange of these essential commodities, it harms the people in general and leads to iniquity in their business transactions. So the Prophet (SAW) prohibited it affectionately on them. And when the same reason is found in another medium of exchange besides gold and silver, it is subjected to the same ruling. Likewise, when the same reason is present in another foodstuff besides those mentioned, then it may not be sold except like for like, hand to hand, because:
“The Prophet (SAW) prohibited selling food (of the same variety) except equivalent in weight and hand to hand.” (Muslim)
Conditions for the valid transaction of currency (medium of exchange) and food:
There are two conditions for the validity of these transactions:
1. The quantities of the two items exchanged must be the same, without any consideration of quality; based on the following evidence:
Abu Sa‘id Al-Khudri (R.A.) narrated:
Bilal (R.A.) came to the Allah’s Messenger (SAW) with some Burni dates (a high-quality variety), the Prophet (SAW) asked, “Where did these come from?” He said, “We had some low-quality dates so I sold two Sa’ of those for one Sa’ of these”. The Prophet (SAW) said, “Oh! (that is ) exactly Riba, (that is ) exactly Riba. Don’t do that; if you want to buy, sell your dates in separate transaction (i.e. for cash or for some other commodity) then buy (the dates you want) with it (what you received form the first transaction).” (Agreed upon)
And the Prophet (SAW) said:
“gold for gold, equal in weight.” (Muslim)
2. It is not permissible to delay the delivery of one of the two items exchanged, instead the transaction must be completed immediately as per the saying of Prophet (SAW): “hand to hand”, and His (SAW) statement :
“Do not sell gold for gold unless equivalent in weight (and from hand to hand ), and do not sell less amount for greater amount or vice versa; and do not sell silver for silver unless equivalent in weight (and from hand to hand), and do not sell less amount for greater amount or vice versa and do not sell gold or silver that is not present at the moment of exchange for gold or silver that is present.” (Agreed upon)