The goals of socio-economic justice and equitable distribution of income and wealth are integral parts of the moral philosophy of Islam. However, one of the socio-economic reforms made by Islam was the prohibition of riba (interest).
INTEREST
In modern secular economic systems interest plays a very important role. In fact, in the Western world people cannot think of any economic system without interest. From a theoretical standpoint, interest has been a debatable subject among economic and political theorists. They often stress the point that money capital cannot be treated as capital goods on the same basis as productive factors. It is pertinent to remark here that lending of money for interest was abhorred and, in most cases, prohibited by all the monotheistic religions . An eminent Western economist, Roy Harrod , regards the abolition of interest is the only way to avert a collapse of capitalism. Not only this, but he speaks with great admiration for an interest-less society in his work on Economic Dynamics. Harrod clearly recognizes that, “It is not the profit itself, earned by services, by assiduity, by imagination, or by courage, but the continued interest accruing from the accumulation that makes that profit taker eventually appear parasitical…” and he further states that an interest-less society which will be a totally new kind of society” would be the correct and final answer to all that is justly advanced by the critics of capitalism.
PROHIBITION OF RIBA (INTEREST) IN ISLAM
Riba is prohibited in Islam as it appears explicitly in the Holy Qur’an. There is complete unanimity among all Islamic schools of thought regarding the prohibition of riba. Since the Qur’an is the undisputed source of guidance in Islam, there is unanimous agreement on the fact that Islam has forbidden the practice of riba. The debate on whether riba is interest or usury has been settled. The ulama have made crystal clear that both interest and usury fall within the domain of riba. The modern banking system is organized on the basis of a fixed payment called interest. That is why the practices of the modern banking system are in conflict with the principles of Islam which strictly prohibit riba. Islam is opposed to exploitation in every form and stands for fair and equitable dealings among all men. To charge interest from someone who is constrained to borrow to meet his essential consumption requirement is considered an exploitative practice in Islam. Charging of interest on loans taken for productive purposes is also prohibited because it is not an equitable form of transaction . In several verses of the Holy Qur’an, Allah(swt) 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 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)
“O ye who believe! Devour not usury doubled and multiplied; but fear Allah, that ye may (really) prosper.” (3:140)
“Those who devour usury will not stand except as stands one whom the evil one by his touch hath driven to madness. That is because they say: ‘Trade is like usury.’ But Allah hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge). But those who repeat (the offence) are companions of the fire, they will abide therein (forever)” (2:275)
“O you who have attained faith! Remain conscious of God, and give up all outstanding gains from Usury, if you are (truly) believers” (2: 278)
Abdullah Yusuf Ali in his commentary on the Holy Qur’an mentioned that usury is condemned and prohibited in the strongest possible terms. There can be no question about the prohibition. Owing to the fact that interest occupies a central position in modern economic life, and specially since interest is the very life blood of the existing financial institutions, a number of Muslim countries have been inclined to interpret it in a manner which is radically different form the understanding of Muslim scholars throughout the last fourteen centuries and is also sharply in conflict with the categorical statements of the Prophet Muhammad(saw).
THE MEANING OF RIBA
The word riba has been used in the Holy Qur’an on several occasions. So it is necessary to know what it means or what it really stands for. Riba has been extracted from Raba. It means addition, increase . So, riba literally means to increase, to grow to rise, to add, to swell. It is, however, not every increase or growth which has been prohibited by Islam. In the Shari’ah, “riba” technically refers to the premium that must be paid by the borrower to the lender along with the principal amount as a condition for the loan or for an extension in its maturity. In this sense riba has the same meaning as interest in accordance with the consensus of all jurists without any exception . 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.
Success in this Life & the Hereafter.
Those who consume 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...�Qur�an.
O you who believe! Do not devour Riba (e.g. interest), making it double & redouble, and be careful of (your duty to) Allah, that you may be successful.�
The only saying of the faithful believers when they are called to Allah (His Words- the Qur�an) and His Messenger, to judge between them, is that they say: �We hear and we obey.� And such are the successful (who will live forever in Paradise).
None can doubt that riba is haram and a major sin, and no disobedience to Allah is worth the risk of His punishment. We must remember that the life of this world is short and fleeting, and that the purpose of our existence is not to lust after beauty and wealth, but rather to worship Allah correctly and live by His rules. Just because riba is widespread and common, it does not make it permissible.
