Riba:Its History and Scripture

Riba: Its History nd Scripture

While Muslims agree that riba is prohibited, not all agree on what precisely it is,^[1][2] or whether its use should be punished by humans rather than Allah.^[3][4] It is often used as an Islamic term for interest charged on loans,^{[Note 1]} and the belief this is based on — that there is a consensus among Muslims that all loan/bank interest is riba — forms the basis of a $2 trillion Islamic banking industry.^[8] However not all scholars equated riba with all forms of interest, or agree whether its use is a major sin and against sharia (Islamic law), or simply discouraged (makruh).^[3][4]Riba (Arabic: ربا ,الربا، الربٰوة‎ ribā or al-ribā, IPA: [ˈrɪbæː]) can be roughly translated as "usury", or unjust, exploitative gains made in trade or business under Islamic law. Riba is mentioned and condemned in several different verses in the Qur'an (3:130, 4:161, 30:39 and perhaps most commonly in 2:275-2:280). It is also mentioned in many ahadith (reports describing the words, actions, or habits of the Islamic prophet Muhammad).

In addition to the unjust gains made from repayment of a loan where some kind of interest is charged — the full name of which is riba an-nasiya — most Islamic jurists believe there is another type of riba^[9] — namely riba al-fadl — which is the simultaneous exchange of unequal quantities or qualities of a given commodity.^[10][11]

Etymology and definitions

The word riba was used by the Arabs prior to Islam to refer to an "increase". In classical Islamic jurisprudence the definition of riba was "surplus value without counterpart."^[12]

The difficulty of explaining what exactly riba means in Islam has been noted by early Islamic jurists such as Ibn Majah^[13][14] and Ibn Kathir,^{[15][16][17][18]} who quotes the second "Rashidun Caliph" Umar bin al-Khattab,

“There are three things, If God’s Messenger had explained them clearly, it would have been dearer to me than the world and what it contains: (These are) kalalah, riba, and khilafah.”^{[14][Note 2]}

Disagreeing is Muhammad Taqi Usmani — "one of the leading" modern day "religious experts on Islamic finance"^[20] — who argues that scripture concerning riba cannot be ambiguous (or mutashabihat) because God would not condemn a practice but leave its "correct nature" unknown to Muslims.^[21]

Definitions

Definitions of riba include:

• Unjustified increment in borrowing or lending money, paid in kind or in money above the amount of loan, as a condition imposed by the lender or voluntarily by the borrower. Riba defined in this way is called in fiqh riba al-duyun (debt usury). (Abdel-Rahman Yousri Ahmad)^[22]
• An increase in a particular item. The word is derived from a root meaning increase or growth. (Saalih al-Munajjid, IslamQA website)^[23]
• Non-equality in an exchange. Besides increase in repaying a loan, this can be different results from the exchange of nonequivalent quantities (riba al-fadl) or from the presence of a risk in which the other contractual party does not share. (Olivier Roy)^[24]
• All forms of interest, "any excess on the principal sum of loan", i.e. any and all interest, irrespective of how much is lent, whether the borrower is rich or poor, using the loan for productive investment or consumption. (Some translations of verses of the Quran substitute the word "interest" for riba or "usury".)^[25] (The "orthodox"^[26] or "conservative"^[27] view of classical jurists and revivalists — such as Abul A'la Maududi^[28] — as described by Encyclopedia of Islam and the Muslim World and other sources.)^[29][26]

At least a few sources (John Esposito, Cyril Glasse, Ludwig W. Adamec) emphasize a dichotomy in what riba means or prohibits — classical scholars interpreting its meaning broadly and strictly, and others using a narrower, more easily evaded definition in practice, or at least in modern practice:

• Interest. Historically Islamic legal scholars have interpreted the Quran as "prohibiting any loan contract that specifies a fixed return to the lender" on the grounds that it provides "unearned profit to the lender" and imposes "an unfair obligation on the borrower." In the modern era Islamists and revivalists" preach that all interest is socially unjust and should be banned;(John Esposito)^[30]
• The above definition has been observed in few Muslim-majority countries, which instead define riba as excessive interest,^{[Note 3]}compound interest (John Esposito),^{[Note 4]} or exclude from the category of riba interest-like charges with euphemisms such as `commission` (Cyril Glasse),^[31] and/or charges using legal subterfuges (known as ḥiyal) where (for example), a money lender buys something and later sell it back for a greater amount (Ludwig Adamec).^[32]

An orthodox/revivalist Muhammad Taqi Usmani gives definitions for riba al-Quran

• a contract of loan or debt for any additional amount over the principal.^[33]

... and for the three varieties of riba-al-sunnah:

• An exchange of money "of the same denomination where the quantity" exchanged is not equal, whether it is in a spot transaction or with deferred payment.^[33]
• "A barter exchange between two weighable or measurable commodities of the same kind, where either the quantity" exchanged is not equal, or delivery of one side is deferred. (riba al-fadl)^[33]
• "A barter exchange between two different weighable or measurable commodities where the delivery of one side is deferred".^[33][34]

Alternatives to the strict definition of classical scholars and revivalists have been put forward by Islamic modernists who emphasize the moral aspect of any prohibition, believing that what should be prohibited was the exploitation of the needy, rather than the interest on loans itself:^[35]

• Interest on some loans — "exploitive" loans — but not others. Possible meanings of exploitive riba include:^{[Note 5]}
  • interest on loans for consumption not investment,^[36][37] since investment loans were allegedly not practiced in Meccan society and usually earn borrowers a return they can use to pay the interest charged^[38] (this idea was proposed in the 1930s by Syrian scholar Marouf al-Daoualibi);^[39]
  • interest on loans charging compound rather than simple interest,^[36] (an interpretation proposed in the 1940s by Egyptian jurist al-Sanhuri);^[39]
  • charging "exorbitant" interest rates;^[36][29]
  • interest on loans to the poor and needy;^[36]
  • interest on loans made by the economically strong/rich to the economically poor and/or vulnerable^[40] (as opposed to interest paid by large banks to individual account holders);
  • interest on loans motivated by a desire to make risk-free return of principal along with some interest or additional return, and where no concern is given to whether the funds are invested to enhance the earning ability of the lender (Muhammad Akram Khan).^[41]

Varieties

According to some ahadith, the Islamic prophet Muhammad said there are either 70, 72,^[42] or 73 varieties^[43] (depending on the ahadith) of riba.^[44] (The ahadith do not specify what those varieties are.) Most Islamic jurists (Fuqaha) describe several different kinds of riba:^[9]

• Riba an-jahiliya: usury practiced in pre-Islamic Arabia referred to in Quran 3:130. Scholars differ on its definition. According to Raqiub Zaman and M.O. Farooq, a riba an-jahiliya debt was "doubled and redoubled" each year if the borrower could not pay what was owed.^[45][46] Another similar definition (described by Taqi Usmani), is that riba an-jahiliya was a kind of loan where the borrower was not charged any additional amount above the principal unless they could not repay when the loan was due, in which case they were charged an additional amount but not necessarily double or triple the principal.^{[Note 6]} Usmani believes both of these definitions are incorrect, and that in reality a number of transactions where "an increased amount was charged on the principal amount of a debt" were in vogue at this time and can be considered riba an-jahiliya.^[48] Other orthodox scholars agree and state riba an-jahiliya, riba an-nasiya, riba al-duyun, riba al-Quran, riba al-qardh^[49][50] are all names for one of the two types of riba. (The second type being riba al-fadl.)^[51]
• Riba an-nasiya: the excess accruing from a loan transaction.^[52] Riba an-nasiya is riba on a credit transaction, when two quantities of items are exchanged, but one or both parties delays delivery or payment and pays interest, (i.e. excess monetary compensation in the form of a predetermined percentage amount or percentage).^[10] (Taqi Usmani quotes Fakhruddin Al-Raazi as saying "riba an-nasiah, it was a transaction well-known and recognized in the days of Jahiliyya".)^[53]
• Riba al-fadl, also riba al-sunna:^[54] excess accruing in a sale or barter transaction,^[52] i.e. riba involving the simultaneous exchange (not involving any deferred/delayed payment) of unequal quantities or qualities of a given commodity.^[10] Riba al-fadl and prohibition of it — according to Usmani — was developed by Muhammad (hence the name riba al-sunna), and so was not part of pre-Islamic jahiliya.^[53]

Still another source (the Takaful Basic Exam preparation of Islamic Banking and Finance Institute Malaysia and Aznan Hasan), describes two types of riba each with two sub sets.^[55][56] (Its definition of Riba Nasi`ah seems different from others.):

Types of Riba

Types of riba	Description	Sub-type of riba	Description
Riba Duyun	Unjustified increment in money lent whether in kind or cash over and above the principal amount.	Riba Qard	Increase (interest) on the principal sum of the loan is agreed upon at the point of contract
		Riba Jahiliyyah	Increase levied on the borrower for late repayment or failure to repay the financial loan
Riba Buyu`	Occurs in trading and exchange transactions, in which unequal exchange of certain commodities (gold, silver, dates, etc.) of same kind and same basis.	Riba Fadl	Due to unequal amount/quantity
		Riba Nasi`ah	Due to extension of time of delivery[55]

History

Riba an-jahiliya

John Esposito describes riba as a pre-Islamic practice in Arabia "that doubled a debt if the borrower defaulted and redoubled it if the borrower defaulted again".^[30] It was held responsible for enslaving some destitute Arab borrowers.^[29]

Abdullah Saeed quotes the son of Zayd b. Aslam (died 136/754) on what the Quran 3:129-130 means by riba being "doubled and redoubled":

“Riba in the pre-Islamic period consisted of the doubling and redoubling [of money or commodities], and in the age [of the cattle]. At maturity, the creditor would say to the debtor, ‘Will you pay me, or increase [the debt]’? If the debtor had anything, he would pay. Otherwise, the age of the cattle [to be repaid] would be increased ... If the debt was money or a commodity, the debt would be doubled to be paid in one year, and even then, if the debtor could not pay, it would be doubled again; one hundred in one year would become two hundred. If that was not paid, the debt would increase to four hundred. Each year the debt would be doubled.”^[57][58]

Orthodox Islamic scholar and Islamic banking advocate Taqi Usmani disagrees. In describing "riba in the days of Jahiliyya", he makes no mention of debts being doubled, but states that riba "had different forms" and that "the common feature of all these transactions is that an increased amount was charged on the principal amount of a debt."^[48]

Riba

According to orthodox sources (Youssouf Fofanaa, Taqi Usmani), "some jurists" saw riba (which Fofanaa defines as interest) "forbidden early in Mecca, some in the year 2 AH (after Muhammad left Mecca for Medina), and some after the opening of Mecca, but the majority agreed on its prohibition".^[59] Usmani cites sources declaring that 3:129 "clearly" forbade interest and these verses were revealed in 2 AH.^[60]

Other sources — such as the Encyclopedia of Islam and the Muslim World — state that early Muslims disagreed on whether all or only exorbitant rates of interest could be considered riba, and thus declared forbidden, but the broader definition won out with a consensus of Muslim jurists holding that any loan that involved an increase in repayments was forbidden.^{[29][Note 7]} One particular jurist (al-Jassas, d.981, who is criticized by Modernists)^[45][61][62] is credited with establishing the orthodox definition of riba — stipulating that it was excess payment "in a loan or debt", (i.e. interest on debt).^[63] M. A. Khan argues that attempts to ban interest resulted in either the development of black markets and higher prices for "interest-bearing credit", which "defeat[ed] the very purpose for which interest was banned"; or in various "subterfuges to camouflage interest so as to bypass the legal sanctions".^[64]

Some (scholar Timur Kuran) attribute the basis of religious condemnation of interest on loans to the widespread practice in the ancient world of selling loan defaulters into slavery and shipping them to foreign lands. Feisal Khan argues that "all pre-modern, and not just Muslim societies" banned interest on loans, using a ban as "a simple and effective risk-mitigation mechanism for small borrowers that cannot afford the down-side risk inherent in financial transactions". Among other monotheist Abrahamic religions,^[65] Christian theologians condemned interest as an "instrument of avarice",^[66][67] the Jewish Torah prohibited lending at interest to fellow Jews but allowed it to non-Jews (i.e. Gentiles) (Deut. 23:20).^[68] (Historically many Jews were led to money lending with interest as a profession because of this exemption and because they were barred from many professions in Christian territories.)^{[citation needed]} With modernity and economic development, higher incomes and more complex mechanisms such as insurance eliminated the need for the ban. This, rather than religious backsliding, explains the lack of interest in the ban among the contemporary Christian and Jewish counterparts of the Islamic ulema (according to Feisal Khan).^[69]

(According to two other sources — International Business Publications^{[Note 8]} and Egyptian Grand Mufti Ali Gomaa^{[Note 9]} — riba is restricted to exchanges involving currencies of gold and silver, and so does not apply to loans of paper currency. Thus, when "currencies of base metal were first introduced in the Islamic world", Islamic jurists did not forbid interest charges on them as riba.)^[70]

Historically, while the Islamic states followed classical jurisprudence in prohibiting an increase in repayments on loans (interest) in theory, in practice the giving and taking of interest continued in Muslim society "at times through the use of legal ruses (hiyal), often more or less openly."^[29] One common Ottoman era stratagem to circumvent of the ban on interest, according to Timur Kuran, was known as istiglaland involved the borrower selling his house to a lender and immediately leasing it back. The proceeds of the sale served as the sum loaned, the lease/rent/mortgage payment served as principal and interest repayment of the loan.^[72] According to Kuran, only transactions "that satisfied the letter of the ban" on interest "through stratagems" (hiyal) were allowed. In addition, in the sixteenth century, an Ottoman sultan "limited the annual rate of interest to 11.5%" "throughout the empire" on these loans. This order "was duly ratified by a legal opinion (fetva)."^[73] Another source (Feisal Khan) quotes several sources indicating the Ottoman empire forbid as riba only interest rates above a certain level (about 10-20%).^[74]

According to Minna Rozen the business of money lending was completely in the hands of Jewish Sarrafs in the Ottoman Empire.^[75]Europeans who visited Ottoman Empire stated that Ottoman economy would not function without these Sarrafs, though they sometimes were accused of cheating.^[75] In Persia, money lending was also dominated by Jewish Sarrafs. In nineteenth century Shiraz, for example, almost all Jews were active in lending money on interest.^[76][77]

Taqi Usmani maintains that outside of Dar al-Islam, riba (interest on loans) allowed the Rothschild family to "acquired financial mastery over the whole of Europe and the Rockfeller [sic] over the whole of America".^[78]

Modernism

The orthodox prohibition on interest was reconsidered by Islamic Modernists starting in the late 19th century in reaction to the rise of European power and influence during the Ages of "Enlightenment", "Discovery" and colonialism. According to author Gilles Kepel, for many years in the 20th century, the fact that interest rates and insurance were among the "preconditions for productive investment" in a functioning modern economy led many Islamic jurists to strive to "find ways of" justifying the use of interest "without appearing to bend the rules laid down" in the Quran.^[79] In the largest Arab Muslim country, Egypt, Modernist Grand Mufti Muhammad Abduh declared collecting interest on bank deposits and loans permissible in 1900. From then up to the year 2002, successive Muftis have declared riba "prohibited, permissible, and prohibited and then permissible again" up to the year 2002.^[80][81]

Revivalism

In the late 20th century (mid-1970s) however, Islamic revivalists/activists/Islamists have worked to revive and rejuvenate the definition of interest as riba, to enjoin Muslims to lend and borrow at "Islamic Banks" that avoided fixed rates, and to mobilize to pressure governments to ban the charging of interest.^{[Note 10]} In 1976, King Abdulaziz University in Jeddah organized the First International Conference on Islamic Economics in Makkah. At the conference, "several hundred Muslim intellectuals, Shari'ah scholars and economists unequivocally declared ... that all forms of interest [were] riba".^[79][84] By 2009, over 300 banks and 250 mutual funds around the world complied with this definition of riba and disavowed interest on loans or deposits,^[85] and by 2014 around $2 trillion in assets were "sharia-compliant".^[86]

Scripture on Riba

Both the Quran and the Hadith of Muhammad mention riba. Orthodox scholars such as Mohammad Najatuallah Siddiqui and Taqi Usmani believe Quranic verses (2:275-280) define riba to mean any payment "over and above the principal" of a loan.^[87] Others disagree with this definition (such as non-orthodox economists Mohammad Omar Farooq and Muhammad Ahram Khan, and scholar Fazlur Rahman Malik),^[26][88] and/or emphasize the importance of ahadith (Farhad Nomani, Fazlur Rahman Malik and Abdulkader, with Farooq stating "it is broadly agreed that the Qur’an does not define riba").^[89]

Quran and prohibition

Twelve verses in the Quran deal with riba^[90] (although not all of them mention the word). The word (usually translated as usury) appearing eight times in total — three times in 2:275, and once each in verses 2:276, 2:278, 3:130, 4:161 and 30:39.^[91]

The Mekkan verse in Surah Ar-Rum was the first to be revealed on the topic:

And what you give in usury (riba), that it may increase upon the people's wealth, increases not with God; (Quran 30:39)^[92]

Other Medinan verses are:

... for their taking usury (riba), that they were prohibited, ... (Surah An-Nisaa Quran 4:161)^[93]

O believers, devour not usury (riba), doubled and redoubled, and fear you God; haply so you will prosper. (Surah Al-i-'Imran Quran 3:129-130)^{[94][Note 11]}

Culminating with the verses in Surah Baqarah:

Those who devour usury (riba) shall not rise again except as he rises, whom Satan of the touch prostrates; that is because they say, 'Trade is like usury (riba).' God has permitted trade, and forbidden usury (riba). Whosoever receives an admonition from his Lord and gives over, he shall have his past gains, and his affair is committed to God; but whosoever reverts — those are the inhabitants of the Fire, therein dwelling forever.

God blots out usury, but freewill offerings He augments with interest. God loves not any guilty ingrate.

Those who believe and do deeds of righteousness, and perform the prayer, and pay the alms - their wage awaits them with their Lord, and no fear shall be on them, neither shall they sorrow.

O believers, fear you God; and give up the usury (riba) that is outstanding, if you are believers.

But if you do not, then take notice that God shall war with you, and His Messenger; yet if you repent, you shall have your principal, unwronging and unwronged.

And if any man should be in difficulties, let him have respite till things are easier; but that you should give freewill offerings is better for you, did you but know. (Quran 2:275-280)^{[95][Note 12]}

Interpretations

According to Youssouf Fofana and Taqi Usmani, jurists do not consider the verses 30:39 and 4:161 to clearly prohibit Muslims from riba, whereas the latter two (3:129-130 and 2:275-280) do.^[96][59] Another orthodox scholar, M. N. Siddiqi, also believes 2:275-80 "establishes" that riba is "what is over and above the principal" and that "it is unjust".^[87] According to Fofana, historically (most) jurists agreed on the prohibition of riba from these verses and termed it riba al-nasia, distinguishing it from riba al-fadl (the exchange of like goods in different quantities at the same time, mentioned in a number of narrations).^[59]

• verse 30:39 provides "insufficient indication" to prohibit riba, according to Fofana, because sources disagree on what it refers to. Muhammad ibn Jarir al-Tabari quotes a number of Tabi'een (Muslims who were born after Muhammad died but who were old enough to be contemporaries of the Sahaba "Companions"), who state that (Quran 30:39) refers to a gift, whereas al-Jawzi quotes Hasan al-Basri as stating it refers to riba.^[97]
• Verse 4:161 refers to the Jews and their taking of riba, but it is unclear if the prohibition applies to the Muslims (according to Usmani and Fofana).^[59][98]
• However 3:129-130 is seen by many — including Taqi Usmani^[99] and Ibn Hajar al-Asqalani (a medieval Shafiite Sunni scholar of Islam)^[59] — as prohibiting riba. Fofana however, thinks "the verse itself could be interpreted as expressing a preference against interest", so interpreting the verse as prohibiting riba may require support from some ahadith "relating to Amr ibn Aqyash".^[59]
• Mohammad Nejatullah Siddiqi, interprets Quranic verses (2:275-2:280, known as ayat al-riba)^[100] to mean that riba is not only "categorically prohibited" and "unjust" (zulm), but is defined as any payment "over and above the principal" of a loan.^[87] Youssouf Fofana and Taqi Usmani and other orthodox sources agree.^{[101][Note 13]}

Questions and replies

On the other hand, some believe the "riba verses" (2:275-280) to be ayat al-mujmalat ("ambiguous" verses). These include the second caliph `Umar, (according to Al-Shafi‘i jurist Fakhr al-Din al-Razi),<sup>[100][103]</sup> and a number of classical jurists, including Ibn Rushd (see below).<sup>[100]</sup> Other Classical Islamic jurists considered the term riba "speculative general"<sup>[104]</sup> rather than a "specific" (khass), or absolute or unqualified (mutlaq).<sup>[105]</sup> They restricted the application of riba to "the clarification by the Tradition [ahadith] ...".<sup>[100][106]</sup> According to Farhad Nomani, in studying scholarly "commentaries, one notes that the technical, and even to some extent the customary meaning of riba as a practice in pre-Islamic era, is a matter of controversy among classical jurists and the interpreters of the Qur'an."<sup>[107]</sup> Other classical jurists ("like al-Baji and al-Tawwafi, to name only two"), believed riba was `amma, a "general term" meaning it "is definitive or free of speculative content", according to Farhad Nomani.^[100]

Umar, also declared that Muhammad died before he could explain the verse of riba (among 2:275-280) fully — it being the last revealed verse of the Qur'an according to a hadith reported by Ibn Majah. (However, according to Taqi Usmani, this hadith is not as authentic as that of another where one of the narrators in the change of transmission was more reliable.^[108] This hadith indicates that the last verse was actually 2:281 — one not mentioning riba.)^[109]

Raqiub Zaman argues against the orthodox translation of riba as any

"excess or addition — i.e. an addition over and above the principal sum that is lent." If Muslim jurists are referring to interest as usury on the basis of this literal meaning of riba, than naturally one wonders why God Almighty used the terms `doubling` and `quadrupling` (the sum lent) as usury in 3:130 ... and why there was no further clarification of this verse in the Quran or by the Prophet.^[45]

Taqi Usmani argues that the words "doubled" and "tripled" in the verse are not "restrictive" of the prohibition of riba, and like some other words in the Quran are not to be taken literally but are used "for emphasis or for explaining".^[110]

The background of these verses was the dispute between two clans, Banu Thaqif and Banu Amr ibn al-Mughirah. The verse is addressed to the Banu Thaqifa who insisted that they be able to collect riba from the Banu Amr ibn al-Mughirah for a loan made to them, despite having signed a peace treaty forgoing claims of riba.

According to Fofana, historically (most) jurists agreed on the prohibition of riba from these verses.^[59] Disagreeing with the orthodoxy is author/economist Muhammad Akram Khan who writes that since the verse ("O believers, fear you God; and give up the usury (riba) that is outstanding, if you are believers") is addressed to the Banu Thaqifa it is (according to Khan) a "specific reference" addressing a "historical situation" and does "not institute a law that could make dealings in riba a state crime."^[111]

Quran and credit sales and late payment

While orthodox scholars believe the Quran declares interest (or any increased repayment of a loan) to be forbidden riba, orthodox scholars (including Taqi Usmani, and Monzer Kahf)^{[Note 14]} believe it specifically allows giving credit in a sale and increasing the price for this deferred payment in some circumstances (for example charging RS21000 for 90 days credit for an appliance that would costs Rs20000 in cash on the spot). According to Taqi Usmani, in Quran aya 2:275,^[113]

"... they say, 'Trade is like usury,' [but] God has permitted trade, and forbidden usury .."

the reference to permitting "trade" refers to credit sales such as murabaha, the "forbidden usury" refers to late fees (charging extra when the repayment is late), and the "they" refers to non-Muslims who didn't understand why if one was allowed both were not.^[114] Usmani writes:

the objection of the infidels ... was that when they increase the price at the initial stage of sale, it has not been held as prohibited but when the purchaser fails to pay on the due date, and they claim an additional amount for giving him more time, it is termed as "riba" and haram. The Holy Qur'an answered this objection by saying: "Allah has allowed sale and forbidden riba."^[115]

Usmani interprets the verse to mean that it is a "misconception" to believe that "whenever price is increased, taking the time of payment into consideration, the transaction comes within the definition of interest" and thus riba.^[116] Charging extra for deferred payment in a credit sale such as murâbaḥah is not riba, but late charges are.^[117]

Regarding hadith, M.O. Farooq states "it is well-known and supported by many hadiths that the Prophet had entered into credit-purchase transactions (nasi'ah) and also that he paid more than the original amount."^{[118][Note 15][Note 16]}

(While Usmani envisioned murâbaḥah being a limited part of the Islamic Banking industry, it has come to dominate it, often as a hiyal to lend cash.^{[121][122][123]} There is also general agreement in Islamic finance that finding a solution to delinquent murâbaḥah accounts continues to be a challenge.)^[124][125]

Hadith and prohibition

Scholars such as Farhad Nomani, Abdulkader Thomas,^{[Note 17]} and M.O. Farooq argue that classical scholars believed that hadith (the body of reports of the teachings, deeds and sayings of the Islamic prophet Muhammad that often explain verses in the Quran) was needed to define riba.

M.O. Farooq states that "it is commonly argued" that riba is "defined by hadith".^[46] Thus the argument goes, textual proof for the position that all forms of interest are riba and hence prohibited by Islamic law is based on hadith.^[46][127]

Some ahadith offered by Usmani as prohibiting any increase in the amount "charged on the principal amount of a debt"^[48] include:

• "Every loan which derives a benefit is a kind of riba."^[128]
• "If one of you has advanced a loan and the debtor offer the creditor a bowl (of food), he should not accept it, or if the debtor offers him a ride of his animal (cattle) the debtor must not take the ride ...".^[129]

According to Farhad Nomani, among the schools of fiqh, "... The classical Hanafi, some famous classical Shafi`i (e.g., al-Razi) and Maliki(e.g., Ibn Rushd) jurists were of the opinion that riba in the Qur'an was an ambiguous (mujmal) term, the meaning of which was not clear per se, and therefore the ambiguity had to be cleared by the Tradition" (another name for ahadith).^{[100][Note 18]}

Different sources report different types and numbers of riba-related ahadith. According to Farhad Nomani, there are "three principal types" of ahadith^{[107][Note 19]} that deal with riba.^[119]

1. The "most accepted or reliable sayings", found in most compilations of ahadith, that state that riba exists when "six articles of the same kind are either bartered unequally or not delivered immediately".^[107] (see Riba al-Fadl)
2. Another set cite Ibn `Abbas, and report that there is "no riba except in deferment ... in delivery and/or payment".^[107]
3. A third set quote Muhammad's "sermon on the occasion of the last pilgrimage,"^[107] where he is reported to have said:

"God has forbidden you to take riba, therefore all riba obligation shall henceforth be waived. Your capital, however, is yours to keep. You will neither inflict nor suffer inequity. God has judged that there shall be no riba and that all the riba due to `Abbas ibn `Abd al Muttalib shall henceforth be waived."^{[Note 20]}

Similarly, M.A. Khan states "there are three sets of Traditions relating to riba", including the riba al-fadl and last pilgriamge sermon.^{[Note 21]} Another source, Abdulkader Thomas, states that "there are six authenticated ahadith that allow us to define" riba.^[133][134] And under "riba in hadith", Shariq Nisar of Global Islamic Finance, lists seven "general" ahadith and another six on "Riba al-Nasi'ah".^[102]

Several narrators including Jabir,^[135] Abdul Rahman ibn Abdullah ibn Masoud,^[136] say that

Muhammad cursed the accepter of usury and its payer, and one who records it, and the two witnesses, saying: They are all equal.^[135][137]

Questions

On the other hand, the ambiguity and lack of clarity of what constitutes riba is reported to been indicated by Caliph `Umar, who included it among the three concepts that "it would have been dearer to me than the world" had Muhammad "explained them clearly" (see above), and twentieth century Islamic scholar, Fazlur Rahman Malik, who sums up his analysis of the ahadith on riba saying: “In short, no attempt to define riba in the light of Hadith has been so far successful”.^[88]

According to Farhad Nomani, "it is known that Ibn `Abas", a companion of Muhammad, "was of the opinion that the only forbidden ribawas the pre-Islamic riba."^[100] Nomani state that classical jurists "all agreed" that the meaning of riba was not "free of speculative content", because there was a difference between

• the "linguistic and customary meaning" of riba in the pre-Islamic period on the one hand, and
• "on the other hand", the "specification by the Tradition (the hadith) and the ambiguity of the opinions of the close companions of the Prophet on the problem" of the meaning of riba.^[100]

According to Abdullah Saeed, quoting Rashid Rida

none of the authentic hadith attributed to the Prophet in relation to riba appears to mention the terms, ‘loan’ (qard) or ‘debt’ (dayn). This absence of any reference to loans or debts in riba-related hadith led a minority of jurists to contend that what is actually prohibited as riba is certain forms of sales, which are referred to in the hadith literature.^[138][139]

According to another scholar, the mufti of Egypt, Dr. Muhammad Sayyid Tantawy, there is nothing in the Quran or Hadith that prohibits the pre-fixing of the rate of return, as long as it occurs with the mutual consent of the parties.^[140]

Arguments on scriptural support for prohibition

Arguing that Quran and hadith do not provide clear evidence that interest on loans is riba, Farooq notes that a number of early jurists held positions that are at variance with blanketly equating riba with interest. Some note the wording of aya 3:130,^[141]

Imam Ahmad ibn Hanbal (780–855 CE), believed only Riba an-jahiliya (where the amount owed "doubled and redoubled" each year if not paid off) was unlawful "without doubt from the Islamic viewpoint". According to Nabil A. Saleh, several companions (Sahabah) of Muhammad (Usama ibn Zayd, Abdullah ibn Masud, 'Urwah ibn Zubayr, Zayd ibn Arqam), including Ibn Abbas, one of the major companions of the Prophet and earliest of the Islamic jurists, also "considered that the only unlawful riba is riba al-jahiliyyah”.^[142][143]

Classical jurists and most Muslims believe riba to be "a general term" with a broad definition of all interest,^[16] while

Fazlur Rahman defined riba as "exorbitant increment whereby the capital sum is doubled several-fold, against a fixed extension of the term of payment of the debt."^[144]

Farooq also questions traditionalist and activist orthodoxy, insisting the ahadith commonly cited as defining riba as interest are not unambiguous,^[145] as they must be when used as the basis for laws with impact on "people’s life, honour and property" such as a ban on all interest does.^[146]

Farooq gives examples quoting a couple of ahadith stating there is no riba "in hand-to-hand [spot] transactions”,^[147] or "except in nasi'ah [waiting]”^[148][149] — that seem to contradict the orthdox position that there is also riba in riba al-fadl, i.e. the "hand-to-hand" exchange of unequal amounts of the same commodity.^{[Note 22]} (Farooq notes a hadith where two Sahabah (companions of Muhammad) argue, one -- 'Ubadah b. al-Samit—stating Muhammad forbade riba al-fadl, while another Sahabah — Mu'awiyah — contradicts him, saying he never heard Muhammad forbid such trade, "though we saw him (the Prophet) and lived in his company?”^[154])

The "except in nasi'ah" hadith also seems to contradict the many ahadith describing Muhammad buying on credit and paying more (after "waiting") than the original amount.^[119][120] The distinction sometimes made that it is not riba to make voluntary, gift extra payments that are not stipulated in the sale agreement — such as Muhammad gave to Jabir bin 'Abdullah by when he paid back a loan,^[120] or when he repaid the loan of a camel giving two back,^[155] or another time giving a better quality camel than the original.^{[156][157][158]} But these ahadith are contradicted by the hadith stating “every loan that attracts a benefit/advantage is riba.”^{[Note 23][Note 24]} as well as by hadithspecifically forbidding accepting a gift when extending a loan.^{[164][165][166]} And all these ahadith addressing and warning the lender but saying nothing about or to the borrower, would appear to be at odds with the many ahadith who include comments such as "The receiver and the giver" of extra payment "are equally guilty.”^[167]

Importance of the ban

Replying to the non-orthodox, Taqi Usmani argues that scripture concerning riba cannot be ambiguous (or mutashabihat) because God can not "wage war against a practice, the correct nature of which" is unknown by Muslims. Only those verses for which "no practical issue depends on its knowledge" may be ambiguous (according to Usmani).^[21]

Orthodox point to a number of ahadith indicating the gravity of the sin of committing riba. Abu Huraira is reported to have narrated:

The Prophet said, "Avoid the seven great destructive sins." The people inquire, "O God's Apostle! What are they? "He said, " To associate others in worship along with God, to practice sorcery, to kill the life which God has forbidden except for a just cause, (according to Islamic law), to eat up Riba (usury), to eat up an orphan's wealth, to give back to the enemy to flee from the battlefield at the time of fighting, and to accuse chaste women who never even think of anything touching chastity and are good believers." ^{[Note 25]}

According to Sunan Ibn Majah, the Islamic prophet Muhammad declared the practice of riba worse than "a man committing zina(fornication) with his own mother".^[168]
(Source: https://en.wikipedia.org/wiki/Riba )