Sharia / Fiqh and Riba
How Muslims should deal with riba is disputed. Some believe riba is a violation of sharia (Islamic law) to be prohibited by the state and violators punished.[3] Others believe it is simply a sin to be left to God to judge and punish.[3][Note 26] Orthodox jurists tend to be less strict on its prohibition for Muslims in non-Muslims lands,[170] and strictness tends to vary throughout the Muslim world with Sudan being the most severe and Malaysia the least.[171]
At least one scholar (Abdulkader Thomas) has stated that not only is interest in violation of sharia, but is such a menace that failure to "combat" it indicates unbelief in Islam, (potentially punishable by death). According to Thomas, “Riba is part of a broader problem of belief and behavior. Refusing to combat riba is akin to disbelief. Conceding the argument that money has an intrinsic value is potentially a greater act of disbelief”.[172][44]
Author/economist Muhammad Akran Khan has noted that contemporary orthodox scholars have argued that interest is a violation of sharia law primarily on the basis of two sources:[3]
- the Farewell Sermon (mentioned above where the Prophet abolished all claims of riba on loans),[3]
- God has decreed that there will be no usury, and the usury of ‘Abbās b. ‘Abd al-Muṭṭalib is abolished, all of it.[173]
- and the fact that the Banu Thaqif clan was threatened with war by Muhammad for abrogation of their treaty with the early Muslims if they tried to collect interest on loans from Muslims. (Banu Thaqif are the ones who are warned against "being at war with God and His messenger" in Quran 2:275-280.)
However, M.A. Khan argues, "the Prophet could easily have announced the broad features of such a law [against Riba]. The fact is that neither the Prophet nor the Qur'an has announced any law relating to interest", as they had "in the case of theft, adultery or murder. .... Neither the Prophet nor the first four caliphs nor any subsequent Islamic government ever enacted any law against riba." Attempts to do so are "quite recent".[3]
The "authentic books of Islamic jurisprudence (fiqh) produced throughout Islamic history" had "sections dealing with riba", discussing "its nature and what makes a transaction lawful or unlawful", but according to M.A. Khan, until recently none contained "any public law for enforcement through state machinery."[174] The treasure of Islamic jurisprudence which has covered all facets of life, including imaginary situations, does not mention any punishment for one who indulges in riba."[174] In 1999 a work did. The Blueprint of Islamic financial system including strategy for elimination of Riba by the International Institute of Islamic Economics, called for riba-based transactions to be punishable by law.[175][174]
Another (non-Muslim) scholar (Olivier Roy) points out Ayatollah Ruhollah Khomeini's book of fatawa Tawzih al-masa'il, written before 1962,[Note 27] as an example of a more traditionalist attitude toward riba, or at least the charging of interest on loans. Rather than calling for a ban on interest, Khomeini states that lending without charging interest, "is among the good works" (Mustahabb) that are "particularly recommended in the verses of the Quran and in the Hadiths."[4][178]
Scriptural proof and fiqh
According to Farhad Nomani while classical jurists had "a consensus of opinion about the prohibition of riba", they disagreed on the "interpretation of the primary Islamic sources and, consequently, over the details of the ruling on riba". They believed that the "objects of riba occur in sale, and, only by analogy they related riba to loan ..."[179]
Madhhab (schools of fiqh), differ somewhat in their interpretation of riba. The Shafi'i hold that injunctions for riba apply to gold and silver currency but not fils (non-precious metal currency). "Thus, one hundred fils [coins made of neither silver or gold] could be exchanged for two hundred either on the spot or on a deferred delivery basis." By extension this would apply to contemporary fiat [i.e. paper] money, according to Abdullah Saeed.[180]
(One author — Imad-ad-Dean Ahmad — argues "ribâ as it is used in the Qur'an and sunnah" is not the same as interest, but the failure to back currency with precious metals. This is not because riba can only involve loans using gold and silver currency, but because instead of interest riba is actually the "now common practice of issuing unbacked paper currency". To end this sin, Muslim states must return to the gold standard.)[181]
Critic of the all-interest-is-riba formulation, M.O.Farooq, makes a number of criticisms of logic employed using ahadith to establish the connection.
- When it comes to "people's life, honor and property" special care should be taken formulating "laws, codes or dogmas" (such as forbidding interest on loans) in terms of scriptural backing. For example, even high quality sahih ahadith provide "probablistic" and not "certain knowledge" of what it was that Muhammad taught. (Only a very few ahadith provide "certain" knowledge, and none of them address riba.)[182] [Note 28]
- In defining riba, the "underlying reason" for why it is forbidden should be given first consideration, but in fact this reason — justice — has been given short shrift in orthodox scholarship.[184] Taqi Usmani dismisses "justice" as an element of sharia on the ground that "Zulm (injustice) is a relative and rather ambiguous term the exact definition of which is very difficult to ascertain. Every person may have his own view about what is or what is not Zulm."[185] Two orthodox writers (Abu Umar Faruq Ahmad and M. Kabir Hassan), admit that the idea that the rationale for prohibition of riba as formulated in al-Qur’an was injustice and hardship finds some support in Quranic verse 2:279 and in the works of some early scholars like Imam Razi[186] and Ibn Qayyim[187] for whom "it appears that what is prohibited is the exploitation of the needy, rather than the interest itself".[35][Note 29]
Farooq cites another critic, Abdullah Saeed, who complains that the schools of Islamic jurisprudence have ignored "rationale/wisdom" (hikmah) and arrived at a legal "cause" (`illa) to determine what was riba "which had nothing to do with the circumstances of the transaction, the parties thereto, or the importance of the commodity to the survival of society."[180] One result of this legalistic thinking is that hiyal could be and has been used "from the medieval period to the present day", to create loans based on "fictitious transactions" charging "exorbitant rates of interest" approved by orthodox jurists as lacking riba.[180][189]
A similar argument in favor of the objectives rather than means is made by Mahmud El-Gamal. In favor of making analysis of istislah(public interest)[190] rather than qiyas, (i.e. using analogy to apply injunctions to new circumstances) "the final arbiter in the area of financial transactions", Gamal quotes the twentieth-century Azhari jurist and legal theorist Abdul-Wahhab Khallaf:
El-Gamal quotes 14th century Maliki scholar Al-Shatibi stating that the legal ends of Islamic law "are the benefits intended by the law. Thus, one who keeps legal form while squandering its substance does not follow the law."[193][194]
El-Gamal also finds it curious that classical jurists consider 'urf (or adherence to convention or customary practice) an important "legal consideration"[195][196] [Note 30] (for example Hanafi jurist Al-Sarakhsi writes “establishment [of rights, etc.] by customary practice is akin to establishment by canonical texts”),[Note 31] and one that is not fixed but changes as customary practice changes. But when it come to banking, contemporary orthodox scholars do not consider "customary practices" to constitute a "legal consideration".[197]
- Future
Mohammad Omar Farooq argues the prevailing doctrine of interest-equals-riba may eventually follow other such "long-standing orthodox" but no longer accepted practices such as hadd capital punishment for apostasy from Islam, or that "triple talaq" (i.e. divorce by a husband of their wife by declaiming "talaq" aloud three times).[198]
(Source: https://en.wikipedia.org/wiki/Riba)
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