Why Usury is Prohibited?

• Author: Fatwa no. 86595 & 84764
• Publish date:04/03/2010
• Sections: FATWA FOR ALL
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• Why mark up (usury) is prohibited in Islam? Does interest has an effect on the national economy?

Fatwa: 

 

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah and that Muhammad  is His slave and Messenger.

 

Imaam ar-Raazi and other Muslim scholars  state five reasons for forbidding Riba:

First, in Riba transactions, a person takes the money of another without compensation because the person who pays a Dirham in return for two Dirhams in cash or after a while gets an increase in his money without giving something for it. It is known that money is the key to getting what we need. So, it has to be protected. The Prophet (Sallallaahu Alaihi Wa Sallam) said: "The inviolability of the money of the person is similar to the inviolability of his blood." So, taking his money without compensation is forbidden.

                  

Second, some scholars state that Allah forbade Riba as it discourages people from working. In fact, when the money owner could get profit and interest through Riba transactions without having to work, he becomes lazy and prefers Riba to invest in trade and industry and this, in turn, leads to joblessness among the people. Indeed, the public interest is in trade, crafts, factories, and buildings.

Third, Riba causes severing relations among people as it takes the place of good loans which promote kindness and courtesy among people.

Fourth, most of the time it is the rich person who gives the Riba loan to the poor person, hence putting yet another burden on the latter. So, encouraging Riba means giving more power to the rich over the poor who, in addition, will have to pay more than what he took and this is contradictory to mercy and benevolence and Allah is the most Merciful, the most Benevolent.

Fifth, Riba is forbidden by evidence from the texts of the Quran and Sunnah and we are not asked to know its wisdom. We are only required to approve that Riba is forbidden and act accordingly. In fact, a Muslim duty is to surrender to the Divine Instructions, to adhere to them and to do what is Halaal and to avoid what is Haraam, since Islam is based on total submission to Allah, The Exalted, whether or not one knows the wisdom or reason behind the Divine Teachings.

Allah says (what means): {It is not for a believer, man or woman when Allah and His Messenger have decreed a matter that they should have any option in their decision. And whoever disobeys Allah and His Messenger, he has indeed strayed in a plain error.} [Quran 33:36]

 

The Prophet  said: “Allah has cursed the one who consumes Riba (i.e. usury or interest), the one who gives it to others, the one who records it and the one who witnesses it.” [Muslim]

 

As regards the effect of Riba (interest) on the national economy, it has dangerous effects and bad consequences on the economy. This is one of the reasons why Allah forbade it. We will limit ourselves here to two disastrous effects of Riba on the national economies both in the consumption level and the production one.

First, the Riba loans add to the exploitation of the poor and the needy as it results in more poverty, hence reducing their future earnings.

 
On the other hand, these Riba loans make rich creditors richer and add to their future earnings. It is known that the poor and needy classes constitute a big majority of society. And, in case the income of this category of people decreases then their demand on the consumed and invested commodities decreases as well. So, if we know that this demand is actually the magic key that turns the wheel of the national economy, as a whole, we realize how big the extent of the economic problem will be and how expensive it is for the individual as well as the society in general.

Second, in the field of investment and production, the Riba banking system allows the outflow of currencies to the wealthy people who are able to pay the loans while the poor ones bear the expenses as the prices of commodities rise up and this results also in national economy inflation which is disastrous for any economy.

Finally, know that Allah never forbade anything except it has some harmful effects.

 

Allah Knows best.

 

Fatwa answered by The Fatwa Center at Islamweb

(Source: http://www.islamweb.net/en/article/147162/why-usury-is-prohibited)