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Questions/Answers About Islam’s Stance On Interest (Riba)
Author/Source: Junaid Hassan  Posted by: admin
Hits: 1645 Rating: 0 (0 votes) Comments: 0 Added On: Monday, September 13, 2010 Rate this article

 

 

Q: Is interest halal (permissible) in any form?

 

A: No. Taking of interest (Riba) is not only forbidden in the Qur’an (Al-Baqarah 275-281, al-Imran 3:130) but Bible as well (Exodus 22:25, Leviticus 25:36, Leviticus 25:37, Deuteronomy 23:19, Ezekiel 18:13,17).

 

Similarly, it has been considered immoral and harmful for a society not only by some of the ancient economists but modern ones as well. See, for example:

 

 

  • Usury and Just Compensation: Religious and Financial Ethics in Historical Perspective by Constant J. Mews and Ibrahim Abraham, Journal of Business Ethics 72:1–15, 2007.

 

  • Conflicts of Interest? The Ethics of Usury by Martin Lewison, Journal of Business Ethics 22: 327–339, 1999.

 

The reason why it is considered unfair is that, in addition to binding a borrower to reproduce and return what he has borrowed (which is totally fair), it demands of him to return, no matter what, something over and above it. For example, if a person invests the borrowed money in some business and, unfortunately, faces a heavy loss, he would still be bound to give the lender something more than what he has actually borrowed.  On part of the lender, there lies a greedy mentality of multiplying his wealth without taking into account the situation of the borrower. However, it should be noted that if the lender asks the borrower to share some amount of profit with him, it cannot be considered interest as he is not asking for any fixed increment in all cases but only imposing a condition in the case of profit.

 

 

Q: I mean buying things on lease or getting loan on lease etc., are these allowed in any way or any case?

A: Please note the following points which would, hopefully, cover your question:

  • Interest is defined as a fixed increment which a lender demands from the borrower only because the former has given the latter permission to use some amount of money (or consumable item) for a certain period of time.

 

  • Interest is only related to consumable goods e.g., money and food etc. The additional money one pays on monthly basis on buying, for example, a car or house is rent, not interest. However, in such a case, the ownership of the item must reside with the seller until or unless the buyer pays the agreed upon amount in full. If the buyer fails to pay this amount, the item, a car, house or whatever, must be returned back to the owner.

 

  • Taking of interest or to help someone in taking it (e.g., writing interest’s agreement or going to collect interest money on someone’s behalf etc.) is prohibited in Islam. Whereas, paying of interest is neither prohibited in the Qur’an nor the Hadith. People have understood a hadith (Sahih of Muslim no. 4093) wrongly due to which they hold that paying of interest is prohibited too. That hadith forbids to “cooperate” or “assist” someone in interest’s business and, on its basis, some people argue that paying of interest is, in fact, to assist interest’s business. Although, the one who pays it does so out of helplessness and does not intend to cooperate or assist anyone in interest’s business, therefore, the culprit is only the one who demands it.

 

 

Q: Should a study loan option be considered?

 

A: Yes, in my opinion, it should be considered when one does not have sufficient means to assist one’s studies. As I have discussed above, only taking of interest is a sin. The one who pays it cannot be blamed, for he is the one who is wronged and treated unfairly with.

 

Even if we agree for a moment that paying of interest is also prohibited, still, one may be exempted from almost any ruling of Sharia in case of helplessness. For example, covering of private body parts is obligatory for believing men and women (Al-Nur, 24:30 and 31) but in case of a medical problem, nobody would prohibit a patient to reveal these parts for a medical checkup. Similarly, in your case, when it seems impossible for you to carry on your studies without taking loan on interest, you may opt for it. 

 

 

Further Comments:

 

Interest is such an epidemic which has infected whole of our economic system; no one can flee from it at this time. When some moral plague makes such a place in a society, Islam teaches us to gradually and periodically annihilate it.

 

The best example in this regard is the evil of slavery in the Arab society in the time when the Qur’an was revealing. The Qur’an did not finish it overnight because it simply was not possible. Had it given an instant order to free all slaves, the whole Arab economy which was based on slavery would have immediately collapsed. Secondly, there were old, sick and handicap slaves who, if instantly freed, would have found no means of sustenance but to beg in streets. Similarly, there were young maids who might have to opt for prostitution and young men who might have become thieves. Islam first improved people’s awareness about the problem by introducing the concept of equality in the society, then paved way to help the slaves become self sufficient to live on their own and, in the process, closed the door for everyone to make new slaves. In the same way, instead of eradicating interest overnight which would collapse our economic system in a single moment, wisdom as well as the model of the Qur’anic reformations suggests that we should think of alternative ways to get rid of it and, in the meanwhile, tolerate it until an alternative system is fully functional. (By tolerating, I do not mean to back it up but let interest-based institutions, e.g. banks, work.)

 

I hope this would be helpful. Should you have any other query, please feel free to write. Of course, Allah knows the best and we are only the students of His D’in.  

 

Thank you.

 

Sincerely,

 

Junaid

 

 

 

The above answers are based on Alama Javed Ahmed Ghamidi’s research. For further reading please see his book: Meezan, 3rd ed., Chapter: Qanoon-e-Maeshat (Lahore: Al-Mawrid, 2008), p. 508 to 512. Available online at:

 

http://cid-8781fcf46e18d431.skydrive.live.com/browse.aspx/Public/Allama%20Ghamidi%7C4s%20Writings


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