I decided to share this here so that perhaps more people could benefit from it. A discussion about Riba/Interest was initiated by someone who quite absurdly claimed that interest and Riba were not the same thing and that interest was allowed in Islam. Thereafter with the involvement of few others jumping into the discussion I realized that perhaps more people were under such or similar misconceptions. Therefore I am copy pasting the final concluding discussion here in the hope that if other people hold such idea's they too might receive an amount of clarification...
Al Quran- 16:116 -
وَلاَ تَقُولُواْ لِمَا تَصِفُ أَلْسِنَتُكُمُ الْكَذِبَ هَـذَا حَلاَلٌ وَهَـذَا حَرَامٌ لِّتَفْتَرُواْ عَلَى اللّهِ الْكَذِبَ إِنَّ الَّذِينَ يَفْتَرُونَ عَلَى اللّهِ الْكَذِبَ لاَ يُفْلِحُونَ
Wala taqooloo lima tasifu alsinatukumu alkathiba hatha halalun wahatha haramun litaftaroo AAala Allahi alkathiba inna allatheena yaftaroona AAala Allahi alkathiba la yuflihoona
• Hence, do not utter falsehoods by letting your tongues determine [at your own discretion], "This is lawful and that is forbidden", thus attributing your own lying inventions to Allah: for, behold, they who attribute their own lying inventions to Allah will never attain to a happy state!
It is part of our Eemaan to believe in Allah-SWT as the Prophet-SAAW believed. The attributes of Allah-SWT told to us by the Prophet-SAAW are what we know and believe of Allah and we recognize that beyond this we do not have the capacity to understand or comprehend Allah atleast in the dimensions and parameters of this life. Amongst these attributes of Allah-SWT one of the most basic and essential traits that we believe in are that a) Allah is the One and Only, b) the Creator of everything, c) All-Powerful, d) All-Encompassing, e) The Wise, f) The all-Knowing, g) The All-Aware. Now had Allah willed He-SWT could have quite simply sent down the Quran with every individual at birth and every child could have naturally known Arabic. Nothing is impossible for Allah-SWT if Islam were as simple as reading the Quran and applying it based on every individuals understanding of it, well actually, if that were the case, we’d pretty much have what we’re left with today …’chaos in the name of Islam’! This is the result of the infiltration of random opinions and interpretations of Islam disregarding the explanation, interpretation, teachings and understanding given to us by the Holy Prophet-SAAW himself!
Understanding, verifying and deriving the Islamic Jurisprudence and its implementation are not a mere child’s play, therefore we must understand that it is solely our own ignorance and arrogance when we disregard the unanimously agreed upon verdicts and established laws of the Islamic Jurisprudence, on the basis of perhaps a couple of books that we might have read and the logic which appeals to our own personal senses. It’s just like my having studied science till eighth grade and perhaps having read a book or two about nuclear physics, getting up and not only commenting and giving my opinion of some verified established laws, but actually giving a gist of what they should be or what their implementation should entail as per my knowledge and my opinion. If I were to get up and do this, not only would no one take me seriously, but they would laugh at me and label me mad and not pay heed to anything I have to say thereafter. And they would be very right in doing so. And over here we are talking about laws concluded and derived by man not God. Just imagine our insolence and audacity when there are clear cut ayat about a matter and we choose to give our opinion about the matter on the contrary. It is almost like (Allah Taubah) challenging Allah Himself. May Allah keep us safe and protect us from ever consciously or unconsciously indulging in this act.
Although I have already mentioned the relevant Ayat and Hadith and the unanimously agreed upon law of Islamic Jurisprudence regarding Riba/interest. However It seems proper to copy it verbatim here, so that whosoever might be reading this can benefit from this as a whole.
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“Those who consume interest 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 interest.’ But God has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with God. But whoever returns [to dealing in interest or usury]—those are the companions of the Fire; they will abide eternally therein. God destroys interest and gives increase for charities. And God does not like every sinning disbeliever.” (Quran 2:275-276)
“O you who have believed, fear God and give up what remains [due to you] of interest, if you should be believers. And if you do not, then be informed of a war [against you] from God and His Messenger. But if you repent, you may have your principal—[thus] you do no wrong [to others], nor are you wronged.” (Quran 2:278-279)
In the Hadith:
“Avoid the seven destructive sins: associating partners with God, sorcery, killing a soul which God has forbidden– except through due course of the law, devouring interest, devouring the wealth of orphans, fleeing when the armies meet, and slandering chaste, believing, innocent women.” (al-Bukhari and Muslim)
In fact, another statement of the Prophet (peace and blessings of Allah be upon him) should be sufficient to keep any God-fearing individual completely away from interest.
The Prophet (peace and blessings of Allah be upon him) said:
“One coin of interest that is knowingly consumed by a person is worse in God’s sight than thirty-six acts of illegal sexual intercourse.” (al-Tabarani and al-Hakim)
The Companion Jaabir narrated that the Messenger of God (peace and blessings of God be upon him) cursed the one who takes interest, the one who pays interest, the witnesses to it [that is, the interest contracts] and the recorder of it. Then he said, “They are all the same.” (Muslim)
The Prophet Muhammad (peace and blessings of Allah be upon him) also said,
“If illicit sexual relations and interest openly appear in a town, they have opened themselves to the punishment of God.” (al-Tabarani and al-Hakim)
http://en.wikipedia.org/wiki/Riba
Riba (Arabic: ربا, [rɪbæː]) means one of the senses of "usury"[citation needed]. Riba is forbidden in Islamic economic jurisprudence fiqh and considered as a major sin. Simply, unjust gains in trade or business, generally through exploitation.
There are two types of riba discussed by Islamic jurists: an increase in capital without any services provided and risk taking, which is prohibited by the Qur'an, and that prohibited in the Sunnah which comprises commodity exchanges in unequal quantities.
Riba is considered amongst the Seven Heinous Sins (Al-Saba al-Mubiqat - السَبعَ الموبِقاتِ), namely: [1]
Believing in gods other than Allah.
Magic.
Murder.
Riba/usury.
Unlawfully taking orphans' money.
Fleeing the battlefield.
Accusing chaste, pious women.
The Qur'an states:[2]
“ يَا أَيُّهَا الَّذِينَ آمَنُواْ لاَ تَأْكُلُواْ الرِّبَا أَضْعَافًا مُّضَاعَفَةً وَاتَّقُواْ اللّهَ لَعَلَّكُمْ تُفْلِحُونَ ”
3:130 O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful.
“ وَأَحَلَّ اللّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا ”
2:275 Allah has permitted trade and has forbidden interest
Mohammad said in his farewell sermon: "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.".[3]
The Qur'an explicitly prohibits Riba, and since the Qur'an is an undisputed source of guidance for Muslims, all Muslim authorities unanimously agree on prohibition of Riba. There is no difference of opinion between any school of thought on the prohibition of Riba in Islamic Shariah.
The Qur'an mentions that the person who deals with Riba (ربا) will stand (on judgement day) as one who is beaten by Satan into insanity.[4] Here Qur'an makes it clear that "trade" and "riba" are not the same, and that God forbade "riba" and allowed "trade".[5] It further states that whoever accepts the guidance of God must immediately stop dealing in Riba, and those who return to Riba after God’s guidance has reached are dwellers in fire, because God destroys "Riba" and he will reward those who give to charity.
Mohammad cursed the one who deals with Riba. From Jabir: Mohammad cursed the receiver and the payer of riba, the one who records it and the two witnesses to the transaction and said: "They are all alike [in guilt]." [Sahih al-Muslim, Sahih Al-Bukhari, Tirmidhi, Ibn Majah, Bahiqi and Musnad Ahmad]
Islamic Shariah considers Riba as a tool of oppression and a means to unjustly take others' money[6] by exploiting their needs and circumstances. Hence it forbids a Riba based system altogether and promotes Charity as an alternative. Therefore, Mohammad said: "God has judged that there shall be no riba" [Last Sermon]
The crimes of dealing in Riba are so serious that God has declared war against those who deal in Riba.[7] Mohammad has cursed anyone who deals with Riba, the one who takes it, the one who pays it and the one who records it, as their sins are considered equal under the Quran.[8]
Riba is considered to be a greater sin, for Muslims, than that of eating pork or drinking alcohol. Mohammad declared the practice of Riba worse than adultery: worse than "to a man committing adultery with his own mother".[9]
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http://islamicbanksnetworking.com/CounselDetails.aspx?qid=1
Question Text:
Is there a majority accepted view amongst the jurists that modern day Interest is Riba? Or is this opinion just held by some scholars who happen to be well known? Also, does Riba only apply to what is known as Riba Al-Jahiliyya (pre-Islamic days of ignorance)? If no, on what basis can it be applied to modern day Interest?
This counsel answered by Dr. Monzer Kahf
Answer Text:
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
Dear brother, the answer to your first question is YES, THERE IS ALMOST UNANIMOUS AGREEMENT AMONG SHARI`AH SCHOLARS THAT WHAT IS INTEREST IN BAKS AND THE LIKE TODAY IS RIBA. There is also a resolution to this effect by the OIC (Islamic Fiqh Academy). This is not a minority's opinion.
Your second question on Riba Al-Jahiliyyah is confused. Riba Al-Jahiliyyah is increment in debt and this is the financial Riba. You add to it Riba Al-Fadl that happens in certain exchange contracts, that is Riba that is prohibited in Hadith. Both carry unanimous agreement on their prohibition among contemporary Shari'ah scholars.
Your third question becomes answered already as Riba Al-Jahiliyyah is the same interest; there is not a single bit of difference!
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http://www.muftitaqiusmani.com/index.php?option=com_content&view=article&id=29:riba-its-meaning-and-application&catid=10:economics&Itemid=17
RIBA, ITS MEANING AND APPLICATION
Q: Respectable Mufti Saheb: Kindly forgive me for intruding on your precious time and specially during the Holy Month of Ramadan when you will be too busy. Also please forgive me in addressing this letter in English as perhaps I may not be able to express myself more clearly in Urdu.
You have been making research on various Islamic laws and principles which remain not clear in minds of people like me who have no knowledge or study of matters. As a learned Scholar and having vast experience and knowledge of both Islamic Laws and practices of modern period, I hope to get a reply of my query from you. Matter is the same old one - What is the position of Bank interest or profit - by whatever name it is called according to Shariah. To express whatever I understand I give below my feelings:-
1. Authentic definition of 'Riba' which has been declared by Allah and Holy Prophet (S.A.W) in Qur'an as "Haram "?
2. As far as I can see the charges of profit or interest one expects to get in return of his providing money to a needy person to fulfill his requirement of daily needs in the absence of any source to fulfill these is 'Riba' but any such return on money used for business, to earn more money, should not come under the definition of 'Riba '.
3. Generally it is said that if rate of profit is fixed it comes under definition of 'Riba' and becomes 'Haram' but if it linked with profit earned, it is not 'Riba'. In my humble opinion this position is different. For example 'A' has got Rs. 100,000/= and he constructs a shop and gives it on fixed monthly rental for business. Or if he gives Rs. 100,000/= in cash for another business. What is the difference as far as 'A' is concerned. He is parting with his money, in one case he is giving it in kind and in another case in cash. Why return in both the cases be distinguished? Shop's rent is not dependent on profit or loss to the Shopkeeper. If rent paid for shop is 'rental for shop why fixed return on cash is not 'rental of money'?
This letter is just to clarify the position and correct my thinking and in no way to convert Haram into Halal. After all after 15 Centuries, our concept should be clear at least on basic principles of our faith and we should not find excuses for justification of our (mis) deeds.
I shall be grateful to have your considered opinion for my guidance at your earliest convenience.
(M.A. Siddiqui, Operations Director, Matiari Sugar Mills Limited)
A: I received your letter dated 27th January 1997 and apologize for the delay in replying it. It was due to my overwhelming involvements both here and abroad. I hope you will forgive me for this delay. The questions you have posed have been discussed thoroughly in a number of books written on the subject both in Urdu and English. If you wish to benefit from Urdu writings I would advise you to read the following books:
"The Questions of Interest: Mufti Shafei (R.A.)"
"Islam & Modern Business: Mufti Taqi Usmani”
You may also benefit from the book of Dr. Anwar Iqbal Qureshi, titled" Islam and the Theory of Interest ".
I think if you want to be very clear on this point you should at least study these books. However, I am giving here very brief answers to your questions:
1) The legal definition of any prohibited act is seldom given in the Holy Qur'an itself. For example, wine has been prohibited but no definition of wine has been given. Similarly, adultery, telling lies, back-biting and bribery have been prohibited by the Holy Qur'an but the definitions of these acts have not been provided. Reason for it is that all these concepts were too clear in the minds of the addressees to need any such definition. The same is the case of Riba. The concept of Riba was widely recognized among the addressees of the Holy Qur'an and it is that concept which is reflected in the legal definition provided for Riba either in the Hadith or in the later literature of Islamic jurisprudence. According to this definition any transaction of loan where the payment of an additional amount on the principal is made conditional to the advance of such loan is called Riba.
2) There is no distinction in Shariah between advancing a loan to a needy person or advancing it to a business concern. The principle is that the person who advances money to another person should clearly decide whether he wishes to assist him or he wants to share in his profits. In the former case, he should withdraw from any claim of additional amount (in the form of interest) while in the latter case he should share his loss also. It is not permitted by Shariah that he claims profit but does not agree to share his loss.
Another point which needs attention here is that the distinction between a needy and a rich person in commercial matters is totally irrelevant. If a Shopkeeper sells a commodity to a poor person with a margin of profit which is not excessive nobody can say that this transaction is Haram because of the poverty of the purchaser. One can say that it would be more advisable for the Shop Keeper to give him the commodity either as a charity or at cost without charging a profit but it cannot be said that the marginal profit charged here is not Halal. If charging an additional amount on a loan is not in itself Haram then the same analogy should have been applied here meaning thereby that if a creditor charges a marginal interest on the loan he has advanced to a poor person it should not be condemned or declared as Haram, but even the modernists who hold the commercial interest as Halal admit that this kind of transaction is Riba and prohibited by the Holy Our'an. It proves that the basis of the prohibition is not linked to the poverty of the debtor. Had it been so, charging profit from a poor person would also have been declared as Haram. Therefore, the only basis for distinction between a sale and a transaction of Riba is that the former relates to commodity while the latter relates to money.
3) There are several differences between interest and rent. The basic principle of Shariah is that profit is justified where a person has undertaken the risk of the thing given to another person. In a transaction of loan, after advancing money, the creditor does not take any risk of the money because if the money is lost in the hands of the debtor after he has taken delivery thereof the debtor is bound to repay the loan. As the creditor did not take any risk of it, therefore he cannot charge additional profit thereon. While, in the case of a property leased out to the Lessee, the Lessor has taken the risk of the property, If the property is destroyed, he will bear the loss, therefore, it is justified for him to-charge rent from the Lessee. Another difference is that the property is always subject to depreciation while money does not depreciate. Therefore, charging of rent in the first case is justifiable while it is not so in the later case.
I hope that these brief answers will at least explain the basic concepts. However, for greater details you should study the books I have referred to above.
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Now coming back to your opinion and understanding of the matter, you stated: “... I think interest is not haram in the banking system because it in turn is used in business by the bank whether be it in the form of a loan that is used in some business or directly in the form of asset purchase. The bank makes money on our money and from the spread keeps their profit and gives us our return...it wod be haram say if i give you $100 and ask for $200 back knowing fully well you have no means to invest or increase the money....if ur able to invest it then its my right to charge u for renting my capital..just like rentingy house... Its to stop exploitation of people who ae already disadvantaged..”
I completely understand your logic and partially you are correct and you have almost summed up Islam, rather accurately, in your last statement though it requires a little amending if you would so allow me. The correct statement would be:
“Islam stops the exploitation of people!” – nothing more nothing less. It is not just for the disadvantaged or poor, it looks out for everyone and the best of their interests. The logic you applied would have been correct, had it not been for the other law of Islam, which clearly states “it is forbidden to oppress or be oppressed!” In this case the bank would be the oppressor and you would be the oppressed.
Islam allows profit, it only bans interest. According to the Islamic banking system, you give your money to the bank and it takes the accumulated wealth of people and invests it. Thereafter taking a basic amount for its running expenses and maintenance and an amount as its pay or share for having invested your money etc (just like hiring a firm to invest your money for you) it is to give the rest of the profit back to all its clients equally dividing the share depending on their respective amount of investment/money. In the case that somehow the bank incurs some massive losses then too the loss would be divided equally amongst the investors/clients. Albeit it would rarely be the case, unless (Allah-Forbid) some calamity were to occur. Nonetheless, otherwise the profit rates would vary every month and would generally be far more than what the banks usually give. Fixed interest or a fixed percentage of interest or fixed mark up, is not allowed in Islam, because no one is allowed to oppress or exploit anyone, be it an individual or an institution.
Al-Quran (2:278-279)
O ye who believe! Fear Allah, and give up what remains of your demand for usury, if ye are indeed believers. If ye do it not, Take notice of war from Allah and His Messenger: But if ye turn back, ye shall have your capital sums: Deal not unjustly, and ye shall not be dealt with unjustly.
May Allah give us the taufiq to correct ourselves in the light of Islam and rid ourselves of usury and May we hitherto, for the sake of Allah and abiding by His Command, make an earnest effort to stop dealing in interest at any level. And May we place our money in the Islamic banking system (which is not 100% accurate as yet, but nonetheless they are making a sincere effort) in order to encourage and support it. Ameen
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I feel it is imperative that I mention here the following ayat, it’s translation and explanation, as a warning and a point to ponder about ourselves that may we never behave like these nations that preceded us, who transgressed and earned the wrath of Allah. May we never twist the Commands and Injunctions of Allah to suit our own vested interests, and the logic that merely appeals to our whims and fancies. And May we never be amongst those who fool none other but themselves by faking their eemaan and justifying the sins they indulge in or justifying the distorted interpretations of Allah’s Laws. Ameen!
Kindly go over the following – reading the translation and the tafseer, May Allah give us clarity. Ameen!
http://english-tafseer.com/Templates/Surah%202/Surah_2_8.html
وَلَقَدْ عَلِمْتُمُ الَّذِينَ اعْتَدَواْ مِنكُمْ فِي السَّبْتِ فَقُلْنَا لَهُمْ كُونُواْ قِرَدَةً خَاسِئِينَ
Walaqad AAalimtumu allatheena iAAtadaw minkum fee a(l)ssabti faqulna lahum koonoo qiradatan khasieen(a)
And you very well knew those of you, who transgressed in respect of Sabbath. So We-SWT said to them, “Be you apes, despised and rejected.”
(2:65)
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And those people who transgressed on Saturdays were also from amongst them. This incident took place during the period of Prophet Dawud-AS They lived along the coastline and fishing was their means of earning a livelihood.Allah-SWT had ordered them to abstain from fishing on Saturdays, as this day was sacred for them, and was dedicated for worship. Plenty of fish, more than usual, would muster up the shore on Saturdays and they could not resist the temptation to catch it. They invented an excuse for violating the ban. They dug out several ditches along the shore and connected them to the sea with ducts. When the ditches would fill up with fish, they would seal off the ducts, and would not lake any fish on that day. The next day they would catch the trapped fish. Some would lower a fishing rod in the water and the fish so hooked would be taken out the following day. Some of them who obeyedAllah-SWT strongly opposed this crime and tried their best to stop the violators. The dispute became so grave that the wrongdoers drove the noble men out of their settlement, and constructed a wall in between to keep them confined to their homes, out of sight.
One morning, the expelled heard no human voice from the evildoer’s settlement. All that could be heard was the cries of apes and the shrieks of pigs. When they checked it out they saw that all had transformed into apes and pigs. The young ones were turned into apes and the old ones changed into pigs. They recognised their relatives, and would toss around restlessly at their feet, but nothing could be done for them. After a few days all of them died. Accord¬ing to the ‘Hadith’ the nations subjected to such punishment had left no pedigree behind. The monkeys we see today are a separate species, which existed even before this incident, and have nothing to do with these condemned folk.
The Forms of Justification
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It has been clearly indicated that any justification, which negates or violates a law of Shari'ah, is not only wrong, but also a serious crime. However, the justifications of Islamic jurists, which aim at obeying the Shari'ah and not negat¬ing it do not fall in this category. Secondly, living with pious people is also a source of protection against a general Divine punishment. As long as the two Sabbath groups lived together, they were safe, but when the fundamentalists were separated, the so-called civilized were seized by Divine punishment. May Allah-SWT bless us with the company of nobles!
And We-SWT made this on example for their ... and a lesson for the Muttaqin.
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The Bani Israil caught the fish but, for this Allah-SWT turned them into apes and pigs, a sorry sight, a lesson and a source of repentance for their contemporaries and those to follow in time, whereas, for the pious it is a source of greater guidance. The Punishment of distortion was generally discontinued with the advent of the Holy Prophet-SAAW. It is one of his-SAAWBarakah. But it is not surprising to see individual cases of distortion. In our village, a woman habitually used abusive language, especially against Hadhrat Abu Bakr Siddique-RAU, and generally for the Holy Prophet's-SAAWwives and other Companions-RAU. Before she died, her face got terribly disfigured and her tongue hung out four inches just like a dog’s, which simply would not retract. She could neither keep quiet, nor articulate any words and her voice resembled a dog's grumble. She was taken to Lahore for medical aid, but nothing seemed to help and after four months of torture she died. There are many such incidents, to list them all would be impossible here, but such exceptional cases of physical distortion do take place
State of Spiritual Distortion
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In case of the Spirit, it cannot retain its human appearance without Islamic faith and practice. It would resemble the beast or animal whose traits are pre¬dominant in a person. The Spirits of only those Muslims who have enlightened hearts retain their human appearance. Even the Spirits of the practising Muslims take the appearance of permissible animals, whereas those of the non-believers and the wrongdoers take the shape of beasts. They live cloaked in human form, but it would not last forever. If Allah-SWTbestows the power of spiritual observation, it can be seen that towns and cities are infested with beasts. This is the reason why people look human but behave worse than beasts. May Allah-SWT forgive us!
"You both seem to be well versed with islamic thought... I think interest is not haram in the banking system because it in turn is used in business by the bank whether be it in the form of a loan that is used in some business or directly in the form of asset purchase. The bank makes money on our money and from the spread keeps their profit and gives us our return...it wod be haram say if i give you $100 and ask for $200 back knowing fully well you have no means to invest or increase the money....if ur able to invest it then its my right to charge u for renting my capital..just like rentingy house... Its to stop exploitation of people who ae already disadvantaged.. well thats my opinion.."
I feel compelled to go forth with the instigated discussion solely because I understand and appreciate that the reason behind it is strictly self-correction and a better understanding of deen, inorder to apply it to our lives and correct our previous ways. I would initially like to make a few very pertinent and relevant points clear before getting to the main point of discussion, for it is essential for one to understand these essentials of Islam and Eemaan before delving further into any discussion regarding Islamic Jurisprudence and clearly defined and determined Islamic injunctions and laws. These matters are far too precarious for one to take casually and lightly. Moreover, a nonchalant indulgence in these discussions, merely for the sake of asserting one’s own opinions or other personal ulterior motives can cost one drastically on the Day of Judgment and in the eyes of Allah.
The thing is that there is no room for yours or mine or anyone’s opinion’s as such in Islam. Islam is not an amalgamation of a majority vote or consensus of ‘opinions’, it is infact a code of life sent to us by Allah-SWT and brought to us by the Prophet Muhammad-SAAW. Nothing in Islam is an isolated concept, just like life, everything is intertwined and interrelated. The Prophet-SAAW taught us Islam, with his-SAAW own example. He-SAAW along with his-SAAW Companion’s –RAU lived out Islam to the very detail and left an exemplary example for us to follow. An entire community was established and built around Islam from the very scratch, which progressively grew to be an Empire. There were no flaws in the system, the only reason for the downfall was the corruption in the Eemaan of people and the double standards that were brought forth in time because of it. And since Islam is based on basic justice and equality, there is no room for double standards, the moment double standards penetrate the system, the entire essence of Islam is lost!
The thing is that there is no room for yours or mine or anyone’s opinion’s as such in Islam. Islam is not an amalgamation of a majority vote or consensus of ‘opinions’, it is infact a code of life sent to us by Allah-SWT and brought to us by the Prophet Muhammad-SAAW. Nothing in Islam is an isolated concept, just like life, everything is intertwined and interrelated. The Prophet-SAAW taught us Islam, with his-SAAW own example. He-SAAW along with his-SAAW Companion’s –RAU lived out Islam to the very detail and left an exemplary example for us to follow. An entire community was established and built around Islam from the very scratch, which progressively grew to be an Empire. There were no flaws in the system, the only reason for the downfall was the corruption in the Eemaan of people and the double standards that were brought forth in time because of it. And since Islam is based on basic justice and equality, there is no room for double standards, the moment double standards penetrate the system, the entire essence of Islam is lost!
Al Quran- 16:116 -
وَلاَ تَقُولُواْ لِمَا تَصِفُ أَلْسِنَتُكُمُ الْكَذِبَ هَـذَا حَلاَلٌ وَهَـذَا حَرَامٌ لِّتَفْتَرُواْ عَلَى اللّهِ الْكَذِبَ إِنَّ الَّذِينَ يَفْتَرُونَ عَلَى اللّهِ الْكَذِبَ لاَ يُفْلِحُونَ
Wala taqooloo lima tasifu alsinatukumu alkathiba hatha halalun wahatha haramun litaftaroo AAala Allahi alkathiba inna allatheena yaftaroona AAala Allahi alkathiba la yuflihoona
• Hence, do not utter falsehoods by letting your tongues determine [at your own discretion], "This is lawful and that is forbidden", thus attributing your own lying inventions to Allah: for, behold, they who attribute their own lying inventions to Allah will never attain to a happy state!
It is part of our Eemaan to believe in Allah-SWT as the Prophet-SAAW believed. The attributes of Allah-SWT told to us by the Prophet-SAAW are what we know and believe of Allah and we recognize that beyond this we do not have the capacity to understand or comprehend Allah atleast in the dimensions and parameters of this life. Amongst these attributes of Allah-SWT one of the most basic and essential traits that we believe in are that a) Allah is the One and Only, b) the Creator of everything, c) All-Powerful, d) All-Encompassing, e) The Wise, f) The all-Knowing, g) The All-Aware. Now had Allah willed He-SWT could have quite simply sent down the Quran with every individual at birth and every child could have naturally known Arabic. Nothing is impossible for Allah-SWT if Islam were as simple as reading the Quran and applying it based on every individuals understanding of it, well actually, if that were the case, we’d pretty much have what we’re left with today …’chaos in the name of Islam’! This is the result of the infiltration of random opinions and interpretations of Islam disregarding the explanation, interpretation, teachings and understanding given to us by the Holy Prophet-SAAW himself!
Understanding, verifying and deriving the Islamic Jurisprudence and its implementation are not a mere child’s play, therefore we must understand that it is solely our own ignorance and arrogance when we disregard the unanimously agreed upon verdicts and established laws of the Islamic Jurisprudence, on the basis of perhaps a couple of books that we might have read and the logic which appeals to our own personal senses. It’s just like my having studied science till eighth grade and perhaps having read a book or two about nuclear physics, getting up and not only commenting and giving my opinion of some verified established laws, but actually giving a gist of what they should be or what their implementation should entail as per my knowledge and my opinion. If I were to get up and do this, not only would no one take me seriously, but they would laugh at me and label me mad and not pay heed to anything I have to say thereafter. And they would be very right in doing so. And over here we are talking about laws concluded and derived by man not God. Just imagine our insolence and audacity when there are clear cut ayat about a matter and we choose to give our opinion about the matter on the contrary. It is almost like (Allah Taubah) challenging Allah Himself. May Allah keep us safe and protect us from ever consciously or unconsciously indulging in this act.
Although I have already mentioned the relevant Ayat and Hadith and the unanimously agreed upon law of Islamic Jurisprudence regarding Riba/interest. However It seems proper to copy it verbatim here, so that whosoever might be reading this can benefit from this as a whole.
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“Those who consume interest 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 interest.’ But God has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with God. But whoever returns [to dealing in interest or usury]—those are the companions of the Fire; they will abide eternally therein. God destroys interest and gives increase for charities. And God does not like every sinning disbeliever.” (Quran 2:275-276)
“O you who have believed, fear God and give up what remains [due to you] of interest, if you should be believers. And if you do not, then be informed of a war [against you] from God and His Messenger. But if you repent, you may have your principal—[thus] you do no wrong [to others], nor are you wronged.” (Quran 2:278-279)
In the Hadith:
“Avoid the seven destructive sins: associating partners with God, sorcery, killing a soul which God has forbidden– except through due course of the law, devouring interest, devouring the wealth of orphans, fleeing when the armies meet, and slandering chaste, believing, innocent women.” (al-Bukhari and Muslim)
In fact, another statement of the Prophet (peace and blessings of Allah be upon him) should be sufficient to keep any God-fearing individual completely away from interest.
The Prophet (peace and blessings of Allah be upon him) said:
“One coin of interest that is knowingly consumed by a person is worse in God’s sight than thirty-six acts of illegal sexual intercourse.” (al-Tabarani and al-Hakim)
The Companion Jaabir narrated that the Messenger of God (peace and blessings of God be upon him) cursed the one who takes interest, the one who pays interest, the witnesses to it [that is, the interest contracts] and the recorder of it. Then he said, “They are all the same.” (Muslim)
The Prophet Muhammad (peace and blessings of Allah be upon him) also said,
“If illicit sexual relations and interest openly appear in a town, they have opened themselves to the punishment of God.” (al-Tabarani and al-Hakim)
http://en.wikipedia.org/wiki/Riba
Riba (Arabic: ربا, [rɪbæː]) means one of the senses of "usury"[citation needed]. Riba is forbidden in Islamic economic jurisprudence fiqh and considered as a major sin. Simply, unjust gains in trade or business, generally through exploitation.
There are two types of riba discussed by Islamic jurists: an increase in capital without any services provided and risk taking, which is prohibited by the Qur'an, and that prohibited in the Sunnah which comprises commodity exchanges in unequal quantities.
Riba is considered amongst the Seven Heinous Sins (Al-Saba al-Mubiqat - السَبعَ الموبِقاتِ), namely: [1]
Believing in gods other than Allah.
Magic.
Murder.
Riba/usury.
Unlawfully taking orphans' money.
Fleeing the battlefield.
Accusing chaste, pious women.
The Qur'an states:[2]
“ يَا أَيُّهَا الَّذِينَ آمَنُواْ لاَ تَأْكُلُواْ الرِّبَا أَضْعَافًا مُّضَاعَفَةً وَاتَّقُواْ اللّهَ لَعَلَّكُمْ تُفْلِحُونَ ”
3:130 O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful.
“ وَأَحَلَّ اللّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا ”
2:275 Allah has permitted trade and has forbidden interest
Mohammad said in his farewell sermon: "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.".[3]
The Qur'an explicitly prohibits Riba, and since the Qur'an is an undisputed source of guidance for Muslims, all Muslim authorities unanimously agree on prohibition of Riba. There is no difference of opinion between any school of thought on the prohibition of Riba in Islamic Shariah.
The Qur'an mentions that the person who deals with Riba (ربا) will stand (on judgement day) as one who is beaten by Satan into insanity.[4] Here Qur'an makes it clear that "trade" and "riba" are not the same, and that God forbade "riba" and allowed "trade".[5] It further states that whoever accepts the guidance of God must immediately stop dealing in Riba, and those who return to Riba after God’s guidance has reached are dwellers in fire, because God destroys "Riba" and he will reward those who give to charity.
Mohammad cursed the one who deals with Riba. From Jabir: Mohammad cursed the receiver and the payer of riba, the one who records it and the two witnesses to the transaction and said: "They are all alike [in guilt]." [Sahih al-Muslim, Sahih Al-Bukhari, Tirmidhi, Ibn Majah, Bahiqi and Musnad Ahmad]
Islamic Shariah considers Riba as a tool of oppression and a means to unjustly take others' money[6] by exploiting their needs and circumstances. Hence it forbids a Riba based system altogether and promotes Charity as an alternative. Therefore, Mohammad said: "God has judged that there shall be no riba" [Last Sermon]
The crimes of dealing in Riba are so serious that God has declared war against those who deal in Riba.[7] Mohammad has cursed anyone who deals with Riba, the one who takes it, the one who pays it and the one who records it, as their sins are considered equal under the Quran.[8]
Riba is considered to be a greater sin, for Muslims, than that of eating pork or drinking alcohol. Mohammad declared the practice of Riba worse than adultery: worse than "to a man committing adultery with his own mother".[9]
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http://islamicbanksnetworking.com/CounselDetails.aspx?qid=1
Question Text:
Is there a majority accepted view amongst the jurists that modern day Interest is Riba? Or is this opinion just held by some scholars who happen to be well known? Also, does Riba only apply to what is known as Riba Al-Jahiliyya (pre-Islamic days of ignorance)? If no, on what basis can it be applied to modern day Interest?
This counsel answered by Dr. Monzer Kahf
Answer Text:
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
Dear brother, the answer to your first question is YES, THERE IS ALMOST UNANIMOUS AGREEMENT AMONG SHARI`AH SCHOLARS THAT WHAT IS INTEREST IN BAKS AND THE LIKE TODAY IS RIBA. There is also a resolution to this effect by the OIC (Islamic Fiqh Academy). This is not a minority's opinion.
Your second question on Riba Al-Jahiliyyah is confused. Riba Al-Jahiliyyah is increment in debt and this is the financial Riba. You add to it Riba Al-Fadl that happens in certain exchange contracts, that is Riba that is prohibited in Hadith. Both carry unanimous agreement on their prohibition among contemporary Shari'ah scholars.
Your third question becomes answered already as Riba Al-Jahiliyyah is the same interest; there is not a single bit of difference!
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http://www.muftitaqiusmani.com/index.php?option=com_content&view=article&id=29:riba-its-meaning-and-application&catid=10:economics&Itemid=17
RIBA, ITS MEANING AND APPLICATION
Q: Respectable Mufti Saheb: Kindly forgive me for intruding on your precious time and specially during the Holy Month of Ramadan when you will be too busy. Also please forgive me in addressing this letter in English as perhaps I may not be able to express myself more clearly in Urdu.
You have been making research on various Islamic laws and principles which remain not clear in minds of people like me who have no knowledge or study of matters. As a learned Scholar and having vast experience and knowledge of both Islamic Laws and practices of modern period, I hope to get a reply of my query from you. Matter is the same old one - What is the position of Bank interest or profit - by whatever name it is called according to Shariah. To express whatever I understand I give below my feelings:-
1. Authentic definition of 'Riba' which has been declared by Allah and Holy Prophet (S.A.W) in Qur'an as "Haram "?
2. As far as I can see the charges of profit or interest one expects to get in return of his providing money to a needy person to fulfill his requirement of daily needs in the absence of any source to fulfill these is 'Riba' but any such return on money used for business, to earn more money, should not come under the definition of 'Riba '.
3. Generally it is said that if rate of profit is fixed it comes under definition of 'Riba' and becomes 'Haram' but if it linked with profit earned, it is not 'Riba'. In my humble opinion this position is different. For example 'A' has got Rs. 100,000/= and he constructs a shop and gives it on fixed monthly rental for business. Or if he gives Rs. 100,000/= in cash for another business. What is the difference as far as 'A' is concerned. He is parting with his money, in one case he is giving it in kind and in another case in cash. Why return in both the cases be distinguished? Shop's rent is not dependent on profit or loss to the Shopkeeper. If rent paid for shop is 'rental for shop why fixed return on cash is not 'rental of money'?
This letter is just to clarify the position and correct my thinking and in no way to convert Haram into Halal. After all after 15 Centuries, our concept should be clear at least on basic principles of our faith and we should not find excuses for justification of our (mis) deeds.
I shall be grateful to have your considered opinion for my guidance at your earliest convenience.
(M.A. Siddiqui, Operations Director, Matiari Sugar Mills Limited)
A: I received your letter dated 27th January 1997 and apologize for the delay in replying it. It was due to my overwhelming involvements both here and abroad. I hope you will forgive me for this delay. The questions you have posed have been discussed thoroughly in a number of books written on the subject both in Urdu and English. If you wish to benefit from Urdu writings I would advise you to read the following books:
"The Questions of Interest: Mufti Shafei (R.A.)"
"Islam & Modern Business: Mufti Taqi Usmani”
You may also benefit from the book of Dr. Anwar Iqbal Qureshi, titled" Islam and the Theory of Interest ".
I think if you want to be very clear on this point you should at least study these books. However, I am giving here very brief answers to your questions:
1) The legal definition of any prohibited act is seldom given in the Holy Qur'an itself. For example, wine has been prohibited but no definition of wine has been given. Similarly, adultery, telling lies, back-biting and bribery have been prohibited by the Holy Qur'an but the definitions of these acts have not been provided. Reason for it is that all these concepts were too clear in the minds of the addressees to need any such definition. The same is the case of Riba. The concept of Riba was widely recognized among the addressees of the Holy Qur'an and it is that concept which is reflected in the legal definition provided for Riba either in the Hadith or in the later literature of Islamic jurisprudence. According to this definition any transaction of loan where the payment of an additional amount on the principal is made conditional to the advance of such loan is called Riba.
2) There is no distinction in Shariah between advancing a loan to a needy person or advancing it to a business concern. The principle is that the person who advances money to another person should clearly decide whether he wishes to assist him or he wants to share in his profits. In the former case, he should withdraw from any claim of additional amount (in the form of interest) while in the latter case he should share his loss also. It is not permitted by Shariah that he claims profit but does not agree to share his loss.
Another point which needs attention here is that the distinction between a needy and a rich person in commercial matters is totally irrelevant. If a Shopkeeper sells a commodity to a poor person with a margin of profit which is not excessive nobody can say that this transaction is Haram because of the poverty of the purchaser. One can say that it would be more advisable for the Shop Keeper to give him the commodity either as a charity or at cost without charging a profit but it cannot be said that the marginal profit charged here is not Halal. If charging an additional amount on a loan is not in itself Haram then the same analogy should have been applied here meaning thereby that if a creditor charges a marginal interest on the loan he has advanced to a poor person it should not be condemned or declared as Haram, but even the modernists who hold the commercial interest as Halal admit that this kind of transaction is Riba and prohibited by the Holy Our'an. It proves that the basis of the prohibition is not linked to the poverty of the debtor. Had it been so, charging profit from a poor person would also have been declared as Haram. Therefore, the only basis for distinction between a sale and a transaction of Riba is that the former relates to commodity while the latter relates to money.
3) There are several differences between interest and rent. The basic principle of Shariah is that profit is justified where a person has undertaken the risk of the thing given to another person. In a transaction of loan, after advancing money, the creditor does not take any risk of the money because if the money is lost in the hands of the debtor after he has taken delivery thereof the debtor is bound to repay the loan. As the creditor did not take any risk of it, therefore he cannot charge additional profit thereon. While, in the case of a property leased out to the Lessee, the Lessor has taken the risk of the property, If the property is destroyed, he will bear the loss, therefore, it is justified for him to-charge rent from the Lessee. Another difference is that the property is always subject to depreciation while money does not depreciate. Therefore, charging of rent in the first case is justifiable while it is not so in the later case.
I hope that these brief answers will at least explain the basic concepts. However, for greater details you should study the books I have referred to above.
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Now coming back to your opinion and understanding of the matter, you stated: “... I think interest is not haram in the banking system because it in turn is used in business by the bank whether be it in the form of a loan that is used in some business or directly in the form of asset purchase. The bank makes money on our money and from the spread keeps their profit and gives us our return...it wod be haram say if i give you $100 and ask for $200 back knowing fully well you have no means to invest or increase the money....if ur able to invest it then its my right to charge u for renting my capital..just like rentingy house... Its to stop exploitation of people who ae already disadvantaged..”
I completely understand your logic and partially you are correct and you have almost summed up Islam, rather accurately, in your last statement though it requires a little amending if you would so allow me. The correct statement would be:
“Islam stops the exploitation of people!” – nothing more nothing less. It is not just for the disadvantaged or poor, it looks out for everyone and the best of their interests. The logic you applied would have been correct, had it not been for the other law of Islam, which clearly states “it is forbidden to oppress or be oppressed!” In this case the bank would be the oppressor and you would be the oppressed.
Islam allows profit, it only bans interest. According to the Islamic banking system, you give your money to the bank and it takes the accumulated wealth of people and invests it. Thereafter taking a basic amount for its running expenses and maintenance and an amount as its pay or share for having invested your money etc (just like hiring a firm to invest your money for you) it is to give the rest of the profit back to all its clients equally dividing the share depending on their respective amount of investment/money. In the case that somehow the bank incurs some massive losses then too the loss would be divided equally amongst the investors/clients. Albeit it would rarely be the case, unless (Allah-Forbid) some calamity were to occur. Nonetheless, otherwise the profit rates would vary every month and would generally be far more than what the banks usually give. Fixed interest or a fixed percentage of interest or fixed mark up, is not allowed in Islam, because no one is allowed to oppress or exploit anyone, be it an individual or an institution.
Al-Quran (2:278-279)
O ye who believe! Fear Allah, and give up what remains of your demand for usury, if ye are indeed believers. If ye do it not, Take notice of war from Allah and His Messenger: But if ye turn back, ye shall have your capital sums: Deal not unjustly, and ye shall not be dealt with unjustly.
May Allah give us the taufiq to correct ourselves in the light of Islam and rid ourselves of usury and May we hitherto, for the sake of Allah and abiding by His Command, make an earnest effort to stop dealing in interest at any level. And May we place our money in the Islamic banking system (which is not 100% accurate as yet, but nonetheless they are making a sincere effort) in order to encourage and support it. Ameen
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I feel it is imperative that I mention here the following ayat, it’s translation and explanation, as a warning and a point to ponder about ourselves that may we never behave like these nations that preceded us, who transgressed and earned the wrath of Allah. May we never twist the Commands and Injunctions of Allah to suit our own vested interests, and the logic that merely appeals to our whims and fancies. And May we never be amongst those who fool none other but themselves by faking their eemaan and justifying the sins they indulge in or justifying the distorted interpretations of Allah’s Laws. Ameen!
Kindly go over the following – reading the translation and the tafseer, May Allah give us clarity. Ameen!
http://english-tafseer.com/Templates/Surah%202/Surah_2_8.html
وَلَقَدْ عَلِمْتُمُ الَّذِينَ اعْتَدَواْ مِنكُمْ فِي السَّبْتِ فَقُلْنَا لَهُمْ كُونُواْ قِرَدَةً خَاسِئِينَ
Walaqad AAalimtumu allatheena iAAtadaw minkum fee a(l)ssabti faqulna lahum koonoo qiradatan khasieen(a)
And you very well knew those of you, who transgressed in respect of Sabbath. So We-SWT said to them, “Be you apes, despised and rejected.”
(2:65)
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And those people who transgressed on Saturdays were also from amongst them. This incident took place during the period of Prophet Dawud-AS They lived along the coastline and fishing was their means of earning a livelihood.Allah-SWT had ordered them to abstain from fishing on Saturdays, as this day was sacred for them, and was dedicated for worship. Plenty of fish, more than usual, would muster up the shore on Saturdays and they could not resist the temptation to catch it. They invented an excuse for violating the ban. They dug out several ditches along the shore and connected them to the sea with ducts. When the ditches would fill up with fish, they would seal off the ducts, and would not lake any fish on that day. The next day they would catch the trapped fish. Some would lower a fishing rod in the water and the fish so hooked would be taken out the following day. Some of them who obeyedAllah-SWT strongly opposed this crime and tried their best to stop the violators. The dispute became so grave that the wrongdoers drove the noble men out of their settlement, and constructed a wall in between to keep them confined to their homes, out of sight.
One morning, the expelled heard no human voice from the evildoer’s settlement. All that could be heard was the cries of apes and the shrieks of pigs. When they checked it out they saw that all had transformed into apes and pigs. The young ones were turned into apes and the old ones changed into pigs. They recognised their relatives, and would toss around restlessly at their feet, but nothing could be done for them. After a few days all of them died. Accord¬ing to the ‘Hadith’ the nations subjected to such punishment had left no pedigree behind. The monkeys we see today are a separate species, which existed even before this incident, and have nothing to do with these condemned folk.
The Forms of Justification
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It has been clearly indicated that any justification, which negates or violates a law of Shari'ah, is not only wrong, but also a serious crime. However, the justifications of Islamic jurists, which aim at obeying the Shari'ah and not negat¬ing it do not fall in this category. Secondly, living with pious people is also a source of protection against a general Divine punishment. As long as the two Sabbath groups lived together, they were safe, but when the fundamentalists were separated, the so-called civilized were seized by Divine punishment. May Allah-SWT bless us with the company of nobles!
And We-SWT made this on example for their ... and a lesson for the Muttaqin.
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The Bani Israil caught the fish but, for this Allah-SWT turned them into apes and pigs, a sorry sight, a lesson and a source of repentance for their contemporaries and those to follow in time, whereas, for the pious it is a source of greater guidance. The Punishment of distortion was generally discontinued with the advent of the Holy Prophet-SAAW. It is one of his-SAAWBarakah. But it is not surprising to see individual cases of distortion. In our village, a woman habitually used abusive language, especially against Hadhrat Abu Bakr Siddique-RAU, and generally for the Holy Prophet's-SAAWwives and other Companions-RAU. Before she died, her face got terribly disfigured and her tongue hung out four inches just like a dog’s, which simply would not retract. She could neither keep quiet, nor articulate any words and her voice resembled a dog's grumble. She was taken to Lahore for medical aid, but nothing seemed to help and after four months of torture she died. There are many such incidents, to list them all would be impossible here, but such exceptional cases of physical distortion do take place
State of Spiritual Distortion
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In case of the Spirit, it cannot retain its human appearance without Islamic faith and practice. It would resemble the beast or animal whose traits are pre¬dominant in a person. The Spirits of only those Muslims who have enlightened hearts retain their human appearance. Even the Spirits of the practising Muslims take the appearance of permissible animals, whereas those of the non-believers and the wrongdoers take the shape of beasts. They live cloaked in human form, but it would not last forever. If Allah-SWTbestows the power of spiritual observation, it can be seen that towns and cities are infested with beasts. This is the reason why people look human but behave worse than beasts. May Allah-SWT forgive us!
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