UNDERSTANDING "RIBA" (Usury) - Revised - September 2007

The Prohibition of RIBA (Usury) in the Qur'an is an admitted fact, but can this term Riba be applied equally with all certainties, upon the borrowers and the lenders, when the dealings are based upon lawful simple "Moderate Interests"?

Note: As we shall soon discover that Riba (Usury)happens to be one of the most difficult subjects for the last 1400 years, for Muslims as well as for the Muslim Scholars. Hence, I appeal to my readers to read the entire article, understand the various issues with an open mind and then make their own decisions...

THE VERSES OF THE QUR'AN:

Here are few verses on the subject of Riba (Usury):

Those who devour usury will not stand except as stands one whom the Evil One by his touch hath driven to madness. That is because they say: "Trade is like usury but Allah hath permitted trade and forbidden usury. Those who after receiving direction from their Lord desist shall be pardoned for the past; their case is for Allah (to judge); but those who repeat (the offence) are companions of the fire: they will abide therein (for ever).  Qur'an 2: 275.

O ye who believe! fear Allah and give up what remains of your demand for usury if ye are indeed believers.  2: 278

O ye who believe! devour not usury doubled and multiplied; but fear Allah; that ye may prosper.  3: 130

For the iniquity of the Jews We made unlawful for  them certain (foods) good and wholesome which had been lawful for them; in that they hindered many from Allah's way. That they took usury though they were forbidden; and that they devoured men's substance wrongfully; We have prepared for those among them who reject faith a grievous punishment.  Qur'an 4: 160 - 161.

Another verse that speak of the Earlier Books:

That which We have revealed to thee of the Book is the Truth, - confirming what was (revealed) before it: for Allah is assuredly - with respect to His servants - well acquainted and fully Observant.   Qur'an 35: 31.

Examining "Usury" in the Earlier Books:
 
In the Books of the Old Testament the prohibition for lending money on Usury is clearly mentioned in: Exodus 22: 25; Leviticus 25: 36-37; Deuteronomy 23: 19-20; Nehemiah 5: 7-10; Psalms 15: 5 and Proverbs 28: 8. The Hebrew word used for Usury is "neshek". Below is the literal translation of that word neshek, as found in the famous Strong's Concordance of the Bible: 

   Strong's Number: 5392-HSN
   Transliterated:  neshek
   Pronounced:      neh'-shek
           from 5391 HSN; interest on a debt: KJV--usury.

Here is the literal meaning of the Hebrew root word # 5391:

   Strong's Number: 5391-HSN
   Transliterated:  nashak
   Pronounced:      naw-shak'
           a primitive root; to strike with a sting (as a serpent); figuratively, to oppress with interest on a loan: KJV--bite, lend upon usury.

TIMING OF THE REVELATION:

       Following is the translation of an important verse on Riba, verse number 30: 39 translated by Muhammad Asad and his exhaustive scholarly research presented in the Commentary # 35. My thanks are due to the scholar and the publishers DAR AL-ANDALUS Gibraltar and Pola Hamida Asad for the publication The Message of THE QUR'AN by Muhammad Asad - 1980 (complete edition).  

Translation by Mohammad Asad: And [remember] whatever you may give out in usury so that it might increase through [other] people's possession will bring [you] no increase in the sight of God 35 - whereas all that you give out in charity, seeking God's countenance, [will be blessed by him;36] for it is they, they [who thus seek His countenance] that shall have their recompense multiplied. Qur'an 30: 39.

Below is the noteworthy Commentary # 35 to above verse. Please read the entire text of it carefully:

Mohammad Asad writes; This  is the earliest mention of the term and concept of riba in the chronology of Qur'anic revelation. In its general, linguistic sense, this term denotes an "addition" to or an "increase" of a thing over and above its original size or amount; in the terminology of the Qur'an, it signifies any unlawful addition, by way of interest, to a sum of money or goods lent by one person or body of persons to another. Considering the problem in terms of the economic conditions prevailing at or before their time, most of the early Muslim jurists identified this "unlawful addition" with profits obtained through any kind of interest-bearing loans irrespective of the rate of interest and the economic motivation involved. With all this - as is evidenced by the voluminous juridical literature on this subject - Islamic scholars have not yet been able to reach an absolute agreement on the definition of riba: a definition, that is, which would cover all conceivable legal situations and positively respond to all the exigencies of a variable economic environment. In the words of Ibn Kathir (in his commentary on 2: 275), "the subject of riba is one of the most difficult subjects for many of scholars (ahl al-'ilm)". It should be borne in mind that the passage condemning or prohibiting riba in legal terms (2: 275-281) was the last revelation received by the Prophet, who died a few days later [cf. note [268] on 2: 281; hence the Companions had no opportunity to ask him about the Shar'i implications of the relevant injection - so much so that even 'Umar ibn al-Khattab is reliably reported to have said: "The last [of Qur'an] that was revealed was the passage [lit., "the verse"] on riba; and, behold, the Apostle of God passed away without [lit., "before"] having explained its meaning to us" (Ibn Hambal, on the authority of Sa'id ibn al-Musayyab). Nevertheless, the severity with which the Qur'an condemns riba and those who practice it furnishes - especially when viewed against the background of mankind's economic experiences during the intervening centuries - a sufficiently clear indication of its nature and its social as well as moral implications. Roughly speaking, the opprobrium of riba (in the sense in which this term is used in the Qur'an and in many sayings of the Prophet) attaches to profit obtained through interest-bearing loans involving an exploitation of the economically weak by the strong and resourceful: an exploitation characterized by the fact that the lender, while retaining full ownership of the capital loaned and having no legal concern with the purpose for which it is to be used or with the manner of its use, remains contractually assured of gain irrespective of any losses which the borrower may suffer in consequence of this transaction. With this definition in mind, we realize that the question as to what kinds of financial transactions fall within the category of riba is, in the last resort, a moral one, closely connected with the socio-economic motivation underlying the mutual relationship of borrower and lender; and, stated in purely economic terms, it is a question as to how profits and risks may be equitably shared by both partners to as loan transaction. It is, of course, impossible to answer this double question in a rigid, once-for-all manner: our answers must necessarily vary in accordance with the changes to which man's social and technological development - and, thus, his economic environment - is subject. Hence, while the Qur'anic condemnation of the concept and practice of riba is unequivocal and final, every successive Muslim generation is faced with the challenge of giving new dimensions and a fresh economic meaning to this term which, for want of a better word, may be rendered as "usury". - In the present instance (which, as I have mentioned, is the earliest in the history of the Qur'an), no clear-cut prohibition is as yet laid down; but the prohibition appearing in 2:275'ff. is already foreshadowed by the reference to the immoral hope of increasing one's own substance "through [other] people's possessions', i.e., through the exploitation of others.

THE SHAR'I IMPLICATIONS:

     The above explanatory note indicates that the discord of Shar'i implications is from the early days of Islam and not of this century or because of the present day world economy and its dependency upon the global banking system, as one would like to hypothesize and place the entire blame upon. The recorded comments also inform us that although the subject of Riba is "one of the most difficult subjects", there is a "room for difference of opinion". Due to the absence of the specific directives on the subject from the Prophet (peace be upon him), to the Companions and the non existence of the conclusive concurrence over a long period, there have been varying interpretations and definitions provided by scholars for the Qur'anic term Riba. Taking a closer look of the above commentaries and then reading the books on the subject of Riba, one observes that 'Umar ibn al-Khattab (r.a.), who happened to be one of the closet Companions of the Prophet, is reliably reported to have said, as noted above: "and, behold, the Apostle of God passed away without having explained its {Riba's} meaning to us".  Whereas, on the other hand, there are scores of Hadiths in circulation on the subject of Riba, and all these narrations claim to have originated from the Prophet and surprisingly were unknown to Umar ibn al-Khattab (ra).

THE TRANSLATED TEXTS:

       There are varying interpretations of the Arabic word Riba but there appears to be unanimity in rendering its translation in English. Almost all the translators of the Qur'an, Muslim as well as the non-Muslim, have translated the Arabic word Riba as "Usury". One may tend to argue that it is the "modern parlance". One cannot overlook the fact that the Qur'an was translated into English for the first time in the 17th century. However, the translators while undertaking their works were well aware of the historical times and circumstances under which these Revelations came to the Prophet. In one of the most widely circulated translation of this century and published from Saudi Arabia, viz.,  The Noble Qur'an in the English Language the word Riba is interpreted, under the Glossary of the Arabic words, as "Usury". 
Below is the Dictionary meaning of the word Usury:   

u-su-ry:  n. , pl. -ries [ME usurie < ML usuria < L usura < usus]  the act or practice of lending money at a rate of interest that is excessive or exorbitant esp. at a rate of interest higher than is allowed by law

    The next important question is; Does this literal translation of the English term "Usury" and its interpretation as such has any support in form of a Declaration by a Mufti or a recorded comment by a Muslim Scholar? The answer is; Yes.

Here is a passage from 'The Concise Encyclopedia of Islam' by Harper & Row, Publishers, Inc., San Francisco, under heading Riba:

Today the prohibition is hardly observed in any Islamic country. Either it is simply disregarded -- the Egyptian Mufti Muhammad 'Abduh once declared "moderate interest" lawful -- or it is referred to by some such euphemism as "commission". 

Note: The said Declaration was made in the late nineteenth century, after the French Revolution, by Shaikh Muhammad  'Abduh, the Rector of Al-Azhar University, Cairo. upon his return to Egypt from Europe. 

"ZERO TOLERANCE"

    It is quite often mentioned, supported by the narrated reports coming from the Prophet, that the taking or devouring of any sum of money as "an increase" (interest) upon the capital, wealth or investment is Haram and a sin worse than the rape. Any excess on the capital is riba and therefore there can be no distinction between the reasonable and exorbitant rates of interests. Furthermore, it is reasoned that since the verses of the Qur'an prohibits "devouring", anyone who partakes in any transaction that involves Riba has also committed the sin of Riba. In other words, not only the "taking" but also the "giving" of "Interest" is prohibited. The borrowing of money on interest for buying a house, a car, etc.; taking of interest bearing loan for the education; paying of interest on a credit card or a department store shopping card, etc., are all Haram. It is also reasoned that anyone that abets, encourages or associates himself with such acts or transactions is also committing the sin of Riba. Hence, the administrating, guaranteeing or witnessing, as a third party, of any legal or banking document or contract that involves Riba (Usurious or Simple Interest), is prohibited. There are also recorded texts within these books on the subjects of Riba that prohibits the shop-keepers, businessmen, professionals etc., from receiving payments through the credit cards. The reasoning given is; If the credit card holder (could be a Muslim or a non Muslim) pays interest to the credit card company on the sum owing for that particular purchase or service received, then all the parties to the transaction share the responsibility. In some books, Muslims are discouraged from having a job at institutions like the Commercial Banks, Mortgage Companies and even the Stores wherein the duty is of handling the Credit Cards. One scholar even goes further and claims that the Law of Riba is applicable to "everyone" upon this earth, because the Qur'an has been revealed by Allah for the "entire mankind" and for all times. 

PROPHET HIMSELF PAID
"AN EXTRA AMOUNT"

    In the Sahih Al-Bukhari, under Hadith number 3:579 (in ALIM CD), in the printed version of Al-Bukhari Volume 3, Book 43 (The Book of Loans), Hadith Number is 2394. Here one can read the Arabic and English Text. Narrated by Jabir bin Abdullah it is recorded that the Prophet repaid his debt that he owed Jabir plus he gave him "an extra amount". The scholars who do advocate "zero tolerance" explain; A borrower is permitted to pay an "extra amount" to the principal sum borrowed, while repaying his debt, provided it is given of his own free will and is not stipulated as a condition of the borrowing. Such a payment is neither Interest nor Riba.
 

THE LAW OF NECESSITY:

      Under certain prescribed circumstances the prohibited things become permissible. Even a Haram food becomes Halal, if there is "dire necessity". That proves; in Islam there are exemptions to the Shari'a Laws depending upon the gravity of the necessity since Allah does not want His creation to bear a burden that it cannot. The questions often posed are: Does the paying of a basic normal interest on a Government Loan for Education by a deserving student who cannot continue his studies without such a borrowing or by an employee whose job requires a car and the wages offered include a car allowance but the car has to be purchased from a bank loan, constitute as the grave necessities of life? Can cases similar to these from our daily lives be also qualified as the grave "necessities" of life? The question is: Who can be the judge of such "exemptions"? And, where does he draw the line between the honest necessity and the deceitful circumventing? 

ISLAMIC BANKING & MUDARABAH:

   Is there anything as "zero percent" banking? When an "Islamic" co-operative bank or a housing society purchases any article, commodity, property or the title against cash payment and then sells it at a higher price on credit as a "co-investor" or "sleeping partner", it is called "Mudarabah" (to sell at a profit). 'The Concise Encyclopedia of Islam', published by Harper & Law, Publishers, Inc., describes it as: 

To stay within the letter of the religious law and soothe consciences, some banks offer the solution of mudarabah (sleeping partnership): this defines the placing of capital as a co-investment, which naturally brings a return to both parties.

   Some scholars call such arrangements as an alternative to Riba. Others, call it an attempt to circumvent the Riba. The proponents of the schemes may argue that since there is a trade agreement on the "new price", between the buyer and the seller, and the element of risk is involved as "co-investor",  such transactions are Halal. Even "if" that be the case, how many such "zero percent" banks are there that can meet the needs of the Muslim families around the world? What about the other needs for borrowings, such as; the educational loans, medical emergencies, natural calamities, etc.? There are "Islamic States" that collects the Zakat money from its Citizens as their Trustees and many of them also borrows large funds from the World Bank or International Monetary Funds, on "Interest". Are the citizens of those States collectively or individually responsible for such MEGA Deals on Long Terms involving large sums of Interest Payments? It is recorded that even the Ottoman Banks used to charge and pay interest...

Finally, I wish to repeat what was stated at the beginning of the article:

Note: Riba happens to be one of the most difficult subjects for the last 1400 years, for Muslims as well as for the Muslim Scholars. Hence, I would appeal to my readers to read the entire article, understand the various issues with an open mind and then make their own decisions.

Allah Knows The Best...