Science would have never progressed had they adopted the research methods of the social scientists. 100%, 200%, 500% and sometimes 1000% of the money lent). Without that, they assumed, the industrial development of the West would have been impaired. As for what the Riba of Islam is, the Qur’an had explained it in unequivocal terms. When a person’s belief is no more than declaration of faith in certain doctrines, then, his reasoning is reversed towards benefits of the earthly nature. Is there any difference between Riba and Interest? Interest is what you earn on your money by lending it: to a company through a bond , for example, or to a bank when you buy a CD. Zayd b. Aslam and Mujahid explained what the Riba of the Jahiliyy days used to be. With the linkage idea so unceremoniously dismissed by the financial market, we can now look into the long article by Fazlur Rahman (1919-1988): a scholar produced by the West, employed by the West, and designated ‘an Islamic scholar’ by the West. The answer is that there are two requirements to understand Qur’anic purposes: (i) know the Arabic language, (ii) know its idiomatic usage. So, profit obtained by renting property is allowed in Islam as opposed to earning profit by renting money, which is lending and earning interest. That is, if the banks promptly paid 7% interest at the end of the year, shouldn’t the depositors as promptly return 4% of the interest amount received?”. Therefore, it is necessary to explain the reasons which actuated Islam in forbidding… Riba was a vicious circle and once you are trapped in it, you could never come out. . But if you do not, then take notice of war from Allah and His Messenger. Another possible window for a man trying to squeeze himself out of a religious obligation was closed by the words, “However, if you repent, then you may have your principal.” Now, the money lenders of the pre-Islamic times possessed two kinds of wealth: (a) principal investment money, and (b) the interests that were earned on that principal. Hadith clarifies Riba as that extra amount that the lender charges on loans, no matter how little. …but the difference between riba and normal transactions are really small anyway. In these verses, He did not specify “doubled and re-doubled interest,” but rather, He used the words “any outstanding interest.” “Any” is, of course, “any” – nothing specific. So, I just wanted to ask you guys if there is any difference between the Riba that was in practice 1400 years ago and the modern form of interest? Either he was unaware, or deliberately ignored Ibn al-Qayyum’s statement in his commentary on Sunan Abi Da’ud, where he states that inability to identify the true intent of a sentence, leads a man to wrong meanings. Fazlur Rahman quotes two Tabi`iyyun – Zayd b. Aslam and Mujahid – by which non-Arabic speaking readers are led to a wrong meaning. ? Writes the Kuwaiti Encyclopedia: “Riba (of all kinds) is prohibited by the Qur’an, by the Sunnah, and by consensus of the Ummah. In Islam Riba (Interest) is strictly prohibited. It was interest of every kind: simple, compound or any other. The debtor has to spend it first and the reproduce it and return it, to the creditor along with the interest. Fear Allah, haply you may prosper.”. Among the major publications of IQRA Publications is the popular Islamic monthly in English, the Young Muslim Digest, arguably among the foremost in this type of publishing in India. A man has his savings in the bank amounting to 100,000. The seminar idea moved the hearts. He explains that the two were defining Riba. In a second example, Allah said (17: 31), “Do not kill your children fearing poverty,” which does not mean, “You can kill them if you do not fear poverty.” Or, Allah said speaking about the consecrated months (ash-harul hurum) in verse 36 of Surah Tawbah, “Do not wrong yourself therein,” which does not mean, “You can wrong yourself in other months, but not during the consecrated months.” Or, Allah said about the wealth of the orphans (4: 6), “Cconsume it not wastefully and hastily in fear that they will grow up,” which definitely does not give the license to consume the property if there is no fear that they will grow up and ask for accounts. fixed rate of interest irrespective of profit volume. Is morality absolute because God is absolutely powerful, at least within the scope of His universe? Islamic and conventional banking could be differentiated on the basis of objectives, risk sharing and interest based transaction (Ahmad et al., 2010). Get your answers by asking now. 2.4K views View 1 Upvoter His dissertation at Oxford was on Ibn Sina, taught Persian language, Islamic philosophy (the version rejected by Imam Ghazali), Near Eastern Studies, (concerning everything except invasion by the West and theft of its resources), and then chose to write (perhaps what converted him from ‘unknown’ to ‘well-known’) on economy. 100%, 200%, 500% and sometimes 1000% of the money lent). Again, Allah said (24: 33), “Do not force your slave-girls to adultery, if they wish chastity.” It does not mean that if the slave-girls do not care for chastity, they can be used as prostitutes; but rather, it means forcing them to prostitution is all the more hateful a crime if the girls wish to remain chaste. The words ‘doubled and redoubled’ do not mean you can consume simple interest but not compound interest. Classification of Riba. That is banks profit will not be fixed prior to business. (Freud’s well-researched works were rejected by his own students after his death). Naming his own uncle, he announced publicly, “I write off hereby the interests due to my uncle `Abbas.” He did not say, “I am writing off ‘the compound interest’ due to `Abbas but not ‘the simple interest that he had earned in the past.’” Similarly, when he wrote to the people of Najran that they will not be allowed to conduct any interest-bearing transactions, he did not specify that they could continue with simple interest banking. How do you think about the answers? The compeller will earn twofold sins: one, for using them for prostitution, and two, compelling those who love to be chaste. Boredom could be the reason why nobody asked: “Fair enough. Do not devour usury doubled and redoubled (ad`aafan mudaa`afa). Riba on the other hand includes both Interest and Usury along with a host of other transactions like we have discussed whist explaining Riba al … that's forbidden below Sharia, Islamic religious regulation, because of the fact that's understood to be exploitive. They are both haram, whether it is 0.1% or 1000%. But, possibly, he found the discipline vast, so chose a single topic: Riba and Interest – redefining the earlier, recommending the latter. `Umar in fact was so worried about the possibility of Riba creeping into ordinary commercial dealings that he used to announce, “Those who do not know the laws of commercial dealings may not enter our markets. The interest-based system on which commercial banks are based is a haraam, riba-based system that is based on lending and borrowing with riba. Similarly, when Allah said, “Do not devour usury doubled and redoubled,” He did not mean, “you could devour usury if it is not doubled and redoubled.” What is meant is that charging doubled and redoubled interest is a crime more revolting. The re is no difference between riba and interest in this. As an example of gimmicks, the author brings in a long passage of Ibn al-Qayyim to create the impression that Ibn al-Qayyim is also of the opinion that Riba is only that which is doubled and redoubled. feet of land. Usury is an exploitative high charge on the principal. What gave birth to the idea of a seminar on interest-bearing banking was a question sent to a Muslim news magazine. Click to share on Facebook (Opens in new window), Click to share on Twitter (Opens in new window), Click to email this to a friend (Opens in new window), An Introduction to the Arabic Language through Islamic Texts, An Important Hadith for Husband-Wife Relationship, Muslim Contribution to the Indian Independence Movement, On the Etiquettes of Giving and Receiving Gifts, The Virtue of Talking Less and Avoiding Vain Speech. The Qur’an said (2: 35), “Those who deal in usury (Riba) shall not rise (on Judgment Day) except as he rises whom the Devil has driven to madness by (his) touch.” (A point of note is that all the verses in the Qur’an concerning Riba were revealed after the verse containing the words “doubled and redoubled.”). This magazine is being brought out regularly by IQRA Publications since the past 36 years. There is not a word about this issue in this article. And, in particular, what happens when prices plunge to the bottom, such as of real estates, shares, gold, coffee, leather, spices, or the like, whose prices so often crash down because of local or foreign factors. It is one of the major sins. Therefore all the Holy Prophets in all the Religions have condemned Riba, that is Usury. The following is a numerical example that clarifies the differences between the approaches used in riba (conventional) and Islamic financing: A family wants to buy a house for $300,000. Thus, the Qur’an, as it always does, defeated the efforts of the deviants. “Seized in this state they say: ‘Buying and selling is but a kind of interest’, even though Allah has made buying and selling lawful, and interest unlawful.” Al Baqarah 2:275. Do not devour usury doubled and redoubled.” He cites another example from the Qur’an to show how the apparent meaning cannot be possibly taken. Anyone who declared it lawful may be allowed to repent. He looks for a pretext to treat a haram as halal. counting on the translation, riba might in user-friendly terms communicate with severe activity; despite the fact that to others, the full theory of activity is riba, and subsequently is unlawful. if there's no creator wouldn't that mean that the universe is either infinitely old or popped itself into existence? Interest vs No Interest. If the interest earned through ‘compound interest’ (or the doubled and redoubled kind) was alone prohibited by the Qur’an and not the simple type, then, why did Allah not say, “You may have your principal and the money earned as simple interest?” Why did He allow them keep back only the principal, and not the simple interest money also, if it was halal? There is a sea of difference between saying what the Riba of the Jahiliyyah was, and, in contrast, what the Riba of Islam is, or should be.As for what the Riba of Islam is, the Qur’an had explained it in unequivocal terms.It was interest of every kind: simple, compound or any other. feet instead of 50. But the Qur’an has enunciated that trade and interest are not the same. RIBA is an arabic word derived from the root word riba means increase and excess, while the english name of riba in the conventional term is called interest. If asked concerning linkage of interest rates with inflation, they could respond, with scrutinizing eyes, “Say that again.”. Religious practice forbids riba, even at low interest rates, as both illegal and unethical or usurious. He followed up the topic by saying in the next verse (278), “Believers! The banks gave loans – on interest – to entrepreneurs to help them set up industries with big capital lay out. ? Similarly, Allah said in the next verse, “Allah destroys usury (Riba) and cultivates charity.” He did not say He destroys usury of the “ad`aafan mud`aafa” kind alone. The second type is called Riba Al Fadl, Riba An Naqd or Riba Al Bai. Hence they're not the same. Riba is the arabic word for Interest. Indeed, there has been such consensus over the issue that of the dozens of deviated sects that appeared during the last 1400 years, who differed over many issues and parted ways with the mainstream Ummah, none ever differed over usury, to declare any kind of it lawful. That is, the economy is on a free fall, and so, in general, the prices are going down and down? If the participants were not bored enough to be awake they could have asked many more questions of the class about which an Arabic proverb says, “Laadarar, walaadirar,” meaning, in common parlance, “no harm done, no harm received.” In English they say, “back-to-back liability” although, of course, in connection with the subject in discussion, the financial market accepts neither the Arabic proverb nor the English equivalent. 'In Sharee`ah (Islamic Law), it is the measure of excess in one thing when two things are exchanged in some bargain; or in the case of a loan, an increased amount of the loan at the time of its payment. Still have questions? Is he not sucking the land-owner’s wealth? Regretfully, there are other portions in the article, which, at one end of the extreme can be called intellectual gimmicks, while, at the other end, they can be labelled as “kalimatu al-haqqi, urida bihi al-batil,” meaning, true words quoted with the intent to prove the untrue as true. Usury is the act of lending money at an interest rate that is considered unreasonably high or that is higher than the rate permitted by law. Riba is bad because it is prices or amounts which rip people off. It was interest of every kind: simple, compound or any other. The difference between riba and selling, however, implies a distinction between riba and ribh or profit. Difference between Trade and Interest In trade, one earns profit as a result of initiative, enterprise, efficiency, hard work, profit fluctuates, and there is risk of loss as well. Was it Riba to draw advantage of a brother Muslim through a commercial dealing? They do not explain what the prohibited Riba of Islam is. But he whose belief is connected with the love of his Lord, his reasoning takes the higher sublime turn towards His Lord. There's a hell lot of difference. May the creator guide us all. That is, there is a sea of difference between saying what the Riba of the Jahiliyyah was, and, in contrast, what the Riba of Islam is, or should be. Published in Bangalore (India), the caption hides a message: the content will differentiate between Riba, usury, and interest to show that the three are not the same. If he refused, he should be killed.”. 332, 1st Floor, Darus-Salam Building, Accordingly, the Prophet clarified the issue. It is feared that they would unknowingly indulge in Riba-transactions.”. He proceeds to cite examples from the Qur’an which can lead to wrong understanding if one does not understand the intents and purposes contained in a sentence. Say I have $100,000 cash and a house worth $100,000. In this article, I attempt to construct a clear definition for “Riba Al-Duyun”, which is the type of riba associated with loans. The burden on borrower in both of these examples is not the same. The prophet said even if u take 0.001% of gold then u are sinful because u are taking money from the poor.. Those people on mortgages today pay more on interest then on bills or taxes put togehter.. In fact, during economic crisis, inflation shoots up to 50%. The caption above is the title of a book that we have been asked by several people to review. Fear Allah, haply you may prosper.”. Maybe the participations were yawning too much. Allah said (24: 33), “As for those you own as slaves, if they seek a contract (for freedom), then contract with them, if you know any good in them.” This does not mean, says Ibn al-Qayyim, that the slaves may be freed only if some good is found in them, and not when not found; but rather, the intent is that it is a greater obligation to free them if you find goodness in them. In Islam, any interest, no matter the rate, is forbidden as it is one of the types of ribaa’. Where should I start reading in the bible? ... Murabaha or Musawama is permissible and Halal, any return on loans and debts is prohibited due to being Riba. The prophet said allah and his prophet have waged war (not literal) on those who do the following: So no the interest in olden days and today is the same. feet of land, instead of 50 sq. The man can now buy 100 sq. This particular verse did not say, “Those who deal in doubled, redoubled usury.” It said, “Those who deal in usury.”, The Qur’an also did not specify doubled and redoubled usury in another statement of the same verse. Should the banks not increase the rate of interest owned to their depositors to 15%? The bank lends money to the customer with interest, and the customer who deposits money in the bank lends this money to the bank in return for interest. For example, as Muhammad Asad (the Jew-turned-Muslim) explained to (the Muslims-turned-Jews), that `Umar wondered whether drawing high profits, say more than a small percentage, was also Riba. The reason that can be assumed is that first, it crusades for Riba, and second, it fights hard to show that the Riba that the Qur’an declared unlawful is the “doubled, redoubled” type – not simple interest. Should then the banks allow no outflow of interest money to the depositors, but instead, charge them a certain percentage for enjoying an increase in the worth of their savings?”. There was not a single scholar’s shadow present there. He said, “Whoever took extra, indulged in interest.” At the fall of Makkah, he announced that he was quashing every Riba of the past. It has nothing to do with the issue for which the debate was called, i.e., Riba vs. inflation. Hadith clarifies Riba as that extra amount that the lender charges on loans, no matter how little, writes SYED IQBAL ZAHEER. In sum, and said regretfully, the article of Fazlur Rahman – which is at the core of all other arguments contained in the book, Riba, Usury, Interest and Qur’anic Ethics – fails quite badly when examined from Islamic legal point of view. The two explained what Riba of the pre-Islamic times was, namely, compound interest. Shouldn’t interest rates be brought down too? That’s what this seminar on the declared objectives would have looked like when held in March 2013. Therefore, shun Riba, and what smacks of Riba.”, `Umar saw Riba in every advantageous dealing. 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