RIBA, TYPICALLY TRANSLATED as ‘interest’ or ‘usury,’ is a forced “increase of value or amount” in “the medium of exchange” that places extra liability on a party when something is loaned or swapped.
Riba is an unscrupulous system and dangerous means that empowers lenders to take the assets or properties of individuals in need. Interest-based financial systems are inherently unfair and contradictory to the natural concern humans are to have for the well-being of others.
Islam’s teachings on how to make business transactions reasonably and fairly without exploitation or abuse, says Abdullah Saeed in Islamic Banking and Interest, managed to abolish usury from Arabia and then the surrounding lands of Asia, Africa, and Europe. Those parts of world flourished under Islamic government. Heeding these teachings today holds the promise that it will again advance humanity beyond the use of riba as the basic means of financial and material gain.
Prophet Muhammad said:
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Cursed is the one who takes interest, and the one who pays it, the one who records it, and the two who (accept to be the) witnesses for signing it. (Muslim)
Muslims must, therefore, take heed of this warning from their Prophet. When it comes to making the choice of whether or not to participate in financial transactions that are riba-based, the temporary satisfaction of acquiring real estate, worldly opportunities, transportation or any gain is far outweighed by the serious disadvantages, worldly and otherworldly of involving oneself in riba—no matter the objective. The dangers of riba may not be readily apparent to everyone or even seem harmless. But it is perilous to lose sight of the fact that God has declared engaging in riba a major sin—a kabira.
What is striking about riba is the severe punishment, compared to other prohibitions, God promises those who engage in it. It is awe-inspiring to read in the Quran how this Merciful Creator and Just Lord unequivocally states that those who engage should expect war—and nothing less than this—from Him, Glorified is He in Honor and Might.
The Quran says,
O you who believe! Remain conscious of Allah, and give up all outstanding gains from usury, if you are [truly] believers; for if you do it not, then know that you are at war with Allah and His Messenger. But if you repent, then you shall be entitled to [the return of] your principal. You will do no wrong, and neither will you be wronged. [Surat Al-Baqarah, 278-279]
Interest in Pre-Islamic Times
Man has known, used, and developed the concept of riba long before the advent of Islam. Hadith Master Ibn Hajar Al-‘Asqalani said:
Imam Malik narrated from Zaid ibn Aslam that in the period of Jahiliyya (pre-Islamic times) riba or interest was changed according to the following scheme: One person had a right in the property of another. It may have been a general right because of the amount loaned or the price of something purchased, or in any other form. A time was set when the claim would be settled. When the appointed time was due the creditor would ask the debtor if he wanted to settle the claim or pay riba with an extension to the time. If the claim was settled then there was no increase in the payment—i.e., no riba charged. Otherwise the debtor would increase the amount payable and the creditor would extend the period further. (Fath Al-Bari, 4:264)
An awareness of the injustice of riba and the struggle to control its ills is found early in recorded history. Laws characterizing fines in money as “wrong doing” are a part of the Code of Hammurabi—a well-preserved ancient law, enacted by the sixth Babylonian king, Hammurabi in 1760 BC in ancient Babylon. These laws were enforced by the Egyptian King Bocchoris of the Egyptian 24th Dynasty (c.730 – c. 715 B.C.), who forbade the taking of interest in excess of principal.
Judaism also prohibited interest. In the Old Testament it is written:
If thou lend money to any of My people that is poor thou shall not be to him as a usurer, neither shall thou lay upon him usury. (Exodus 22:25)
Take thou no usury from him or increase, but fear thy Lord that thy brother may live with thee. Thou must not give him thy money upon usury or lend him thy victuals for increase. (Leviticus 25:36-37)
As for Christianity, the Gospel according to Luke reads:
Give away to everyone who begs of you, and of him who takes away from your goods do not demand them back again. (Luke 6:30)
The First Council of Nicaea (325 A.D.) prohibited usury among the clergy, and later on, the Church obtained a ruling from Charlemagne (742-814 A.D.) that this prohibition would be extended to laymen.
At the Third Council of the Lateran (the 11th Ecumenical Council), which met in March 1179, Pope Alexander III presided, 302 bishops attended, and it was then decreed that persons who accepted interest on loans could receive neither the sacraments (divine grace) nor be given Christian burial. Pope Clement V made the belief in the right to usury heresy in 1311 and abolished all secular legislation which allowed it
Pope Sixtus V condemned the practice of charging interest as “detestable to God and man,” damned by the sacred canons, and contrary to Christian charity. (Conrad H Moehlman,(1934),The Christianization of Interest, Church History pp 6-7).
These religions still uphold the righteousness of prohibiting riba in theory, although not in practice. It was only during the 17th Century, and under the pressure of business exigencies, that it was agreed that economic activity should be liberated from what was seen as obsolete limitations. Riba was made legal by Judeo-Christian amendments in the divine law. (Louis Milliot (1971), Introduction a` l’‘etude du droit Musulman, pp. 647-648).
A Punishment Befitting the Crime
Yet, when we look at the world’s reality of those living in the grip of riba-based systems and consider the rollercoaster-nature of people’s financial situation and the havoc it inflicts on their emotional, spiritual and material welfare, we readily appreciate both the harshness of the punishment and the reason why it should be so. The warning of the Creator and Lord of the Worlds will always hold true.
But man’s heedlessness is truly amazing.
The question for many sincere Muslims is this: “Is the riba prohibited in the Quran the same as the interest on my home loan?”
Simply stated, the answer is an unequivocal yes.
This is confirmed by all qualified Muslim scholars and economic and financial specialists based on authentically correct evidence (daleel) from the Quran and the Sunnah of Prophet Muhammad. And though more complicated, the contemporary idea and system of interest is not drastically different from the one that existed in his era, nor the systems of unfair gain imposed by others throughout the history of mankind.
In fact, if there are any differences to be reckoned with, since the riba system today impinges on all walks of life, it is only the greater intensity of the harms of riba and the increased devastation and the further extent of contemporary riba schemes’ dire human and ecological consequences. As indicated by the perennial world financial crises, every corner of our societies and every individual in them is subject to these deleterious effects, whether a participant in the system or not.
Prophet Muhammad has forewarned us of a time that would come wherein virtually every living human being would be affected by riba. It seems to me, we have arrived.