Riba and some misconceptions
Riba and some misconceptions
Today, when talking about Islamic finance, or Takaful or any other form of Islamic finance, it is very common to hear Muslims arguing their viewpoints, such as:
- There is no difference between profit and interest! The conventional banks charge you 10% interest and the Islamic bank charges you 10% profit- so what’s the difference? It is the same thing.
- Islamic finance costs us more than the conventional banks…
- There is no such thing as Islamic finance, we live in a world based on interest and therefore we must adopt interest products in order to progress in life…
Are we making these statements be based on some knowledge or experience, or perhaps just assumptions?
What is riba? Is it interest or is it usury? Is it any form of gain? Lexically, the word riba means “an increase.” But what does it mean in the Islamic law (Shariah) ?
Allah Most Wise says in the second chapter of the Noble Qur’an :
“Oh you who believe! Fear Allah and give up what remains of your demand for riba if you are indeed believers.” (Surah 2, Verse 278)
“If you do not, take notice of war from Allah and his Messenger (sallallahu alaihi wasallam) but if you repent you shall have your capital sum. Deal not unjustly and you shall not be dealt with unjustly.” (Surah 2,Verse 279)
The blessed Messenger (SAW) of Allah is reported by Sayidina Jabir (radiyallahu anhu) to have 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].” (Muslim)
In another narration, Sayidina Abu Hurayrah (radiyallahu anhu) reports : The Prophet, (SAW) said:
“Riba has seventy segments, the least serious being equivalent to a man committing adultery with his own mother.” (Ibn Majah).
The primary sources of Islamic law, the Qur’an and Sunnah, make it clear that riba is despised in Islam and clearly haraam. More serious than just a prohibition, there is a declaration of war from ALLAH and HIS MessengerSAW), a most severe warning in the Qur’an.
It has been made clear that we all must definitely give up whatever we have of riba and avoid it in all its forms . Firstly, we need to understand what riba actually is.
Initially even Christianity, and Judaism strongly condemned and prohibited Riba. Later, the scholars of Judaism and Christianiaty abandoned or modified the prohibition of riba. Modern capitalistic economics has little room for morality and no room for religion, hence riba has become widespread and has led mankind into the economic anarchy of the present era.
As mentioned earlier, riba literally means an increase. So any financial transaction where we gain more then we gave, must be carefully examined. We must ensure that there has been a process of trade, transfer of risk and participation in profit and loss. If there is no risk, this usually is a sign of the existence of riba.
Riba is not limited just to financial transactions as you will see from the following Hadeeth:
From ‘Abdallah ibn Abi Awfa (radiyallahu anhu): The Prophet(SAW) said:
“A najish [one who serves as an agent to bid up the price in an auction] is a cursed taker of riba.” (Fathul Bari’, Sharh Al Bukhari)
From Abu Umamah (radiyallahu anhu): The Prophet(SAW) said:
“Whoever makes a recommendation for his brother and accepts a gift offered by him has entered riba through one of its large gates.” (Bulugh al-Maram, Kitab al-Buyu, Bab al-riba, reported on the authority of Ahmad and Abu Dawud).
The above two Ahadeeth further demonstrate the wider meaning of riba, i.e, manipulating a price through deceit, lies, etc is a form of riba (that is cursed by the Messenger SAW!). We also learn that when we help anyone, either through a referral, a good word, etc. there should be no benefit taken from that person. How wonderful this is, that a man will honestly recommend someone for selfless gain .Imagine a world like this, there would be no corruption!
So what have we learnt so far about riba:
Gaining an increase in any transaction, not only financial, may be a form of riba. We must check the risk, contract, mechanisms and Shariah related to the transaction to ascertain whether it falls under riba or not.
Gaining a benefit from a person who owes you something besides the capital sum is a form of riba.
Gaining even a gift from a person whom you recommended or referred is a form of riba.
Finally, if any person clearly tells you they are charging interest (which is clearly an increase, irrespective of whether the increase is 1% or 50%), stay away from it!
So if a bank, business or person includes you in any transaction wherein interest is mentioned, immediately ensure they change it or make sure you are not a part of it, as the Hadeeth is clear: whether you give, take or write down the riba, you are part of it.
If we actively work to be free of the great sin of riba, we will find alternatives and solutions, inshALLAH.