Riba - Background

Background

Riba was forbidden in the Medinan society of Muhammad, just like in the medieval Christian world. Historically, the consensus of Muslim jurists understood that any loan that involved an increase in repayments was forbidden, and as such, the Islamic state prohibited it. This prohibition was reconsidered with the advent of European influence during the Age of Enlightenment.

The word is a Quranic term. One of its applications is "interest" or "usury" on loaned money. The Quranic term is not limited to money but as well includes all loan transactions in which the debtor returns a sum of goods in excess or above the original loan, be it money, eatable or any other item or goods; anything in excess of original is considered riba if items exchanged are of the same kind (such as gold for gold). Riba is any increment on a loan or debt, either preconditioned or in rescheduling.

Riba is considered amongst the Seven heinous sins (Al-Saba al-Mubiqat - السَبعَ الموبِقاتِ), namely:

• 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:

3:130 O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful.

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.".

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. Here, Qur'an makes it clear that "trade" and "riba" are not the same and that God forbade "riba" and allowed "trade". 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 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 ."

Islamic shariah considers riba as a tool of oppression and a means to unjustly take the money of others 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"

The crimes of dealing in riba are so serious that God has declared war against those who deal in it. 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.

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".