Riba - Prohibition of Riba

Prohibition of Riba

The Qur'an deals with riba in 12 verses, the word appearing eight times in total, three times in 2:275, and once in 2:276, 2:278, 3:130, 4:161 and 30:39.

The Mekkan verse in Surah al-Rum was the first to be revealed on the topic: And whatever Riba you give so that it may increase in the wealth of the people, it does not increase with Allah (Quran 30:39)

The other Medinan verses: And because of their charging Riba while they were prohibited from it (Quran 4:161) Those who believe do not eat up Riba doubled and redoubled (Quran 3:130)

Culminating with the verses in Surah Baqarah: Those who benefit from interest shall be raised like those who have been driven to madness by the touch of the Devil; this is because they say: "Trade is like interest" while God has permitted trade and forbidden interest…God deprives interest of all blessings but blesses charity.... O believers, fear God, and give up the interest that remains outstanding if you are believers. If you do not do so, then be sure of being at war with God and His messenger. But, if you repent, you can have your principal.... (Quran 2:275-280)

Jurists do not consider the first two verses as clear prohibitive verses on the matter, whereas the latter two have been understood to prohibit Muslims from riba.

Tabari quotes a number of Tabi'een, who state the verse from Surah al-Rum refers to a gift whereas al-Jawzi quotes Hasan al-Basri as stating it refers to riba. Either way, there is insufficient indication from this verse that riba is prohibited, if it does indeed refer to riba.

The second verse refers to the Jews and their taking of riba, which leaves it unclear if such a prohibition applies to the Muslims.

The next verse is seen by many as prohibiting riba, including Ibn Hajar al-Asqalani. However it appears that recourse to some traditions relating to Amr ibn Aqyash are required for the prohibition as the verse itself could be interpreted as expressing a preference against interest.

The verses from Surah Baqarah are seen as categorically forbidding riba. The backdrop to these verses was the dispute between Banu Thaqif and Banu Amr ibn al-Mughirah over riba due on loans between them. As such, the jurists historically agreed on the prohibition of riba from these verses and termed it riba al-nasia, distinguishing it from the interest in exchanging like goods in different quantities, mentioned in a number of narrations, riba al-fadl.

As such, some jurists saw riba forbidden early in Mecca, some in the year 2 AH and some after the opening of Mecca, but the majority agreed on its prohibition.

Some of the modern jurists, like Abduh, Rashid Rida, Shaltut, Sir Syed Ahmed, Fazl al-Rahman, Tantawi and Qardawi have tried to legitimize bank interest. The earlier ones legitimized it for awqaf and state that investment schemes during the late period of the Ottoman rule. They were the first to introduce the notion that riba al-nasia was permitted. Those who followed them remained minority voices whilst the vast majority of modern jurists prohibit it also. The modernists proposed a number of legal arguments that have been heavily criticized for using false legal reasoning, mixing hikma and illah, selective historical readings of the commercial contracts at the time of Muhammad, and misapplication of principles (mafhum al-mukhalifah).

They also advanced non-legal rational arguments such as the necessity of modern finance, necessary for efficient allocation of resources, commercial interest not being the riba prohibited in Islam, no violation of justice or exploitation these days and interest rates are not very high, to name but a few. Most of these arguments have been criticized by modern writers, including Siddiqi, Zarqa, Khan & Mirakhor and Chapra, a good case in point being the published Supreme Court of Pakistan Judgement on the matter.