Qur’an on Interest
Ahadith of Prophet Muhammad on Interest
Types of Riba at the Advent of Islam
What is Riba?
Interest and Trade
Interest and Zakat
Interest and Rent
is Interest Prohibited?
I- The Qur’an on Interest
At the time of
emergence of Islam, the institution of interest existed in the
Arabian society both in the transactions of money loans and barter
transactions of commodities. Since it was deeply rooted in the
economic life of the people, the injunctions of the Holy Qur’an on
its prohibitions were gradually revealed, like those regarding
prohibition of wine, so that the economic life of the people may
not be abruptly disrupted. Following are the verses of the Holy
Qur’an which deal with interest :
1. Those who
swallow usury cannot rise up save as he ariseth whom the devil
hath prostrated by (his) touch. That is because they say: Trade is
just like usury; whereas Allah permitteth trading and forbiddeth
usury. He unto whom an admonition from his Lord cometh, and (he)
refraineth (in obedience thereto), he shall keep (the profits of)
that which is past, and his affair (hence-forth) is with Allah. As
for him who returneth (to usury) – such are rightful owners of the
Fire. They will abide therein. Allah hath blighted usury and made
almsgiving fruitful. Allah loveth not the impious and guilty.
2. O ye who
believe! Observe your duty to Allah, and give up what remaineth
(due to you) from usury, if ye are (in truth) believers. And if ye
do not, then be warned of war (against you) from Allah and His
messenger. And if ye repent, then ye have your principal (without
interest). Wrong not, and ye shall not be wronged.
3. O ye who
believe! Devour not usury, doubling and quadrupling (the sum
lent). Observe your duty to Allah, that ye may be successful.
4. Because of the
wrong-doing of the Jews, We forbade them good things which were
(before) made lawful unto them and because of their much hindering
from Allah’s way: And of their taking usury when they were
forbidden it, and of their devouring people’s wealth by false
pretences. We have prepared for those of them who disbelieve a
5. That which ye
give in usury in order that it may increase on (other) people’s
property hath no increase with Allah; but that which ye give in
charity, seeking Allah’s countenance, hath increase manifold.
If put in the order
of revelation, the above verses gradually prohibited interest. The
first verse of the Holy Qur’an (30:39) which was revealed
regarding interest compares it with Zakat and states that interest
does not increase one’s wealth, in fact it decreases it, whereas
Zakat increases it manifold. In the next verse (3:130), the
believers are told not to devour compound usury doubling or
quadrupling the sum of loan. In the next two verses (4:160-161),
the Muslims are warned to obey the Qur’anic injunctions of
prohibition of interest lest they suffer the fate of the Jews who
infringed prohibition of interest and will meet a painful doom.
Then comes the famous para of the revealed book of Islam (verses
275,276,278 and 279 of chapter 2) which finally prohibited
interest. It distinguishes between trade (Bai) and interest (Riba).
It condemns usury and the usurer and praises the fruitfulness of
charity. It absolutely prohibits charging of usury and commands
the believers to give it up and get back only their principal
amounts of loans. Finally, it warns them to take notice of war
from Allah and Allah’s Messenger if they violate prohibition and
revert back to usury.
to the start of this chapter]
II- Ahadith of Prophet Muhammad (PBUH) on
In this section we
are reproducing some of the well-known Ahadith of the Prophet of
Islam which show that the Prophet has not only condemned ‘Riba’
(interest) in possibly the most serverest terms but has also
identified it in money as well as in commodity transactions in
very clear words. These Ahadith facilitate our understanding of
the Islamic concept of ‘Riba’ and bring into focus its various
aspects for our guidance. The relevant Ahadith are:
1. Abu Sayeed al-Khodri
reported that the Messenger of Allah said: Gold for gold, silver
for silver, wheat for wheat, barley for barley, date for date,
salt for salt and like for like in hand to hand (transaction).
Whoso gives more or takes more, then the taker and the giver are
equal in taking interest therein.
2. Abu Sayeed al-Khodri
reported that the Messenger of Allah said: Don’t sell gold for
gold unless like for like and don’t increase something of it upon
something, and don’t sell silver for silver unless like for like
and don’t increase something of it upon something, and don’t sell
the absent therefrom for the present. Agreed upon it. In a
narration: Sell not gold for gold, nor silver for silver unless
like for like.
3. Abu Sayeed
reported that Bilal came to the Holy Prophet with Barni dates. The
Prophet asked him: whence is this? He replied. There were old
dates with me and I sold out of them two sa’as for one. He said:
Alas! Veritable interest! Don’t do (it), but when you intend to
purchase, sell the dates for purchasing another kind, and then
reported that the Messenger of Allah said: Usury is in promise.
And in another narration he said: There is no usury in what is
hand to hand.
Omar reported that the Messenger of Allah said:
Gold for gold is interest unless in hand to hand (transaction);
silver for silver is interest unless in hand to hand
(transaction); wheat for wheat is interest unless in hand to hand
(transaction), barley for barley is interest unless in hand to
hand (transaction), and date for date is interest unless in hand
to hand (transaction).
Abu Sayeed and Abu Hurairah reported that the Holy
Prophet engaged a man as a labourer at Khaiber. He came to him
with best dates. So he enquired : Is every date of Khaiber like
this? ‘No, by Allah’ he said, ‘O Prophet ! verily we take one sa’a
of this for two sa’as, and two sa’as for three. He said: Don’t do
(it), sell the whole for dirhams, and purchase the best dates for
dirhams. He said: In weight also like that.
According to Abu Saeed Khudri, the Holy Prophet
said, “Sell not two ‘saa’ (measure) of dates for one ‘saa’ nor
exchange two dirhams for one dirham (for it is ‘Riba’)”.
It is related by Abu Bakr that the Holy Prophet
said, “Sell not gold for gold and silver for silver but in equal
quantity; but sell gold for silver or silver for gold as you
It is reported by Abu Saeed Khudri that the Holy
Prophet said, “Sell not gold for gold and silver for silver but in
equal quantity nor sell anything for the same thing in lesser
quantity, nor sell anything present for that which is absent.”
It is related by Abu Huraira that the Holy Prophet
said, “Sell one dinar in exchange for one dinar and one dirham in
exchange for one dirham and not for more”.
‘Uthman reported that the Holy Prophet said, “Sell
not one dinar for two dinars, nor one dirham for two dirhams”.
Abu Sayeed says that one day Bilal came to the Holy
Prophet with green variety of dates. The Holy Prophet enquired,
“Where from did you bring this?” Bilal replied, “We had dates of
inferior quality; we therefore gave two ‘saa’ of that quality in
exchange for one ‘saa’ of this (superior) quality with the object
of presenting to the noble Prophet”. On hearing this the Holy
Prophet exclaimed, “A Wa A Wa (expression of condemnation). This
is clear interest. Do not do so (again), rather when you wish to
acquire dates of superior quality, first sell the dates of
inferior variety for money, and then purchase dates of superior
Sa’ad-bin-Abi Waqqas reported : I heard that the
Holy Prophet was questioned about the purchase of dry dates for
fresh ones. He asked: Shall the fresh dates be diminished when
they become dry? ‘Yes’ said he. So he prohibited him from that.
Abu Daud, Nisai, Ibn Majah)
Samorah-b-Jundub reported that the Holy Prophet
prohibited from selling animal for animal by way of promise.
Jaber reported that the Holy Prophet prohibited
selling of ‘subrah’ date of unknown measurement for a fixed
measurement of dates.
Abu Hurairah reported that the Messenger of Allah
said: I came across a people in the night in which I was taken to
heaven. Their bellies are like houses wherein there are serpents
which can be seen from outside their bellies. I asked : O Gabriel
! who are they? He said: These are those who devoured usury.
Omar-b-al-Khattab reported : The last of what was
revealed was the verse of usury, and the Messenger of Allah
expired while he did not explain it to us. So give up usury and
- (Ibn Majah,
Abdullah-b-Hanjalah (one washed by angels) reported
that the Messenger of Allah said: A dirham of usury a man devours
with knowledge is greater than 36 fornications.
Abu Hurairah reported that the Messenger of Allah
said: Usury has got seventy divisions. The easiest division of
them is a man’s marrying his mother.
Ibn Mas’ud reported that the Messenger of Allah
said: Though usury increases, its effect indeed turns towards
Jaber reported that the Messenger of Allah cursed
the devourer of usury, its payer, its scribe, and its two
witnesses. And he said that they are equal (in sin).
It is reported that the Holy Prophet, on his last
Pilgrimage and in his last address, said, “Every form of interest
(‘Riba’) is cancelled; capital indeed is yours which you shall
have, wrong not, and you shall not be wronged. God has given His
injunctions that interest is totally forbidden. I first start with
(the amount of) interest (which people owe) to ‘Abbas and declare
it all cancelled”.
Abu Hurairah reported that the Holy Prophet said: A
time will certainly come over people when none will remain who
will not devour usury. If he does not devour it, its vapour will
-(Ahmad, Abu Daud,
Nisai, Ibn Majah)
to the start of this chapter]
III- Types of Riba at the Advent of Islam
On the basis of
practice prevailing at the time of emergence of Islam and keeping
in view the Ahadith of Prophet Muhammad (PBUH), the Muslim jurists
have classified ‘Riba’ into two types, namely: Riba-an-Nasia and
Riba-al-Fadl. The former is in cash loans whereas the latter is in
means interest charged on money loans. Some examples of
Riba-an-Nasia are as follows:
times of ignorance, if a debtor owed some loan to his creditor,
but had no means to repay it within the fixed time, he would
request the creditor to extend time. The creditor stipulated
certain increase or addition in his principal on the consideration
of which he would agree to extend the time of payment
PPPPPPdPüRüRüR84Sabia, ‘Riba’ was in this form : when a
person owed some money to another person and the period of debt
expired, the lender would demand his principal sum; if the debtor
expressed his inability to pay, the lender would then grant him an
extension on the condition that he would pay in excess of the
capital. The period was then extended with an increased debt. The
additional amount charged was called Riba.
The above mentioned
transactions are typical examples of Riba-an-Nasia. Riba-an-Nasia,
according to jurists, contains the following three elements:
Excess or surplus over and above the loan
Determination of this surplus in relation to
Bargain to be conditional on the payment of a
is the name of the interest which is charged in barter
transactions of commodities. It lies in the payment of an addition
by the debtor to the creditor in the exchange of commodities of
the same kind i.e. wheat for wheat or barley for barley or dates
for dates. etc.
Barter system for
exchange of commodities was very common in Arabia at the time of
emergence of Islam. People used to change goods for goods,
especially the poor used to borrow some food items from the rich
with a promise to repay more than the borrowed quantity after a
certain specified time. This was exploitation of the poor by the
rich and Islam eliminated it. As we have already seen that Prophet
Muhammad (PBUH) declared such transactions as usurious and,
Ahadith reproduced in the relevant section, to sell wheat for
wheat, dates for dates, barley for barley and like for like is
‘Riba’ except when sold from hand to hand and in equal quantity.
According to jurists, elements of Riba-al-Fadl are as follows:
The two things of exchange between the parties must
be homogeneous or of same kind, viz, gold for gold or corn for
They must be unequal in measurement and weight. If
gold is exchanged for gold of the same weight and quality in hand
to hand transactions, it is not interest. If unequal, the excess
must be interest.
They must not be in hand to hand transactions. If a
guinea is given for 1½ guinea to be paid at a future date, the
excess will be considered as interest.
Islam has abolished
both types of Riba mentioned above.
to the start of this chapter]
IV- What is Riba?
The Qur’an and
Hadith have used the term ‘Riba’ which has been translated by the
scholars as ‘usury’ or ‘interest’. We do not find definition of
this term either in the Qur’an or in Ahadith of the Prophet of
Islam. It would be, therefore, most appropriate if we reproduce
the views of some renowned commentators of the Qur’an and the
jurists of Islam who have explained the meaning and nature of ‘Riba’.
According to Muhammad Asad : “In its general,
linguistic sense, this term denotes an “addition” to or an
“increase” of a thing over and above its original size or amount:
in the terminology of the Qur’an, it signifies any unlawful
addition, by way of interest, to a sum of money or goods lent by
one person or body of persons to another. Considering the problem
in terms of the economic conditions prevailing at or before their
time, most of the early Muslim jurists identified this “unlawful
addition” with profits obtained through any kind of
interest-bearing loans irrespective of the rate of interest and
the economic motivation involved. With all this-as is evidenced by
the voluminous juridical literature on this subject – Islamic
scholars have not yet been able to reach an absolute agreement on
the definition of riba: a definition that is, which would cover
all conceivable legal situations and positively respond to all the
exigencies of a variable economic environment. In the words of Ibn
Kathir (in his commentary on 2 ; 275), “the subject of riba is one
of the most difficult subjects for many of the scholars (ahl-al-ilm)”.
It should be borne in mind that the passage condemning and
prohibiting riba in legal terms (2 : 275-281) was the last
revelation received by the Prophet, who died a few days later
hence, the Companions had no opportunity to ask him about the
shar'i’ implications of the relevant injunction – so much so that
even “Umar ibn al-Khattab is reliably reported to have said: “The
last [of the Qur’an] that was revealed was the passage [lit., “the
verse”] on riba; and, behold, the Apostle of God passed away
without [lit., “before”] having explained its meaning to us “ (Ibn
Hanbal, on the authority of sa’id ibn al-Musayyab) Nevertheless,
the severity with which the Qur’an condemns riba and those who
practice it furnishes – especially when viewed against the
background of mankind’s economic experiences during the
intervening centuries – a sufficiently clear indication of its
nature and its social as well as moral implications. Roughly
speaking, the opprobrium of riba (in the sense in which this term
is used in the Qur’an and in many saying of the Prophet) attaches
to profits obtained through interest- bearing loans involving an
exploitation of the economically weak by the strong and
resourceful: an exploitation characterized by the fact that the
lender, while retaining full ownership of the capital loaned and
having no legal concern with the purpose for which it is to be
used or with the manner of its use remains contractually assured
of gain irrespective of any losses which the borrower may suffer
in consequence of this transaction”.
According to Syed Abul Ala Maududi, “The Arabic word riba
literally means “increase in” or “addition to” anything.
Technically it was applied to that additional sum which the
creditor charged from the debtor at a fixed rate on the principal
he lent, that is, interest. At the time of the revelations of the
Quran, interest was charged in several ways. For instance, a
person sold something and fixed a time-limit for the payment of
its price, and if the buyer failed to pay it within the fixed
period, he was allowed more time but had to pay an additional sum.
Or a person lent a sum of money and asked the debtor to pay it
back together with an agreed additional sum of money within a
fixed period. Or a rate of interest was fixed for a specific
period and if the principal along with the interest was not paid
within that period, the rate of interest was enhanced for the
extended period, and so on.”
Afzal-ur-Rahman explains the meaning of ‘Riba’ in detail in the
light of the opinions of some classical jurists of Islam in the
The Holy Qur’an
has used the word ‘Riba’ for interest. The dictionary meaning of
‘Riba’ is excess or increase or surplus but, in economics, it
refers to that surplus income, which the lender receives from
the borrower, over and above the principal amount, as a reward
for waiting or parting with the liquid part of his capital for a
Islam, particularly refers to that excess which is commanded in
a particular way. Ibn Hajar ‘Askalani, talking of ‘Riba’ says,
that “essence of ‘Riba’ is excess whether it is in the commodity
(itself) or in money, as two dinars in exchange for one dinar.
According to Allama Mahmud al-Hassan Taunki,’Riba’ means excess
or increase; and when, in a contract of barter (exchange of
goods for goods), more of one thing is demanded in exchange for
exactly similar thing, it is called ‘Riba’.
words of Shah Wali Ullah of Delhi, element of ‘Riba’ exists in
the debt which is advanced on the condition that the borrower
will pay more or better than what he has received from the
lender. In the opinion of Abu Bakr Ibn al-Arabi, every excess is
‘Riba’ in return for which no reward is paid. Qatada says that
pre-Islamic ‘Riba’ was this that one person sold goods to
another person for a specified period, when the period expired
and the buyer had not made the payment, then the seller would
extend the time of payment along with increase in the purchasing
price (to be paid back)”.
to Mujahid, element of ‘Riba’ existed in all the dealings of
this nature in the pre-Islamic days: whenever a person
contracted a loan from someone, he would ask the creditor to
give him more time for payment, and that he would, in return,
pay him a fixed amount in excess of the principal loan.
findings of Abu Bakr Jassas also show that whenever people in
the pre-Islamic times contracted loans from one another, it was
agreed upon between the parties concerned that so much amount of
money (a definite sum) would be paid by the borrower in excess
of loan after a certain specified time.
opinion of Imam Razi this was the custom in the pre-Islamic
times that they advanced a sum of money to a person for a
specified time and received from him a fixed amount of money
every month as interest; when the time expired, the borrower was
asked to repay the debt, if he could not repay the debt, he was
given extension in the time for repayment and the interest was
of loan business were in vogue in Arabia in those times and were
called by the name ‘Riba’. It is this surplus or excess over
principal amount which is prohibited in Islam.
After going through
the verses of the Qur’an, Ahadith of the Prophet of Islam and
views of the Muslim doctors, we can now understand the meaning of
Islam’s concept of ‘Riba’.
The Verse No. 278
of chapter 2 of the Holy Qur’an commands to give up ‘Riba’ while
the next verse numbering 279 allows the lenders to take back their
principal amount of loan and nothing more. It means that ‘Riba’ is
the amount which is charged by the lender from his debtor in
addition to the capital lent by him. It is this amount which has
been declared unlawful by the Qur’an. Thus, according to the
Qur’an, every increase obtained in addition to the principal
amount of loan is ‘riba’ irrespective of the fact how much rate of
interest is charged and for what purpose the loan is advanced.
in his Ahadith, has explained and clarified that element of ‘Riba’
is found not only in cash loans or money transactions but also in
all forms of barter transactions in which one person receives an
excess over and above the commodity exchanged. From the address of
the Prophet delivered during his last pilgrimage, we can easily
derive the definition of riba. The Prophet is reported to have
said: “Every form of ‘riba’ is cancelled; principal indeed is
yours which ye shall have; wrong not and you shall not be wronged.
God has given His injunctions that interest is totally forbidden.
I first start with interest (which people owe) to Abbas and
declare it all cancelled.” Thus every form of riba has been
cancelled by the Prophet and the lenders are allowed to recover
their principal amount of loan only, which means that every
addition to principal amount lent is `riba’ without reference to
rate of interest charged and without reference to the purpose for
which loan is given.
scholars hold that Islam has prohibited usury only which is
charged at exorbitant rate of interest by the money lenders from
the poor on consumption loans contracted by the latter for their
personal needs. However, this view is erroneous in the opinion of
majority of the contemporary Muslim scholars who hold that ‘Riba’
covers all forms of usury and interest on loans irrespective of
the purpose for which loan in contracted, irrespective of the
parties to the loan and also irrespective of the rate of interest
and the period involved.
to the start of this chapter]
V- Interest and Trade
The Holy Quran
says: “Those who swallow usury cannot rise up save as he ariseth
whom the devil hath prostrated by (his) touch. That is because
they say: Trade is just like usury; whereas Allah permitteth
trading and forbiddeth usury…….”(2:275) Why does God permit trade
and forbid usury?
It is because trade
and usury are absolutely different. In trade one earns profit as a
result of initiative, enterprise, efficiency and hard work. But the
interest is not earned through hard work or any value creating
process. It is not the reward of labour but is in fact unearned
income. Moreover interest is fixed whereas profit fluctuates. In
case of trade there is risk of loss also, but in case of interest
the lender gets his fixed amount irrespective of the fact whether
the debtor earns any profit or sustains loss. God has forbidden
interest but has permitted trade.
to the start of this chapter]
VI- Interest and Zakat
The Holy Qur’an
states : “Allah hath blighted usury and made almsgiving fruitful.
Allah loveth not the impious and guilty”. (2:276). In another
verse, the Qur’an mentions the benefit of Zakat over usury in
these words: “That which ye give in usury in order that it may
increase on (other) people’s property hath no increase with Allah;
but that which ye give in charity, seeking Allah’s countenance,
hath increase manifold”. (30:39)
The above verses of
the Holy Qur’an have inspired many scholars of Islam to compare
interest with Zakat and underline the advantages of Zakat and
disadvantages of interest. Commenting upon these verses Mr. Akram
Khan writes: “The meaning of these verses have become abundantly
apparent in this age. The conventional economic theory recognizes
that interest discourages investment and causes unemployment thus
adding to human misery. The physical and human resources remain
idle for want of finance which does not become available except at
a certain rate of interest. Since all proposals of investment
cannot be as productive as to pay for the going rate of interest
the human and physical resources cannot be deployed productively.
This by itself leads to human misery. But in recent years the
monster of public debt has engulfed the entire world. As a result,
governments are facing huge fiscal deficits leading to inflation,
high taxation, retardation of trade and poverty of the mankind as
a whole. Another channel of human misery through interest is the
net negative transfer of resources from the poor countries to the
rich countries. It is a phenomenon which has been aptly called by
Willy Brandt as “blood transfusion from the sick to the healthy”.
Now large masses of the poor countries are toiling hard just to
pay back the past debt along with interest. The cycle of wealth
has been turned from the poor to the rich at a global scale. What
else could be the evidence for interest being a source of human
misery?” As compared to interest, charity leads to economic
expansion. It attracts God’s blessings. One evidence of the
charity being a blessing is the great boom which all Western
economies experienced in the post-war period. All these economies
introduced programs of social security. These programs provided
the necessary purchasing power to the poor people so that the
aggregate demand in the economy could be maintained at a desirable
discourages economic growth and ruins national prosperity and also
individual’s well-being by causing many distortions in national
economy such as inflation, unemployment, uneven distribution of
wealth and recession. Zakat, on the other hand, helps economic
growth and national prosperity in two ways. Firstly it discourages
hoarding of wealth and encourages its circulation. The hoarder of
wealth knows that if he keeps his wealth idle then the Zakat would
gradually consume it. So he would perforce bring his wealth into
circulation by spending or investing it. Thus the investment and
consumption both would have multiplier effect on the growth of
national income. Secondly, Zakat is collected from the rich who
are few and returned to the poor who are many, and this process
ultimately increases aggregate demand of the consumer goods in the
society as the poor people after having purchasing power in their
hands start demanding more such goods. The industrialists would
produce more in order to meet the increasing demand. Thus increase
in demand and supply would lead to industrialization, business
activity, expansion of employment and growth of national income.
to the start of this chapter]
VII- Interest and Rent
Interest, as we
have already discussed in detail, is charged by the creditor from
the debtor on money loan or on exchange of commodities in barter
transactions at pre-determined rate or prefixed amount with
reference to time. Rent, on the other hand, is charged on the
lease of land, building, plant and machinery, furniture and
fixtures, motor vehicles or on use of other capital goods.
Interest and rent are both different from each other in nature.
Mr. Mannan has pointed out the following difference between the
the result of initiative, enterprise and efficiency. It results
after a definite value creating process, because, the owner of the
property or asset remains involved in and concerned with its use
by the user throughout. But it is not so with interest, because
the lender becomes unconcerned with the use of the loan after his
loan is secured and interest thereon guaranteed.
follows that in case of rent productive effort is very necessary
in the process of value creating, because economic endeavour is
made by the owner of the capital by converting it into property or
asset. Thus the element of entrepreneur remains as much patent and
alive as in producing any goods and services but interest may even
retard the value-creating process. Since the lender remains
unconcerned with the use of the loan, the element of the
entrepreneur is altogether missing.
case of rent the owner of capital himself determines the pattern,
size and utility of the product. Therefore, it is restricted to
definite and purposeful use, whereas in the case of interest the
real owner does not seem to be interested in the economic use of
his capital; therefore, capital is rendered liable to abuse.
in a sense rent does not enter into price. “Corn is not high
because a rent is paid but rent is paid because corn is high.” But
interest does enter into price, retards the process of production
and poor consumers are hard hit.
since the element of loss is very much present in the case of
rent, the use of capital by the owner for earning rent does not
create any idle class in the society, whereas the element of loss
is missing altogether in the case of interest which can make the
rich richer and the poor poorer.
true that “capital is converted and has the potentiality to be
converted to any property or asset, but this potentiality of
capital is left to the discretion of the user, viz the means or
production are vested in the borrower; whereas in the other case
the capital remains vested in the owner and not the user. The fact
of the matter is that rent on a property or hire on an asset is
more synonymous to wages and salary or the margin of gross profit
determined by the manufacturer or trader on his good or
‘remuneration’ charged by any profession; and strictly unlike
interest on capital”.
As far as their
permissibility in Islam is concerned, we have already seen that
interest in every form has been prohibited by Islam whereas it is
not the case with rent. Rent on building and lease of capital
goods and other articles is justified by Muslim jurists like Syed
Maududi on the ground that the owner of these things maintains
them for the use of the tenant by spending his time, labour and
money. Moreover, these things suffer wear and tear and also
depreciation in value when under the use of the tenant. Thus,
charging of rent on such things is not only justified, according
to them, but is also permitted by Islam.
Regarding lease of
agricultural land on fixed cash or quantity of produce, the
opinions of scholars widely differ. While majority of the scholars
hold it lawful, some jurists such as Syed Maududi consider it
similar to interest and hence prohibited in Islam.
interest, according to professor Smith, if taken seriously, would
include the prohibition of land rent and of the whole landlord
system and it would mean precisely the socialization of
agriculture in the interests of those who labour on land. The
reason given by him is briefly as under: “of course, where tenants
are made to pay a fixed rent whether in case or in kind, it is
morally identical with interest. Because, here, the landlord is to
the same extent indifferent to the actual return from land as the
banker is to the actual return from industry and commerce.”
to the start of this chapter]
VIII- Why is Interest Prohibited?
As we have already
discussed, interest has not only been prohibited and declared
unlawful by Islam but has also been strongly condemned as a
criminal offence in this world and a major sin liable to
punishment in the Hereafter. According to al-Qur’an, charging of
interest amounts to declaration of war against God and God’s
Messenger; while according to the Sunnah it is a criminal and
sinful act worse than adultery. But no reason for its prohibition
has been provided either in the Qur’an or by the Sunnah of the
Prophet. This has left the scholars and jurists to find out
reasons and explain as to why interest has been prohibited.
Regarding reasons of prohibition of interest views differ widely.
However, they are unanimous on one single point at least that the
prohibition is due to moral, social and economic harms of
Let us briefly
underline some of the very harmful effects of interest and decide
for ourselves why it has been prohibited.
Riba or usury inculcates miserliness, selfishness,
callousness, indifference, inhumanity, greed and worship of
wealth. It destroys the spirit of sympathy, mutual help and
cooperation, and thus effects adversely the feelings of love,
brotherhood and unity among the community. We find around us that
the usurers are generally miser, selfish and hard-hearted
Shylocks, devoid of milk of human kindness, who exploit the misery
of the poor and charge their pound of flesh without feeling any
moral compunction for the sufferings of the borrowers.
Interest breeds idleness and promotes unearned
income. Instead of undertaking business ventures and using their
business acumen, skill, knowledge and enterpreneurship, people
having money start lending it on interest and thus living like
parasites. Such easily gained money is generally wasted on vices
like gambling, horse-racing, betting, drinking and adultery, and
in expenditure on luxurious living, marriage ceremonies and
Interest causes many economic evils as well. It
leads to hoarding of money adversely effecting its circulation
among larger sections of society. It also causes establishment of
monopolies, cartels and concentration of wealth in few hands. Thus
distribution of wealth in the community becomes uneven and gulf
between the rich and the poor widens. The community is divided
sharply into two camps-have
conflicting interests badly effect peace and harmony in the
society. Moreover, due to interest economic distortions like
recession, depression, inflation, unemployment, etc. are also
Capital investment is withheld from those
enterprises which cannot yield profit equal to the prevailing rate
of interest, even though such projects may be very vital for the
country and nation. The flow of all financial resources in the
country turns in the direction of those enterprises which carry
the prospect of a profit margin equal to or more than the current
rate of interest, even though such enterprises may have little or
no social value.
charged on international loans has aggravated debt-servicing
problem of the debtor countries. It has not only impeded the
economic development of the poor nations, but has also resulted
into transfer of resources from the poor to the rich nations.
Moreover, it is adversely effecting the relations between the rich
and the poor states and thus harming the cause of international
security and peace.
to the start of this chapter]