Book of Selling and Commercial

Transactions

Usury and Interest

الرِّبَا

Glossary

Usury and Interest

‘Ubâdah ibn as-Ṣâmit (RA) narrated that Allah’s Messenger (SA) said, “When gold is [paid for] by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, and salt by salt; [it should be] like for like and equal for equal. If these types differ, then sell as you wish if the exchange is made hand to hand (simultaneously).” (In the narration of Abu Sa‘eed al-Khudri, “The

عَنْ عُبَادَةَ بن الصَّامِتِ قَالَ: قَالَ رَسُوْلُ اللهِ : "الذَّهَبُ بِالذَّهَبِ، وَالْفِضَّةُ بِالْفِضَّةِ، وَالبُرُّ بِالْبُرِّ، وَالشَّعِيْرُ بِالشَّعِيْرِ، وَالتَّمْرُ بِالتَّمْرِ، وَالْمِلْحُ بِالْمِلْحِ، مِثْلاً بِمِثْلٍ، سَوَاءً بِسَوَاءٍ، فَإِذَا اخْتَلَفَتْ هَذِهِ الأَصْنَافُ، فَبِيْعُوْا كَيْفَ شِئْتُمْ يَدًا بِيَدٍ، فَمَنْ زَادَ أَوِ ازْدَادَ فَقَدْ أَرْبَى."

795. Ruling of ribâ (usury, interest): Ribâ is forbidden by consensus. Ribâ (as it pertains to the ribâ of loans) means any amount of interest paid on a loan, even if the rate is not exorbitant. It also refers to any worldly benefit accrued by the lender from the borrower, on account of the loan. Allah said:

{O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers. And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal – [thus] you do no wrong, nor are you wronged.} (al-Baqarah 2: 278-279)

يَا أَيُّهَا الَّذِينَ آمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا إِن كُنتُم مُّؤْمِنِينَ * فَإِن لَّمْ تَفْعَلُوا فَأْذَنُوا بِحَرْبٍ مِّنَ اللَّهِ وَرَسُولِهِ وَإِن تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ.

Jâbir said, “The Messenger of Allah (SA) cursed the one who consumes usury, the one who feeds him or her [i.e., pays back with interest], the scribe and the two witnesses [involved in the interest-bearing transaction], and he said: They are the same.” (M)

لَعَنَ رَسُولُ اللَّهِ آكِلَ الرِّبَا وَمُوكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ وَقَالَ: هُمْ فِي الْإِثْمِ سَوَاءٌ.

person who offers an increase, or asks for one, has in fact dealt in usury.”) ⁷⁹⁶

It is unlawful to sell any foodstuff, whether measured or weighed, for another of its kind, except like for like. ⁷⁹⁷

وَلاَ يَجُوْزُ بَيْعُ مَطْعُوْمٍ مَكِيْلٍ أَوْ مَوْزُوْنٍ بِجِنْسِهِ إِلاَّ مِثْلاً بِمِثْلٍ.

796. (M)
Definition and Types of Ribâ

Ribâ is given many definitions. Its original meaning in Arabic is ‘increase’. Technically, it is an increase in one of the two items in a transaction, or deferment of payment in one of two cases:

1) In sales: exchange of unequal measures of the items mentioned in the hadith for something of the same kind, such as one measure of a better type of dates for two measures of a cheaper type of dates. This is called ribâ al-faḍl (the ribâ of ‘increase’). If the items are of different kinds within the same group, (currencies being one group and foods being the other), they may be exchanged with a difference in measure, such as one measure of wheat for two measures of barley. However, they must be exchanged without deferment (hand to hand).

If one was deferred, that would be a type of ribâ called ribâ al-yadd (the ribâ of ‘the hand’; here it refers to deferring the handing over of something).
2) In loans: increasing the payment in exchange for deferment. This is called ribâ an-nasee’ah (deferment). This is defined as: ¦
“Every loan that results in benefit is ribâ.”

This statement was reported from the Prophet (SA) with controversial authenticity, but it is an established fiqh maxim (قاعدة فقهية).

797. The ‘Illah (Effective Cause) of the Prohibition of Exchange of Unequal Measures of Those Items

Some scholars indicated that the prohibition applies only to those six types mentioned in the hadith. The Dhâhiris are amongst those, because they do not employ qiyâs.
Most scholars maintained that any other item that shares the same ‘illah of the prohibition should be prohibited as well. They agreed that the ‘illah is different between gold and silver and the other four types (wheat, barley, dates, and salt); however, they disagreed over the ‘illah in all:

There are three variant reports from Aḥmad regarding the ‘illah of the prohibition:
1) The most popular: Regarding gold and silver: being of the same kind and measurable by weight. Regarding the four other types: being of the same kind and measurable by volume or weight. (+H)

2) The second report: Regarding gold and silver: being prices for other commodities. (+M, +S) Regarding the four other types: being foods of the same kind. (+S(

3) The third report: Regarding the four other types: being foods of the same kind measurable by volume or weight. (This is the position chosen in this book by Ibn Qudâmah).
Regarding gold and silver, the second report, though not the most popular amongst the earlier Ḥanbalis, is the choice of the majority of the contemporary Ḥanbalis as well as the vast majority of contemporary scholars in general.
¿ All kinds of currency take the ruling of gold and silver and thus are potentially usurious properties. The counter positions seem to miss, in favor of legal technicalities, the objectives of the Legislator in prohibiting usury.
The Wisdom behind the Prohibition of Ribâ

I. The wisdom behind the prohibition of ribâ al-fadl, including ribâ al-yadd:
1) Blocking the means to ribâ an-nasee’ah (deferment). If people get used to exchanging the same kind with a difference in immediate transactions, they may subsequently do the same in deferred transactions.

2) Limiting bartering as a method of transactions. This increases the standardization of values through the use of currency, which benefits the market and the economy. Instead of trading two measures of a cheaper brand of dates for one measure of a better brand, the Prophet (SA) instructed his Companions to sell the cheaper dates for money and use that money to buy the better dates.

It is also unlawful to sell any of those items ⁷⁹⁸ which are [usually] measured [by volume] for another of its like by weight, or to sell an item [usually]

وَلاَ يَجُوْزُ بَيْعُ مَكِيْلٍ مِنْ ذٰلِكَ بِجِنْسِهِ وَزْنًا، وَلاَ مَوْزُوْنٍ كَيْلاً.

The only time they may trade dates for dates is when the traded brands are of the same value, and they trade them in an equal-for-equal manner.
3) Protecting foodstuff from being monopolized by people who can afford to get larger quantities of the food that is used by poor folk, in exchange for the better kinds that they possess.
ii. As for ribâ an-nasee’ah, there are many reasons for its prohibition, including:
1) If one dirham owned by the rich got them two via interest, there would be less incentive for them to work.

2) This would also raise the value of capital in the face of labor. If there were no way for money to beget money except through real investment, not interest-bearing loans, capital would be dependent on labor for its growth.
3) Interest would result in greater gaps between the economic strata of the society.

4) Interest might trap the poor in a vicious cycle of debt, leading to bankruptcy.

5) If charging interest on loans were allowed, it would make people less likely to do the good deed of offering interest-free loans.
6) Modern calls to lower the interest to a minimum, or even to zero, whenever the economy slows down show that it is best for the economy to have no interest. People are more likely to partake in true business ventures that involve some reasonable risk taking rather than extending interest-bearing loans.

798. Meaning the items mentioned in the hadith as well as others that take their ruling via qiyâs.

Usury and Interest

( Page : no 70)

Book of Selling and Commercial

Transactions

Usury and Interest

الرِّبَا

Introduction

The Book of Purification

The Book of Prayer

The Book of Funerals

The Book of Fasting

The Book of Hajj and 'Umrah

Book of Zakat

The Book of Selling and Commercial Transactions

The Book of Bequests

The Book of Inheritance

The Book of Marriage

The Book of Divorce

The Book of Sadaq

The Book of Dhihar

The Book of Lian

The Book of Foods

The Book of Oaths

Book of Fatal and Non-Fatal Assault

The Book of Indemnities

The Book of Hudood

The Book of Jihad

The Book of the Judiciary

The Book of Testimonies

Appendix

Glossary

Usury and Interest