As a student of Quran I Perceive that the term Riba is INTEREST on money lent to others.
Lending of money can broadly fall into two categories. One is for helping a needy one and the other is to augment resources and increase productivity. Lending, borrowing, leasing and hiring are inevitable necessities of business. To ensure justice and equity in business the Society may make rules for commercial loans but it cannot undermine the sanctity of Riba-free plan of loan introduced by Allah, for survival of the people deserving charity. People were under the illusion that Riba is an earning like profit in trading (2:275) and that they can avail themselves of it under all circumstances. Allah said No these are different, I permit trade and prohibit Riba (2:275) keep your past earnings and stop charging the interest from now onward (2:275) and also if the debtor is unable to pay, wait for a better time. It would be still better If you give up the loan by way of charity, (2:280) The debtor spoken of here is obviously a man of limited means who may not be able to pay off the loan and not an entrepreneur. Looking into the subject of spending money in the way of Allah we find that the word "Riba" is interwoven in 11 verses of Sura Baqarah (271 to 281). This definitely is not a coincidence that as many as 11 verses on one subject are put together. As also encapsulating the word riba in these verses is not without purpose. A careful study of these verses indicate that Allah the Almighty has allowed gain in trading but is not pleased with making money at the constraints of people deserving charity. This gives me a feeling that prohibition of interest is specific. It applies to the cases where help on charitable basis is called for and Allah want us to keep open an alternate door of charity by including in our economic system a package of interest-free loan for the those who need our help for their survival. Lending of money to such people shall be a matter of benevolence; It shall be free of interest without the question of inflation and devaluation. This according to Quran is obligatory and who ever refrain from it is the companion of Fire. Question is: Refrain from what? (1) lending on interest under all circumstances or (2) refusing to give loan without interest to needy ones. The second situation in my opinion is closing upon those the doors of help about whom Allah says: (a) Help them with loan and charge no interest (Riba) (b) Do not press them for return of loan. (c) Give up the amount of loan by way of charity if they are not able to pay Surly Allah is not talking about traders, industrialists, enterprisers and billionaires. Looking into the aforementioned verses of Quran I am of the firm opinion that Allah wants us to make a provision in our budget at all levels for giving charity or interest-free loan to needy ones without the consideration of gain, loss, depreciation, inflation or devaluation. Rest is business and a man is free to exchange money on mutually agreed terms. Allah knows better. Muhammad Latif Chandhery Senior citizen 18/2 Shalimar Town Lahore Contact. 0321 402 1162 ----- Original Message ----- From: [EMAIL PROTECTED] To: eGroup For Muslims Around The World Sent: Sunday, November 19, 2006 12:55 AM Subject: Boycott Israel [IslamCity] RibA(interest ,usury) Riba (interest, usury) is primarily an economic issue in view of the fact that all religions and mythologies have prohibited, restricted, discouraged, disliked, or degraded Riba in one way or the other since the inception of human interaction. All three major revealed (Ilhami) religions i.e., Islam, Christianity, and Judaism have strongly condemned and prohibited Riba in its original versions. Later, the clerics of Jews and Christian Church abandoned the prohibition of Riba (interest, usury) that led the mankind into the economic anarchy of the present era. Islam - the most modern revealed religion is still upholding the righteous prohibition of Riba although not in practice in any of the Islamic country at governmental level but there is immense enthusiasm for Riba-Free financial system in Muslims. The western economists have discussed the issue at large in the twentieth century and many of them are also of the view that the religious prohibition should be brought back into the conscious of the people. As long as Riba prohibition was enforced with religious zeal, people were prosperous and the wealth distribution was not abnormal as it is today, and obviously there was not much debate on the subject but since the Riba was made legal by Judo-Christian amendments in the divine law - its destructive fallouts earthed at large. The debate started on Riba for its literal interpretation to economic implications. It is very unfortunate to observe that, in this debate, some misconception in Muslims led to a widely circulated explanation of Riba that divide Riba in to two types, one from Quran (riba-al-nasiah) and the other from Sunnah (riba-al-fadl or riba-al-buyu) and interpreted these as "riba in debt" and "riba in trade" respectively, this division which actually is not the case; is a direct conflict with basic faith of Islam (please see "Present Islamic understanding and misconception about Riba" for details). No clear concept and universal definition of Riba exists, different views and explanations have created much confusion in Muslims in the understanding of Riba. Unless, it is not found that Why Riba was declared Haram (prohibited), the definition of Riba is not possible. Why Riba was prohibited (declared Haram) in the divine law? It is worth to present an example to start with the subject, a factual example from existing interest based banking methodology that is valid and current, which can be well understood by a common person. One should consider the following facts before going through the example. The facts are: Only Banks create money. The created money is then supplied in to the economy only in the form of loan at some specified interest. There are no other institutions that create money other than banks. The example - an astonishing fact As all the banks are creating money and supplying in to the economy on interest and without any doubt all of them are practicing the same technique, so let us consider there is only one bank in our example that creates some money and supply in to the people's economy. Suppose Bank XYZ creates Dirhams 100,000 and supplies it at an interest rate of 10% per annum to several entrepreneurs and governmental units active in the economy, remember there is no money available in the economy from any other source. The bank has taken substantial collateral or guarantee as security of its money from each borrower. See in the following diagram - the borrowers intake loan and repayment liabilities at the end of the first year: It is very simple and clear that at the end of the first year, a combined sum of Dirhams 110,000 is due on all borrowers to repay to the loaning bank. But the money available in the economy is only Dirhams 100,000 as the bank is only supplier of money, so from where the rest 10,000 would come that is the difference in the borrowers intake and total repayment amount...... from NOWHERE. Yes, that is right from nowhere because that money does not exist in the economy. Look at the scene, the bank is the only supplier of money, it creates and supplies 100,000 in the economy and that is the total money available in the economy, but as per loan agreements - these borrowers collectively have to pay back 110,000. How is that possible? There is no way. Don't you believe, it is 100% like this - no less. This is cheating and criminal foul play. So what will happen, at least one or more of these borrowers would default on their loan(s) and would loose their personal assets or belonging that they had put as security to the bank for the repayment. The money creator has designed a mechanism that would force few of the borrowers each year to default so that bank could forfeit the security assets and gain wealth by foul play. This is an eye opening example for those who previously had no idea about the mechanism of banks as how they operate and cause artificial shortage (scarcity) of the money in the societies. This is happening every where in this world from USA to the smallest country on this beautiful planet. This artificial scarcity of money is the root cause of people's problems from hard struggle for surviving to the loss of happiness from their lives. In a Riba (interest) based system, people are not aware of this foul play - borrowers think that they will manage to repay the principal plus Riba (interest) as they think it would be coming from some where else, but the fact is - every borrower would be in battle with others where some borrowers have to lose in order for others to win, some would fail to pay their loans in order for others to get the sum they need to pay off the Riba (Interest). When seen in totality, the supply side is always in deficit and the liability is always in excess due to Riba (interest), the total combined supply cannot discharge the liability. After going through the above real example, I believe, now we are close to find out why Riba was declared Haram in Quran and Sunnah. Let us begin with the economic reasoning of WHY: The availability of each produce is limited, the liability cannot exceed the availability limit. In any transaction, if a liability of produce "in excess" of "the produce available" is created, that extra liability would be artificial because excess quantity of produce does not exist. This universal economic code applies to each and every type of produce; to further get in to the explanation of the rule, let us now identify what represents "the produce", "the transaction", and "extra liability": The Produce In its general expression "the produce" is any thing available to human beings for their use or consumption, but here specifically those produce that can be involved in a transaction, it is best to take historical standards of transactions which are based on produce like gold, silver, grains, currency etc. because throughout history all transactions are carried out in publicly acceptable produce only. These produce have served the societies as "medium of exchange", so it is more appropriate logically and historically to consider the produce as "the medium of exchange" which is again a general expression and can accommodate any other commodity/produce that may be used in a transaction. The Transaction In this universal economic principle, the transaction is based on a single produce and naturally it can only be a transaction of loan or exchange and nothing else. Although donations/grants also involve only one produce but that is not a transaction because a transaction means exchange of good(s) and/or service(s) either on spot or in any specified time frame involving one or more types of produce. Extra Liability Riba (interest, usury) is that extra liability created in excess of the produce available and that does not exist. Every liability is a demand in practice, the basic rule of economics known to every one is that to maintain economic equilibrium (stability) in the society, the supply side should be equal to the demand, if the demand is more than the supply - a shortage will occur. Creating an extra liability means creating an extra demand without increasing equal supply, this will start a never ending mechanism of perpetually increasing the shortage of that produce in the society. Conclusion: Riba was prohibited just to prevent the creation of "extra liability/demand" because that is fake and "does not exist" physically, this artificial "extra liability/demand" creates scarcity of the produce in the society and unjustly accumulation of the produce in few hands. Riba (interest, usury) is a mechanism and dangerous weapon that has a power to get hold of assets/properties of individuals, enterprises, and nations deceitfully. This is unfair and against the nature, so ALLAH banned Riba (interest, usury) very strictly to stop this criminal action. Nature is the Limit in Islam; any thing not natural is prohibited,! stopped, and declared illegal. The above economic reasons are the only base for the prohibition of Riba, ALLAH has allowed everything that is natural but given its strict judgment to stop any behavior, agreement, and practice that is not natural.
