Riba (Usury and Interest) According to Quran and Sunnah

Defining the Problem

Riba (Usury) is of two major kinds:
.Riba An-Nasia - Interest on lent money.

Riba Al-Fadl - Taking a superior thing of the same kind of goods by giving more of the same kind of goods of inferior quality, eg.,dates of superior quality for dates of inferior quality in great amounts.

The definition of Interest, the literal meaning of interest or Al-Riba as it is used in the arabic language means to excess or increase. In the Islamic terminology interest means effortless profit or that profit which comes free from compensation or that extra earning obtained that is free of exchange. Riba has been described as a loan with the condition that the borrower will return to the lender more than and better than the quantity borrowed.

As muslims, our main concern when it comes to financial transactions is to avoid Riba in any of its forms, despite the fact that the basic foundation of the world economics and finance today is that of riba and dealing in usury.

The Prophet has foretold us of a time when the spread of riba would be so overwhelming that it would be extremely difficult for the muslim to avoid it. This situation calls for muslims to be extra cautious before deciding on what money payment of financial methods to use in any personal or business transaction.

To make sure that we are safe from Riba, we have to learn which transactions lead to it.


Interest in Pre-Islamic Times
HafizIbn hajr writes in his commentary of Sahih Bukhari (Fathul Bari), Vol. IV p.264:
Imam Malik reports on the authority of Zaid Ibn Aslam that in the period of ignorance (pre-Islamic times) interest was changed according to the following scheme. One person had a right to the property of another person. It may have been a general right because of the amount lent or the price of something purchased or in any other form. A time was set when the claim would be settled.When the appointed time arrived the creditor would ask the debtor if he wanted to settle the claim or pay interest with an extension of time. If the claim was settled then there was no increase in the payment. Otherwise the debtor would increase the amount payable and the creditor would extend the period further.

Textual Evidence
Hadith - Sahih Bukhari, Volume 3, No. 299; Narrated ‘Aun bin Abu Juhaifah, r.a.
My father bought a slave who practised the profession of cupping, (My father broke the servants instruments of cupping). I asked my father why he had done so. He replied: "The Prophet forbade the acceptance of the price of a dog or blood, and also forbade the profession of tatooing, or getting tatooed and receiving or giving Riba (Usury), and cursed the picture makers".

Hadith - Sahih Bukhari, 2.468, Narrated Samura bin Jundab, r.a.
He speaks of in a dream related to the Prophet (SAW) that there is a river of blood and a man was in it, and another man was standing at its bank with stones in front of him,facing the man standing in the river. Whenever the man in the river wanted to come out , the other one threw a stone in his mouth and caused him to retreat back into his original position.The Prophet was told that these people in this river of blood were people who dealt in Riba (usury).


The Noble Qur'an - Al-Baqarah 275-281
275. {Those who eat Ribâ (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitân (Satan) leading him to insanity. That is because they say: "Trading is only like Ribâ (usury)," whereas Allâh has permitted trading and forbidden Ribâ (usury). So whosoever receives an admonition from his Lord and stops eating Ribâ (usury) shall not be punished for the past; his case is for Allâh (to judge); but whoever returns [to Ribâ (usury)], such are the dwellers of the Fire - they will abide therein }

276. {Allâh will destroy Ribâ (usury) and will give increase for Sadaqât (deeds of charity, alms, etc.) And Allâh likes not the disbelievers, sinners}.

277. {Truly those who believe, and do deeds of righteousness, and perform As-Salât (Iqâmat-as-Salât), and give Zakât, they will have their reward with their Lord. On them shall be no fear, nor shall they grieve}.

278. {O you who believe! Be afraid of Allâh and give up what remains (due to you) from Ribâ (usury) (from now onward), if you are (really) believers}.

279. {And if you do not do it, then take a notice of war from Allâh and His Messenger but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums)}.