Riba (Usury/ Interest) in Islam
Riba in Arabic translates to mean growth, increase, addition, excess, expansion, or surplus. Riba denotes an addition to or an increase of any commodity over and above its original size or amount. Riba is often translated to the English word usury. Usury in the English language refers to the illegal action or practice of lending money at unreasonably high rates of interest. Whereas usury is understood as the lending of money at a high rate of interest, the word Riba — as stated in Islam and the terminology of the Holy Quran — is the lending of money on interest regardless of the rate of interest, whether low or high. Amongst the most common types of Riba is the act of lending out money and loans with the condition that the principle is returned with an additional, pre-specified quantity of funds, known today as interest.
“O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful” (Quran 3:130)
The Holy Quran mentions the word Riba or usury in eight separate instances. The Quran condemns the taking of and profiting from Riba, considering this practice a foul and filthy act. A very forceful and condemning mode of language is used in the Holy Qur’an to describe those that accept interest. Riba counts in fact amongst the most destructive sins in the religion of Islam, ranking amongst the seven deadly sins mentioned by Prophet Muhammad peace be upon him; a severe list of sins that also includes murder.
Riba is considered an unnatural growth of wealth; an unjust transfer of wealth; an unethical and harmful act, and a means of devouring the wealth of others. Riba is considered economic slavery, which makes the poor poorer, and the rich richer; a practice that prevents the poor from overcoming their weakened financial conditions and prospering. The one lending the money is not providing a service, instead solely profiting from the lending of money. This practice denies the poor the opportunity to get out of their situation. The one with the capital will remain rich for life since they eliminate the possibility of suffering losses and expanding their wealth as they extract funds from one borrowing money.
The act of Riba prevents wealth from circulating in the economy. The taking of Riba or usury is a very selfish act; one which allows wealthy people to become wealthier. When money is loaned on interest, the loan is made without any involvement of labor or effort, and without the assumption of any risk which would increase over time. Interest was often used in history as a form of oppression, where the rich lend to the poor knowing that the borrower can’t pay back the loan. So ultimately, they were forced to sell themselves, their wives, and their property to return the funds.
Consuming Riba is the only crime that God the Almighty declared and waged war against those who consume it.
“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” (Quran 2:279)
The two main types of Riba are ‘Riba an Nasiyah’ and ‘Riba al Fadl.’
‘Riba an Nasiyah,’ is also known as compound interest and Riba Al-Quran, because the Holy Quran has specifically prohibited this form of Riba; one commonly practiced in pre-Islamic Arabia at the time. This type of Riba is a loan contract; a credit transaction with a pre-determined or pre-agreed increase or interest which a lender receives over and above the original principle. This Riba involves growth in the loan amount over time. An example of this is the parable in which Peter lends Adam a loan for $100, with the agreement he will get $120 back. This also includes modern lending methods such as card cards, home mortgages, automotive loans, a personal loan from a bank, student loans, and Bank certificate of deposits (CD).
Riba al Fadl, also known as Riba al-Hadith because it was classified as Riba in a narration of Prophet Muhammad peace be upon him, is an immediate sale or exchange of a commodity such as gold, silver, wheat, barley, dates, salt, oil, sugar, or cotton of unequal quantities of the same commodity. When an exchange is made of the same commodity but in a different amount of quantity, the extra amount would be considered Riba. Two main criteria qualify this sale or transaction as Riba: the delay in time, so the exchange of both parties must happen at the same time, and the difference in quality in an exchange of the same commodity. Both commodities must be equal in quantity. An example of this Riba will occur if Peter gives Adam 100 kg of dates for 50 kilograms of better-quality in a single lending session. Our Prophet peace be upon him narrated: ‘Gold for gold, silver for silver, wheat for wheat, barley for barley, a date for date, salt for salt, must be equal on both sides and hand to hand. Whoever pays more or demands more (on either side) indulges in Riba’.
God states that the one who consumes Riba will not stand up on the Day of Resurrection, except as they stand like those who have been touched and beaten by the devil leading him to insanity; which means that they won’t be able to think right on that Day, acting as if he or she were possessed.
“Those who consume interest cannot stand [on the Day of Resurrection] except as one stand who is being beaten by Satan into insanity…” (Quran 2:275)
Then the Verse says:
“…That is because they say, “Trade is [just] like interest.” But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] — those are the companions of the Fire; they will abide eternally therein” (Quran 2:275)
God rendered everything harmful to an individual or society haram (prohibited). There is a crucial difference between business or trade and usury. Riba is detrimental to the economy, whereas business is healthy. Riba is the opposite of business. The administration of business comprises labor, effort, and risk, whereas the act of Riba does not consist of effort, labor, or risk; as the person lending the money with interest is guaranteed to win, whether the person taking the loan prospers or loses money. The gain of the person receiving interest becomes the loss of the person paying it. These transactions do not qualify as business transactions; rather, they are merely rip-off scams. Business transactions ought to take place in a free and fair market, where there is a risk, profit, and loss — not where there is guaranteed profit, without risk and loss, which is unfair and unethical as it corrupts and destroys the free market.
Riba and usury is pure evil because it ‘lends’ itself most literally to a system of economic oppression and injustice. This system has a negative effect, not only individually but also on a societal level. It deprives people of their wealth, businesses, and homes, and causes a lot of pain and suffering; all of which contradicts the core Islamic teachings of social justice. The one that is involved in Riba continually lives in sin as his money his constantly sinning for him or her.
“O you who have believed, do not consume one another’s wealth unjustly but only [in lawful] business by mutual consent. And do not kill yourselves [or one another]. Indeed, Allah is to you ever Merciful” (Quran 4:29)
In an instance of Riba, if a family buys a home for $300k with a 5% interest rate on a 30-year mortgage, they will wind up paying more than $520k with interest. In addition, they have to pay the interest first before paying the principle.
The religion of Islam is not the only faith that bans Riba. The prohibition of Riba also has been revealed in the past Scriptures, including the Injeel (Gospel) and the Torah. So both Christians and Jews know the evils and dangers of the illegal act of taking interest and its punishment, as mentioned in their Books. It was only in 1832 that the Catholic Church started to permit usury. According to the Bible:
“If you lend money to one of my people among you who is needy, do not treat it like a business deal; charge no interest” (Exodus 22:25)
‘If any of your fellow Israelites become poor and are unable to support themselves among you, help them as you would a foreigner and stranger, so they can continue to live among you. Do not take interest or any profit from them, but fear your God, so that they may continue to live among you’ (Leviticus 25:35–36)
‘He lends at interest and takes a profit. Will such a man live? He will not! Because he has done all these detestable things, he is to be put to death; his blood will be on his own head’ (Ezekiel 18:13)
Unfortunately, today we live in a world whose economy has been immersed in a system of interest; where many countries lend out money to other countries who are desperate to accept it, enslaving them and their people. Even Muslim countries have come into a state of debt with interest to other countries, rendering them slaves to those countries.
Unfortunately, today we live in a world where Riba and usury is sometimes concealed and disguised with the utmost deception — where even certain bankers and experts would not recognize the evil and the oppression that is happening in these situations. Wealth is continuously extracted from the masses through deception and other forms of evils and fraud.
Unfortunately, today we live in a world where the modern Banking system manufactures money out of nothing; which is a form of Riba and can lead to the devouring of wealth through inflation. Throughout history, societies have always used as forms of payment coins made from precious metals, e.g., Gold and Silver, as a basis for trade and store of value; however, the practice of modern banking replaced these traditional asset-based systems with paper-based banknotes.
Prophet Muhammad peace be upon him stated: ‘There are seventy-two types of Riba, the least of which is like a man committing incest with his mother.’ He also stated that the punishment of those who devour usury in the hereafter would involve an act in which God the Almighty would enlarge their bellies like houses, filling them with snakes which can be seen from the outside.
To my dear brother and sister, note the evil and dangers of Riba and usury, and save yourself and your families from this sin. Note that there will be no blessings inherent in money taken from Riba, and God will even make that money vanish.
‘And whatever you give for interest to increase within the wealth of people will not increase with Allah. But what you give in zakah (charity), desiring the countenance of Allah — those are the multipliers’ (Quran 30:39)
If you consume Riba, your life will soon come to destruction. Think about your relationship with your Creator and how to please Him, and do not fall into the footsteps of satan by consuming Riba, thinking it will profit you or provide security for your family. Realize the truth that substance and protection come only from Allah, the Glorious. Buy that only which you can afford, realizing that Allah disallows and prohibits that which harms you or society.
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