Riba as I understand
-
As a student of Quran I strongly feel that the term Riba is INTEREST on money lent to others.
Lending of money can broadly fall into two categories. One is for philanthropic purposes and the other is for commercial use.
Fixed or loose percentage of interest is not mentioned in Quran.
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 a Society cannot undermine the sanctity of Riba-free plan introduced by Allah, for survival of the people deserving charity.
People were under the illusion that Riba is like profit in trading (2275) Allah said; these are different, I permit trade and prohibit Riba (2275) keep your past earnings and stop charging the interest from now onward (2275) 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, (2280) The debtor spoken of here is obviously a man of limited means who may not be able to pay off the loan.
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 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 people deserving charity.
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) Giving loan on interest or (2) refusing to give loan without interest. 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 paySurly Allah is not talking about traders, industrialists, jageerdars and the rich ones.
Looking into the aforementioned verses of Quran I am of the firm opinion that Allah want 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 know better.
Muhammad Latif Chaudhery
Senior citizen
18/2 Shalamar Town Lahore
Contact. 0321 402 1162 -
I would be obliged if you could please substantiate your understanding with the words of Quran.
Muhammad Latif Chaudhery -
peace Sarah, all,
I will try and simplify my view with an example
-
A loan that I feel is ok You borrow ?1000 and are asked to pay back ?1100 in one year's time for example. The repayment total (i.e. ?1100) is a fixed sum and does not change. No interest is constantly being added to the repayment total. If the person wishing to take out this loan agrees to the repayment total, then that's fine, they can go ahead with it.
-
A loan that I feel is wrong You borrow ?1000 and are asked to repay the loan plus a certain % on top, e.g. 10% per annum. This means that IF you paid it back in one year, you would pay back ?1100. It doesn't sound much different so far but the key is in this case the repayment total can grow, because IF you did not pay it back within one year, the repayment total would rise, it would grow and this is the definition of "riba" something which grows/rises, i.e. it is NOT fixed.
Most loans from banks do not work like (1), they are like (2).
Of course, you may ask what if person taking loan (1) does not manage to repay it back in one year, what happens then? Well, it depends on the initial agreement but I see it like this the person or bank giving the loan would have to get permission from the loan-taker to increase the repayment amount. If the loan-taker refuses to allow the repayment total to be raised then it cannot be raised. IF the loan-taker signed something that would allow the loan-giver to reclaim the money back in a non-payment situation via assets/car/property/goods etc then this step can also be taken, via a court of some kind. IF the loan-giver wishes to write off this non-payment as charity then according to The Quran they can do and this is acceptable by God.
I think there are deeper reasons why The Quran uses this method, one may be that it would discourage loans of this type (which I see as a more non-productive economy) and encourage more productive investment, e.g. investing directly in business, trade etc.
Hope that makes sense.
-
-
Salaam Wakas
Banks usually give you options (taking your example)
Suppose you want to borrow ?1000
After one year you pay ?1100
2 years you pay ?1150
3 years you pay ?1250....
You're always told how much you'll pay by the end of the period you choose. So what do you make of this? Is it ype 1 or type 2?
-
Peace sis "Samia" and all,
The loan to be paid on any borrowed currency currency, which is what this is wht you indicated above, can by no means be considered "Riba". Theres a loan to be paid for anything you rent be it vehicles, buildings, currecnies etc. The mere fact tht there are different terms used for renting different things is irrelevant since last but not least its the same. A bank charges you what can be called a rent for giving outa certain currency, which ofcourse depends on how much you borrow so its fixed in %age of how much you borrow. But even here if you borrow much or for a longer time you may be given a concession and pay on a certain currncy less %age per yr than ud otherwise do. Now what is compound interest. Its actually a payment by the borrower due to a delay in return. In case of banks say interest rate is set at 5% for the USD per annum. Youve borrowed some of tht currency,say USD 10,000 at tth rate. Now the yr passes but you dont pay the "rent" which would amount to USD 500 in this case. Thus you now owe the bank USD 10,000 plus USD 500 and the next time you need to pay "rent" on that too otherwise the bank would be losing coz time is money. Now some foolish sectarians claim that one must not fix the amount paybale for a loan in money but must take into consideration profit and loss of the person, so called joint venture. Well tht can be practical if the bank had maybe 100 customers only. With a million ppl everyone has to take responsibility for themselves. The bank cant run after 1000s of ppl jsut because they cannot pay their rent. If theres a real prob THEY need to prove tht to the bank not the other way around coz they took the loan. Also these ppl lack a proper definition of money. Whts it? Merely currency, gold and silver? Local currency? Well here we have the real problem. Infact money can be anything of exchange value. A car,house , platinum gems etc. So does tht now mean tht before i rent somebody an appartment in my building would i ahve to first take his possible profit loss into account or is it ok to charge a fixed rent? And ofcourse even sunnis will agree tht it is. With currcneis its exactly the same thing.
So what is "Riba" then? Riba IMO is when people exploit the market at certain times when ppls needs re high and they charge extrardinary high prices and this can apply to anything, not just currencies, gold and silver. GOD Bless! -
Peace,
Ok I think that makes sense.. now Samia got me thinking confused
Samia I think it depends on the agreement? though if it's growing then it's probably riba ??? unless you agree before hand that by so and so date you need to repay 1100 in one year, and if you're not able to repay it by then an additional fee of 50$ every year until you pay it? Ok maybe that's sounding like riba...because it's rising I dunno.
Sometimes some banks charge you a % for making early repayments, I think that would be a form of riba..
-
Peace sis "Sarah",
Peace,
Ok I think that makes sense.. now Samia got me thinking confused
Samia I think it depends on the agreement? though if it's growing then it's probably riba ??? unless you agree before hand that by so and so date you need to repay 1100 in one year, and if you're not able to repay it by then an additional fee of 50$ every year until you pay it? Ok maybe that's sounding like riba...because it's rising I dunno.
Sometimes some banks charge you a % for making early repayments, I think that would be a form of riba..
JK- Ok say the rent for a particular apartment is USD 100 per month. Now suppose i dont pay at the end of the month when payment was due so i now owe the renter USD 100 + %age of tht which amounts to the interest coz time is money. He/she cldve worked with tht money but now he/she didnt receive it on time so he cldve made less. Thts wht compound interest is all abt and its not Riba like tht. Only if u illegally cross the limits. GOD Bless!
-
Not only is charging interest sinful, it is also sinful to accept a loan which has interest. This is why we Muslims in the God-forsaken West have to avoid their commercial banks. Jazakum Allah
-
Yusha you are a man of little faith to believe that god forsakes part of his creation.
Whoever He has forsaken, it is because they have forsaken Him And be ye not like those who forgot Allah. and He made them forget their own souls! Such are the rebellious transgressors! (Al-Hashr 5919)
And why do you stay in the west ? It seems so hard for you...
I was born and raised in the West. Perhaps one day I will leave. In the meantime I will struggle my best to live a righteous life in a hedonistic world.
in "muslim" countries, most banks also take interest, just in case you ignored this
I know it's sad isn't. But in many countries, like in Saudi Arabia, they charge a fixed service fee, which is allowed in our religion.
-
Peace Samia,
I have not come across such a loan type, as it's probably rarer, but lets say it exists. "riba" is something which grows/rises and is not fixed. What you described is simply a stealth form of "riba", a more palatable version but it's still "riba" in my opinion, thus type (2).
-
Peace "yusha",
As ive explained in my earlier post inteerst is just another name for the "rent on a currency". What the hell is Riba or sinful abt tht. If however you, like a credit shark, take advantage of ppl whove been denied loans at registered banks and lend them money at extremely high interest rates then thtd be an example of Riba. Some ppl call this business since they say "well the demand is up. tht person cant get it from the baks so he has to come to me so i can raise the prices". NO! Yes for luyury items tht can be done but not for something as a currency where certain amount should be available to eevryone. Therefore the government scientifically anaylses and sets an upper bound for the rent/interest charged on currencies which msut not be violated. Hence the cshark is EXPLOITING the person and is now taking Riba which is forbidde. But Riba is not just limited to currecies. Say in a small village where there all shops are closed but some ppl r hungry. Some crook comes along and sells the necessary food items for them at 200% increased price. THT TOO IS RIBA but apparently the sunnis forgot abt tht. GOD Bless! -
Peace "wakas",
You said amongst other things- A loan that I feel is ok You borrow ?1000 and are asked to pay back ?1100 in one year's time for example. The repayment total (i.e. ?1100) is a fixed sum and does not change. No interest is constantly being added to the repayment total.
JK- Yes if the borrower returns the 100 Pound after the yr is over(banks normally charge interest yrly). If he doesnt and takes them along into the next yr then ofcourse he has to be charged for those 100 too and this is made clear to everyone from the start. GOD Bless!
-
Peace "wakas",
You said amongst other things
JK- Yes if the borrower returns the 100 Pound after the yr is over(banks normally charge interest yrly). If he doesnt and takes them along into the next yr then ofcourse he has to be charged for those 100 too and this is made clear to everyone from the start. GOD Bless!Peace
Isn't it still interest though? You are still paying for something that wasn't part of the amount loaned? If someone lent me money and said I need to pay him back double then that is not interest because as you pay him back the amount gets smaller. Even if the interest isn't compounded there is still the possibility of being trapped forever paying someone back.Al
-
Peace "aalmak",
Peace
Isn't it still interest though? You are still paying for something that wasn't part of the amount loaned? If someone lent me money and said I need to pay him back double then that is not interest because as you pay him back the amount gets smaller. Even if the interest isn't compounded there is still the possibility of being trapped forever paying someone back.Al
JK- The more you delay the greater the amount gets. If you pay the interest back within time the amount too gets smaller. As i told you and others time is money. Lets say youve taken a oan of 10000 GBP and irate is 5%. Your supposed to pay the bank 500 GBP after one yr and if you pay it within the yr then the next yr youll only have to pay 500 GBP again. If you dont then tht becomes part of your loan. GOD Bless!
