Riba is an Arabic noun derived from the verb Raba, meaning ‘to increase’, ‘to grow’, and ‘to exceed’. Riba is a sure thing. It has element of guaranteed gain without any possibility of losses. All the risk is taken by the borrower.
Trade on the other hand has no element of Riba where because in trade, possibility of making or losing money is equal and dependent on negotiation skills and product pricing.
An interest free loan (Qard) reflects the spirit of brotherhood and is not taking advantage of the weak and the unfortunate.
The key point that must be highlight is that if money is offered by a lender to a borrower and the borrower does not provide any form of guarantee in terms of appreciation of the loan value, the act of lending and recovery of loan itself cannot be construed as Riba.
In other words, if someone is seeking a loan and the lender is given an opportunity to participate in a trade (business opportunity) in exchange of the loan WITHOUT any minimum guarantee of return (other than giving back the principal amount at face value), the opportunity to participate in a trade it is not right to construed it as Riba related activities as the trade does not guarantee any form of appreciation. There is an equal risk of losses or making profit.
Unfortunately many religious scholars has a very rigid view on this and consider that the "opportunity to participate in trade" itself is Riba despite that the whole arrangement is a trade. They rely on a weak Hadith that states "Every loan that brings some benefit (to the lender) is Riba." Cited by (Al-Matalib Al-'Aliyah 1/411,1373 and Irwaul-Ghalil 5/235,1398.)
There is sufficient literature to support this hadith is very weak. It is unfortunate that such a weak Hadith has gain prominence and making the Islamic scholars to lose sight of the fact that "trade is permissible" as cited in the Quran V217, Ch2.
Scholars then cite hadith narrated by at-Tirmidhi (2442), Ahmad (1630) and Ibn Hibbaan (722) from al-Hasan ibn ‘Ali (may Allah be pleased with him) not to dwell into this argument.
The hadith states that “Leave that which makes you doubt for that which does not make you doubt, for truth leads to reassurance and lies lead to uncertainty.” Classed as saheeh by Shaykh al-Albaani (may Allah have mercy on him).
The point of contention on this hadith is that it clearly focus on issue of doubt. In the business arrangement where Qard is involved, there is no doubt. Where is the element of doubt?
One must not forget that the 4 Madhabs in Islam looks at interpretation of many Islamic Finance activities differently and their views differs greatly. There is a consensus that application of business practices can be allowed if any of the Madhabs allows it.
In Malaysia the concept bay‘al-‘Inah loan concept is acceptable to Madhhab al-Shafie but not acceptable by majority Muslims legal experts ( fuqaha’) because it was considered as the hilah or legal trick or backdoor to riba’ . If this is doable then why are the scholars so set against the participating in a trade without any element of minimum guarantee in exchange of a Qard?
I welcome your thoughts.
As an expert in Islamic finance and jurisprudence, I would like to shed light on the concepts discussed in the article and provide a comprehensive understanding of the issues related to Riba, trade, and interest-free loans (Qard). My expertise in this field is grounded in a deep understanding of Islamic finance principles, Sharia law, and the diverse perspectives within the Islamic legal tradition.
Firstly, the article introduces the concept of Riba, emphasizing its Arabic origin derived from the verb "Raba," meaning 'to increase,' 'to grow,' and 'to exceed.' Riba is characterized as a sure thing with a guaranteed gain and no possibility of losses. This gain comes at the expense of the borrower who bears all the risks. The distinction between Riba and trade is highlighted, asserting that trade lacks the element of Riba because the possibility of making or losing money is equal and depends on negotiation skills and product pricing.
The article also introduces the notion of an interest-free loan (Qard) as reflective of the spirit of brotherhood, where the lender does not take advantage of the weak and unfortunate. The key point emphasized is that for an arrangement not to be considered Riba, the borrower must not provide any guarantee in terms of appreciating the loan value. If a lender offers money to a borrower, and the borrower has the opportunity to participate in a trade without a minimum guarantee of return, the trade is not considered Riba-related, as there is an equal risk of losses or profits.
The discussion touches upon the interpretation of a weak Hadith that states, "Every loan that brings some benefit (to the lender) is Riba." Scholars argue that the Hadith is weak, and there is sufficient literature supporting this claim. The article laments that reliance on such weak Hadiths has led some scholars to overlook the permissibility of trade, as cited in the Quran (V217, Ch2).
Additionally, the article mentions a Hadith emphasizing the avoidance of doubtful matters, but the expert challenges its applicability to business arrangements involving Qard, arguing that there is no element of doubt in such cases.
The diversity of views among the four Madhabs (Islamic legal schools) is highlighted, with a consensus that business practices can be allowed if any Madhab permits them. The example of the bay‘al-‘Inah loan concept in Malaysia, accepted by Madhhab al-Shafie but rejected by the majority of Muslim legal experts, demonstrates the varying perspectives on Islamic finance practices.
In conclusion, the article raises thought-provoking questions about the interpretation of Islamic finance activities, the reliance on weak Hadiths, and the divergent views within the Islamic legal tradition. The expert welcomes further thoughts and discussions on these complex issues.
Those who eat interest (usury), they will not stand (before Allah) except like those who are confused (insane) by the touch of Satan. That is because they say: "Indeed trade is like usury,” while Allah has made the trade lawful and the usury unlawful.
Those who consume riba (interest) cannot stand (on the Day of Resurrection) except as one stands who is being beaten by Satan into insanity. That is because they say, “Trade is (just) like interest.” But Allah has permitted trade and has forbidden interest.
Mohsin Khan: Those who eat Riba (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitan (Satan) leading him to insanity. That is because they say: "Trading is only like Riba (usury)," whereas Allah has permitted trading and forbidden Riba (usury).
Scriptural basis. The Quran states in aya 2:275 that "Allah has permitted trade and forbidden usury." But not all trade is allowed in Islam. The Qur'an prohibits gambling (maisir, games of chance involving money).
As for him who returneth (to usury) - Such are rightful owners of the Fire. They will abide therein. Those who devour usury will not stand except as stand one whom the Evil one by his touch Hath driven to madness. That is because they say: "Trade is like usury," but Allah hath permitted trade and forbidden usury.
That is because they say, “Trade is no different than interest.” But Allah has permitted trading and forbidden interest. Whoever refrains—after having received warning from their Lord—may keep their previous gains, and their case is left to Allah.
Trading in a manner that involves excessive debt or leverage, leading to financial instability and potential harm to the trader or other parties involved, is considered haram.
According to Sunan Ibn Majah, the Muhammad declared the practice of riba worse than "a man committing zina (fornication) with his own mother". In that hadeeth, he said that there are 70 sins of riba. Of these, the minimum sin is to commit adultery with oneself's mother, and the greatest riba is dishonoring any Muslim.
Like the Quran, the Bible also shuns Riba or interest and gives commands to stay away from this element while doing transactions. In Deuteronomy 23:19, it says: “You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest.”
Riba Al-Fadl, “the interest of excess,” the Prophet, on him be peace, specified as a haram, or forbidden, business transaction. Riba Al-Fadl is the unequal exchange of like commodities. One trades gold, silver, wheat, etc. for a greater amount of the same commodity from another.
If you have committed Riba in the past, it's essential that you ask Allah for forgiveness. Allah extends his Divine Mercy to all those who turn to Him with sincerity and supplicate for forgiveness.
Riba is the most prominent element among various prohibitions under Islamic commercial law. While trade is permitted riba is prohibited. Conventionally, trade is defined as the exchange of goods or services for other goods and services or money.
Riba is forbidden under Sharia law (Islamic religious law) because it is thought to be exploitative. Though Muslims agree that riba is prohibited, there is much debate over what constitutes riba, whether it is against Sharia law or only discouraged, and whether or not it should be punished.
Day trading is one of the most common trading styles. In Islamic finance, every transaction must not contain the elements of riba (interest), gharar (uncertainty), and maysir (gambling). Before involving yourself in day trading, you must know about day trading in Islam.
Tafseer of Surah Al-Baqarah Ayat 276. Allah will deprive usury of all blessing, but will give increase for deeds of charity: For He love not creatures ungrateful and wicked. Riba can be roughly translated as "usury", or unjust, exploitative gains made in trade or business under Islamic law.
(2:272) You are not responsible for setting these people on the Right Way; Allah sets on the Right Way whomsoever He wills. Whatever wealth you spend in charity is to your own benefit for you spend merely to please Allah. So, whatever you spend in charity will be repaid to you in full and you shall not be wronged.
Whatever you give in charity is certainly well known to Allah. Give to the poor who are wholly committed to the path of God and who are unable to travel in the land. The unaware considers them rich because of their self-restraint. You will recognize them by their character traits.
(2:274) Those who spend their wealth by night and by day, secretly and publicly, will find that their reward is secure with their Lord and that there is no reason for them to entertain any fear or grief.
Introduction: My name is Carlyn Walter, I am a lively, glamorous, healthy, clean, powerful, calm, combative person who loves writing and wants to share my knowledge and understanding with you.
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