Definition§
Riba (ربا) is an Arabic term that signifies usurious or exploitative interest, which is strictly prohibited in Islamic financial systems. The term extends to include practices where a fixed or guaranteed interest gains unearned profit and imposes undue financial burdens on the borrower.
Etymology§
The term “Riba” is derived from the Arabic root “ر ب و” (r-b-w or r-b-a), which means to increase, grow, or multiply.
Background and Historical Facts§
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Quranic Prohibition:
- The prohibition of Riba is explicitly mentioned in several Quranic verses, including Surah Al-Baqarah (2:275-279) which states, “Allah has permitted trade and has forbidden interest…”
- Verses: Quran 2:275-279, 3:130, 4:161, 30:39
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Hadith:
- The sayings of Prophet Muhammad (PBUH) also condemn Riba, categorizing it as one of the major sins that severely threaten social equity and justice.
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Islamic Jurisprudence:
- The consensus among Islamic scholars (Ijma) reflects a uniform prohibition against Riba across various schools of thought including Hanafi, Maliki, Shafi’i, and Hanbali.
- Terms: - Riba al-Nasi’ah: Riba on loans - Riba al-Fadl: Riba on trade transactions
Cultural Differences and Similarities§
- Middle East: Gulf countries adhere strictly to the prohibition, implementing sharia-compliant financial systems.
- South Asia: Moderate, controlled interest is tolerated to avoid economic disbalance.
- Western Context: Muslim minorities create or use sharia-compliant financial institutions, making distinctions between permissible financial growth and Riba.
Synonyms§
- Usury
- Exploitative Interest
- Compound Interest
Antonyms§
- Halal Profit
- Ethical Financing
- Zero-Interest
Related Terms§
- Murabaha: A form of credit sale where the seller discloses the cost and profit margin to the buyer.
- Mudarabah: A profit-sharing contract where one party provides the capital while the other offers expertise and management.
- Ijara: A leasing agreement where the owner allows another party to use an asset for a predetermined return.
Exciting Facts§
- In Modern Finance: Islamic banking, adhering strictly to the prohibition of Riba, has grown rapidly, leading the global financial industry towards ethical practices.
- Renowned Models: Banks like the Islamic Development Bank and institutions like Al-Rajhi Bank have integrated Riba-free models successfully.
Quotations from Notable Writers§
- Yusuf Ali (Translator of Quran): “Riba is any anticipation of a fixed return for a loan, in complete contrast with the uncertainty of profit or loss connected with an equitable financial project.”
Suggested Literature and Further Studies§
- Books:
- “Islamic Banking and Finance: An Integrative Approach” by Yusuf Al-Mansur
- “The Prohibition of Riba in Islam: An Economic Perspective” by Muhammad Al-Farooq
- Journals:
- “Arab Law Quarterly”
- “International Journal of Islamic and Middle Eastern Finance and Management”
- Online Resources:
- Islamic Development Bank’s online library
- Harvard Islamic Finance Information Program
Additional Translations§
- Arabic: ربا (Riba)
- Persian: ربا (Riba)
- Urdu: حرام سود (Haram Soor)
- Indonesian: bunga riba
- Turkish: faiz
Farewell Thought§
Embark on a journey to not only understand but also appreciate the intricate balance within Islamic finance which blends ethical principles with economic growth. May our endeavors foster a world grounded in justice and compassion, in alignment with the timeless wisdom of Islamic teachings.
Yusuf Al-Mansur October 10, 2023
