USURY DEFINITION & VERDICT IN QURAN
In an attempt to address the contemporary debate of bank interest & the rise of the so called “Islamic banks” , I looked at the Quran verses addressing the usury (reba) issue & what has been commented on it by Sheikh “Muhammad Abduh”(1849-1905) the grand Egyptian & most Islamic countries edict in his time who wrote as follows :
- Reba (usury) is prohibited in all religions . Reba is an Arabic word meaning excess. Quran specified Reba as any money excess over the capital money loan
Allah words are clear Q2;279
فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ
translation “ you may have your principal/capital – [thus] you do no wrong, nor are you wronged.”—-
Thus Islam calls for lending money to the needy whereby the loan to be paid back just equal to the principal loan
- Islam calls for lenient & deferred payment when the debtor is in an insolvent situation Q2;280
وَإِن كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَىٰ مَيْسَرَةٍ ۚ وَأَن تَصَدَّقُوا خَيْرٌ لَّكُمْ
translation “And if someone is in hardship, then [let there be] postponement until [a time of] ease. But if you give [from your right as] charity, then it is better for you, if you only knew’—-
- Allah has clearly clarified that selling & trading is allowed & is unlike usury
Q2;275
وَأَحَلَّ اللَّـهُ الْبَيْعَ وَحَرَّمَ الرِّبَا
translation “Allah has permitted trade and has forbidden interest”——
Allah allows selling because it is a commodity or service which is a return for the paid money/price whilst usury extra money has no tangible return which is merely money against money taking advantage of people needs & doing great harm to economy & market
However , the Sheikh mentions that price increment for postponed goods payment is allowed , thus a commodity can be sold at a certain cash price & at a higher price in case the payment is postponed or made in instalments
- Allah then warns of usury consequences
Q2;276 يَمْحَقُ اللَّـهُ الرِّبَا
translation “Allah destroys interest”—— meaning that the usury causes many social problems of bankruptcy & financial problems enmity towards the lender & enmity between the poor & the rich which may lead to aggressions & crimes in addition to the economic problems of inflation & price increases & stifling economic growth ..etc
In view of what the Sheikh says & Quran verses above , & taking in account the modern economic theories that state that the best economic growth & stimulus can be achieved if banking interest rates equal zero , thus encouraging businessmen to take loans & invest which leads to creating more jobs & goods & development & greatly stimulates the market while still capping & restricting price inflation . This is reflected in the banking monetary system adopted by Usa & Europe who have reduced the lending Federal & Ecb interest rate to almost zero adding only a minor percentage to cover loan administrative expenses & this is compliant to the islamic requirement of non-usury .Unfortunately , the so called “Islamic banks “ have not adopted the Islamic view of lending at zero interest rate so as to solve the problems of needy persons & stimulate economy & they just circumvented this Islamic principal & added a high amount over the loans under the name of “fees “ or other means as a desk paper selling process …etc
- If any needy person had compelling reasons to borrow money under terms of paying interest to the lender , then in my opinion that Allah will –in shaa Allah_ forgive him in accordance to what He said that he forgives the compelled person in Q6;119
إِلَّا مَا اضْطُرِرْتُمْ إِلَيْهِ
translation “excepting that to which you are compelled”