মাসিক আত-তাহরীক Definition of Interest
Allah SWT prohibited interest in unequivocal terms in the holy Quran. He proclaimed وَأَحَلَّ اللهُ الْبَيْعَ وَحَرَّمَ الرِّبَا ‘Allah has permitted trading and forbidden Riba (Interest)’ (Al-Baqarah: 275).
Why is this declaration? Why has interest (الرِّبَا) been declared prohibited? To get into this discussion, we have to know first what is Riba or interest and what it really stands for. In Arabic Riba literally means increase, addition, expansion or growth. This does not imply that every increase or growth has been prohibited in Islam. Umar Chapra, the renowned Islamic scholar, philosopher and the King Faisal Award winner, defines it as saying: "In the Shari'ah, Riba technically refers to the ‘premium’ that must be paid by the borrower to the lender along with the principal amount as a condition for the loan or for an extension in its maturity."
Imam Fakhruddin Razi said that during the era of Jahiliyah, people of Arabia knew very well about Riba and it was widely in practice among them. Even in that period they used to disburse loan systematically according to the terms and conditions agreed upon and realized a fixed amount of money per month while the principal amount remained intact. When the period was over and the debtor failed to repay the debt, the time of repayment was extended on condition of paying an enhanced amount of interest (Tafsirul Kabeer).
Ibn Hajar Asqalani (R) said Riba is that excess material or money which is paid against the original quantity of material or money. In his book Ahkamul Quran Imam Abu Bakar Al-Jassas said, Riba is of two kinds. One relates to purchase and sell while the other is not. The second one is Riba of the Jahiliyah age. He further said that there was tradition of signing a contract during the Jahiliyah era between the debtor and the creditor at the time of providing loan where it was agreed upon that the borrower would pay an extra amount of money at a fixed rate within the stipulated period of time.
According to the renowned Mufassir Ibn Jarir (R), "the Riba mentioned in the holy Quran and practiced during the Jahiliyah era is the realization of a fixed amount of money in addition to the principal amount, stipulated upon a fixed time. The Arabs carried out the same practice. If the debtor failed to repay the loan, the time of repayment was also extended on condition of paying an extra amount of interest (Tafsir Ibn Jareer).
A misconception prevailing in the society regarding Riba needs to be resolved. Many people argue that Riba in the holy Quran and the Hadeeth refers usury which is realized on the money lent for personal or family purpose. To them, interest i.e. the extra amount charged for a fixed period of time for investment in business purposes is quite different one. They are of the opinion that realization of interest or usury from a needy person may be condemnable as there might be scope for exploitation and oppression. But money given as loan for business purpose and interest charged on it is not exploitation because nothing is imposed upon anyone. On the contrary, the businessman will earn profit.
They argue that like conventional commercial dealings the rate of interest is agreed upon according to the convenience of both the parties. This rate of interest is simple and also low, usually ranging from 8% to 18%. Moreover, because of such loan investment in bussiness enterprises become possible and production and employment are accelerated and the wheel of the economy sets in motion. As the income of the borrower increases, it is logical for him to repay the loan with ‘the price for the duration of the capital’. According to them there is no element of pressure or any kind of exploitation prevails here. On the other hand, the purchasing power of the creditor that decreases due to inflation is offset by the interest he receives. As a result the value of the capital remains intact. The explanation is not tenable at all for the following reasons:
Firstly, in the entire Arab world the term Riba is used forinterest. No other terminology is used for it. So there is no scope to create unnecessary doubt about the matter by using any other words of English, Bengali or other languages. For example, interest is prohibited in Islam as wine is prohibited. There is no material difference between a full glass of coloured wine and a bit of white wine kept at the bottom of a glass except in colour and quantity. By the same way the difference between interest and usury is not qualitative but quantitative.
Secondly, during the age of the Jahiliyah, capital was invested for conducting trade and commerce and interest was realized for it. At that time, many people used to invest their capital to earn interest by appointing agents like that of the present age. Among those Abbas Ibn Abdul Muttalib, uncle of Hazrat Muhammad (pbuh) and Bonu Mugheerah were the most infamous. The interest they realized was known as Riba. Hazrat Muhammad (pbuh) stopped the interest based business of his uncle and wrote off all outstanding interest of the debtors in his farewell pilgrimage address (Abu Dawood H/1905).
Thirdly, those who ask to realize the ‘price for the time the capital was used’ are similar in behaviour of the story of that one-eyed deer. If the ‘price for time’ is accepted on the lender's side why not is it applicable in the same way on the borrower's side? More importantly the debtor's time, labour and intellect are used to utilize that money. Moreover, those who argue for taking interest in order to keep the value of money intact, they forget that it is not possible to keep the value of money stable just by realizing interest. It requires additional fiscal and financial measures. So people who are interested in differentiating interest from that of usury most likely speak with a view to fulfill any particular motive. It can categorically be said that both in the Jahiliyah era and in Arabic language the word Riba was used to mean both interest and usury. The lexicographers and scholars are unanimous in this respect.[1]
In fact, interest that is prohibited in the Islamic Shari'ah is prohibited once for all whatever be the names and attributes applied to it and whatever be the means adopted to gain it. It may be remembered that when the verses of the holy Quran were revealed prohibiting Riba, interest was paid on money borrowed for personal cause as well as for business purpose. Both kinds of interest were called Riba in Arabic and this Riba was declared prohibited in the holy Quran.
[1]. T.B. Hughes, A Dictionary of Islam, (Premier Book House, 1985), p. 544; Adam Kupar & Jessica Kupar, The Social Sciences Encyclopaedia, (Routledge & Kegun Paul, 1985), p. 405-406; Encylopaedia Judiace, (Jerusalem, 1972), Vol. 16. p. 28; Raymond De Rover, International Encyclopaedia of the Social Sciences, London, vol. 4, p. 434; Henry, W. Spigel, A Dictionary of Economics, (Macmillan, 1987), Vol. IV, p. 769.
