I liked your posts on riba and I wanted to comment. Insha’Allah you will write back to me with your own views as well.
These days I am deep in my books researching the concept of Riba as well as other areas of economics. I have found that Interest isn’t ALWAYS ALL riba. In fact interest exists for 2 reasons from what I have learned:
Currency depreciates and so interest is charged, and
Interest is charged for profit. The second reason applies to Usury (Riba).
If I take out a loan and I have bad credit then obviously I will be greatly taken advantage of due to my bad credit record and I will be paying a lot of riba. Riba itself is haram. The question here we are faced with is “how much riba is involved”? Everywhere we look we are taking part in riba of some form directly or indirectly – buying clothes for the kids, buying a car (new or used), renting a house or apartment, mortgaging a house, etc!
I am still questioning (because I believe I can never know enough). In the Qur’an 30:39 Allah says “What you give at usury, in order that it may increase on people’s wealth, does not find increase with Allah; and what you give in charity, seeking the pleasure of Allah, will increase manifold.”
Does this mean that GIVING Usury is also prohibited? (i.e. I buy a new car and I’m paying it back in installments – obviously Riba is attached)
I am only a humble seeker of truth and I certainly do not mean to offend you. I have a passion for learning and I cannot let go of this subject. I have friends who insist I am trying to find loopholes in the religion and I have been hurt by their ignorance very deeply. Please help me, brother. I will continue to read your posts, which include sources.
I hope to write to you soon again!
Your Sister in Islam
I find your stipulations on the topic of Riba quite interesting. However, I am afraid that my study and analysis of the issue has led me to an opinion, which is slightly different from yours.
As I understand it, Riba1 is never an adjustment for inflation2. I do agree that while fixing the rate of Riba on loans, one of the influencing variables can, indeed, be the trend of the rate of inflation, but Riba is never merely to cover only the devaluation in currency during inflationary trends. In fact, if the lender demands an adjustment in his loaned amount due to depreciation in the value of the currency, it would not fall in the categoryof Riba3, and, in my opinion, is not prohibited in Islam. However, any adjustments to account for a fall in the value of paper currency should not precede the actual fall in the value of the paper currency. In other words, such inflationary adjustments should only be contingent upon an actual change in the value of the paper currency. This implies that the rate of adjustment in the outstanding amount of loans for a rise/fall in the value of the paper currency, if predetermined, translates into Riba, while if kept contingent upon the actual rise/fall the value of the currency, is neither Riba nor prohibited in Islam.
In the Qur’an 30:39 Allah says “What you give at usury, in order that it may increase on people’s wealth, does not find increase with Allah; and what you give in charity, seeking the pleasure of Allah, will increase manifold.”
In this verse, the Qur’an, by the word ‘Riba‘ has actually referred to ‘Riba-based loans”. The correct translation of the verse should be:
Whatever you give of Riba-based loans, so that it increases by being included in other people’s wealth, it does not increase with Allah; while whatever you give in charity, seeking Allah’s pleasure, shall be increased manifold.
I am sure with the correction in the translation, your questions arising from the incorrect translation of the verse need not be answered.
Please rest assured that I am never offended by any questions, comments or criticisms on my work.
I do wish you all the best in your intellectual endeavors. My fondest regards to you and those around you.
August 27, 2000
- Which may be translated as usury or interest (as in ‘interest on capital’). [↩]
- Depreciation in the value of money. [↩]
- Please note that Riba’ is a pre-determined additional payment demanded by the seller (of the asset) from the buyer, in return for allowing a stipulated time to make the payment for the transacted sale. The asset being sold may be a real asset or a financial asset (i.e. it may be a house, a piece of cloth, gold, or paper currency etc.). [↩]